Lattice Semiconductor(US:LSCC)2026-02-13 21:03Revenue Performance - Revenue for fiscal 2025 increased by $13.9 million, or 2.7%, to $523.3 million compared to fiscal 2024, driven by stronger demand in data center applications [193]. - Revenue from the Communications and Computing end market rose by 28% in fiscal 2025 compared to fiscal 2024, primarily due to increased demand for AI-specific servers and wireline networking components [198]. - Revenue from the Industrial and Automotive end market decreased by 18% in fiscal 2025 compared to fiscal 2024, attributed to softer end market demand and ongoing inventory normalization [199]. - Revenue from Asia accounted for 67.6% of total revenue in fiscal 2025, with a 6.3% increase compared to fiscal 2024 [201]. - Total revenue from the Americas was $102.8 million, representing 19.6% of total revenue, with a 1.5% increase from fiscal 2024 [201]. - The overall revenue decline of 30.9% from fiscal 2023 to fiscal 2024 was primarily due to market conditions and inventory adjustments by customers [193]. - Revenue from distributors accounted for 83.8% of total revenue in fiscal 2026, a decrease from 89.4% in fiscal 2024 [203]. Gross Margin and Expenses - Gross margin for fiscal 2025 was 68.2%, an increase from 66.8% in fiscal 2024 [192]. - Gross margin increased to 68.2% in fiscal 2026, up 140 basis points from 66.8% in fiscal 2024, primarily due to the non-recurrence of a $7.0 million one-time charge [204]. - Research and development expenses increased to $188.0 million, representing 35.9% of revenue in fiscal 2025, up from 31.3% in fiscal 2024 [192]. - Research and development expenses rose to $187,983,000 in fiscal 2026, representing 35.9% of total revenue, an increase from 31.3% in fiscal 2024 [206]. - Selling, general and administrative expenses rose to $153.6 million, accounting for 29.4% of revenue in fiscal 2025, compared to 23.0% in fiscal 2024 [192]. - Selling, general, and administrative expenses increased to $153,632,000 in fiscal 2026, accounting for 29.4% of total revenue, up from 23.0% in fiscal 2024 [209]. Income and Cash Flow - GAAP Net income for the year ended January 3, 2026, was $3.1 million, with a margin of 0.6%, compared to $61.1 million (12.0% margin) in 2024 and $259.1 million (35.1% margin) in 2023 [223]. - Adjusted EBITDA for fiscal 2025 was $183.0 million, representing a margin of 35.0%, an increase from $162.0 million (31.8% margin) in fiscal 2024 [225]. - Cash provided by operating activities increased to $175.1 million in fiscal 2025 from $140.9 million in fiscal 2024, a rise of $34.2 million [232]. - Net cash used in financing activities rose to $115.7 million in fiscal 2025 from $94.5 million in fiscal 2024, primarily due to stock repurchases [234]. - The company had cash and cash equivalents of $133.9 million as of January 3, 2026, with approximately $73.6 million held by foreign subsidiaries [231]. Future Outlook - The company expects AI-related revenue to grow over the next few years based on a growing pipeline of AI-related design wins across all end market segments [199]. - The company expects research and development expenses to increase in the future but to decline as a percentage of revenue [208]. - The company may consider acquisition opportunities to expand its product or technology portfolios and may seek additional equity or debt financing for this purpose [229]. Other Financial Metrics - Interest income (expense), net decreased to $2,896,000 in fiscal 2026, representing 0.6% of total revenue, down from 0.8% in fiscal 2024 [214]. - Other income (expense), net improved to $(751,000) in fiscal 2026, a decrease of 65.5% compared to $(2,176,000) in fiscal 2024 [215]. - Income tax expense for fiscal 2026 was $10,293,000, a significant increase from a benefit of $(24,902,000) in fiscal 2024 [216]. - Restructuring costs decreased to $4,044,000 in fiscal 2026, down 67.1% from $12,291,000 in fiscal 2024 [212]. - A hypothetical 100 basis point change in interest rates would have resulted in less than $1.5 million change in interest income as of January 3, 2026 [243]. - The company entered into a 2022 Credit Agreement on September 1, 2022, with no significant long-term commitments for capital expenditures as of January 3, 2026 [228].