Lattice (LSCC) Up 18.9% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Lattice Semiconductor reported modest Q2 2025 results, with revenues slightly declining due to macroeconomic challenges, but showing strength in generative AI applications and a focus on FPGA portfolio expansion [2][3][4]. Financial Performance - Net income on a GAAP basis was $2.9 million (2 cents per share), down from $22.6 million (16 cents per share) year-over-year, primarily due to higher operating expenses [3]. - Non-GAAP net income was $32.6 million (24 cents per share), slightly up from $31.4 million (23 cents per share) in the prior year, matching the Zacks Consensus Estimate [3]. - Revenues decreased marginally to $123.97 million from $124.08 million year-over-year, aligning with the consensus estimate of $124 million [4]. Revenue Breakdown - Communications and Computing revenues rose to $68.7 million from $54.6 million, driven by solid demand in data center infrastructure [5]. - Industrial and Automotive revenues fell to $47.3 million from $58.2 million due to higher channel inventory levels [5]. - Consumer revenues decreased to $8 million from $11.3 million [5]. Geographic Revenue Distribution - In Q1 2025, 67% of revenue came from Asia, 22% from the Americas, and 11% from Europe and Africa [6]. Operational Metrics - Adjusted EBITDA increased to $42.2 million from $40 million year-over-year [7]. - GAAP operating expenses rose to $80 million from $62.2 million in the prior year [7]. Cash Flow and Liquidity - In the first half of 2025, Lattice generated $70.4 million in cash from operating activities, up from $51.4 million in the prior year [8]. - As of June 28, 2025, the company had $107.2 million in cash and cash equivalents, with $18.6 million in other long-term liabilities [8]. Future Outlook - For Q3 2025, Lattice expects revenues between $128 million and $138 million, with a non-GAAP gross margin of 68.5%-70.5% [9]. - Non-GAAP total operating expenses are projected to be between $52 million and $54 million, with non-GAAP net income expected to be between 26-30 cents per share [9]. Estimate Trends - Since the earnings release, there has been an upward trend in estimates, with a consensus estimate shift of -7.83% [11]. - Lattice currently holds a Zacks Rank 4 (Sell), indicating expectations of below-average returns in the coming months [13]. Industry Comparison - Lattice operates within the Zacks Electronics - Semiconductors industry, where Lam Research reported revenues of $5.17 billion, reflecting a year-over-year increase of 33.6% [14]. - Lam Research's expected earnings for the current quarter are $1.21 per share, indicating a year-over-year change of 40.7% [15].