Lattice Semiconductor(US:LSCC)2021-11-03 03:49Financial Data and Key Metrics Changes - Revenue for Q3 2021 was $131.9 million, representing a 28% year-over-year growth and a 5% sequential increase [17] - Non-GAAP gross margin reached a record 63.6%, up 210 basis points year-over-year [8][18] - Non-GAAP net income increased by 49% year-over-year [8] - GAAP earnings per diluted share was $0.20, compared to $0.15 in the prior quarter and $0.09 in the year-ago quarter [19] Business Line Data and Key Metrics Changes - Communications and Computing market revenue increased 26% year-over-year and 6% sequentially, driven by Data Center Servers, Client Computing, and 5G infrastructure [9] - Industrial and Automotive market revenue grew 40% year-over-year and 3% sequentially, reflecting strong customer adoption in industrial automation and robotics [10] - Consumer market revenue was up 25% year-over-year and 1% sequentially, focusing on applications with multi-year revenue streams [11] Market Data and Key Metrics Changes - The company reported strong growth across all three end-markets, with double-digit year-over-year growth in each segment [7][17] - The Data Center segment is expected to see a 50% increase in dollar content per server with the next generation of servers [43] Company Strategy and Development Direction - The company is focused on expanding its product portfolio and enhancing software capabilities, with significant investments in new product families [12][14] - The upcoming Lattice Avant platform is expected to double the addressable market and target mid-range FPGA applications [13] - The company continues to execute on its gross margin expansion strategy, aiming for a long-term target of 65% [25][32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged supply chain tightness but emphasized effective navigation of the environment and proactive inventory management [28] - The company expects Q4 2021 revenue to be between $129 million and $139 million, with a gross margin target of 64% [21] Other Important Information - The company generated $45 million in cash from operations in Q3, with a year-to-date total of $116 million, up approximately 70% compared to the same period in 2020 [20] - The company repurchased approximately 250,000 shares for $15 million under its buyback program [20] Q&A Session Summary Question: Can you provide more color on the gross margin results? - Management attributed the record gross margin to pricing optimization and strength across all markets [25] Question: Are you seeing slower growth due to supply constraints? - Management confirmed that while there are supply chain tightness issues, proactive inventory management has helped support customer demand [28] Question: Is your pricing optimization strategy benefiting from current supply tightness? - Management stated that the pricing optimization strategy has been in place since 2019 and is being enhanced by current supply constraints [32] Question: How much of the revenue momentum is coming from Nexus? - Management confirmed that Nexus is contributing to growth, with multiple device families launched and ramping into production [34] Question: Are you seeing any increased competition from legacy competitors or microcontrollers? - Management noted that traditional FPGA competitors remain focused on large, complex FPGAs, while Lattice is well-positioned against microcontrollers due to the demand for more intelligent systems [74] Question: What is the company's stance on M&A? - Management is actively looking for complementary acquisitions that could accelerate organic growth, focusing on hardware and software options [77] Question: Can Avant address both control plane and data plane applications? - Management confirmed that Avant will address both types of applications, expanding the product's capabilities [80]