Lattice Semiconductor Corp (LSCC) Q3 2024 Earnings Call Highlights: Navigating Market ...

Revenue: $127.1 million, up 2% from the second quarter, down 34% year-over-year.

Gross Margin: 69% for both GAAP and non-GAAP.

Non-GAAP Operating Expenses: $54 million, flat with the prior quarter, down 7% year-over-year.

Non-GAAP Operating Margin: 26.6%, up from 25.4% in the prior quarter.

EBITDA Margin: 33.7%, up 160 basis points from the second quarter.

Non-GAAP Earnings Per Share (EPS): $0.24, compared to $0.23 in the prior quarter.

Cash Flow from Operations: $44 million, more than double the second quarter.

Free Cash Flow Margin: 31%, up from 12% in the prior quarter.

Inventory: $104.5 million, an increase of $3 million from the prior quarter.

Share Buybacks: Approximately 370,000 shares repurchased, totaling $17 million.

Q4 2024 Revenue Guidance: Expected to be between $112 million and $122 million.

Q4 2024 Gross Margin Guidance: Expected to be 68% plus or minus 1% on a non-GAAP basis.

Q4 2024 EPS Guidance: Expected to be in the range of $0.15 to $0.23.

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Release Date: November 04, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Lattice Semiconductor Corp (NASDAQ:LSCC) reported Q3 2024 revenue of $127.1 million, in line with guidance, demonstrating stability in their business model.

The company achieved a gross margin of 69%, reflecting strong financial discipline and stability despite market softness.

Lattice's new product revenue continues to grow year over year, with design wins exceeding those in the same period last year.

The company has a strong leadership position in strategic core markets such as communications, computing, industrial, and automotive.

Lattice is well-positioned for growth in the edge AI market, with strong traction in AI servers, laptops, and industrial applications.

Industrial and automotive revenue was down 7% sequentially due to broader market demand and continued inventory normalization.

The company implemented a 14% headcount reduction to align resources with current business levels, indicating cost-cutting measures.

Lattice expects a U-shaped recovery rather than a V-shaped one, with low single-digit revenue growth anticipated in 2025.

Revenue guidance for Q4 2024 is lower, expected to be between $112 million and $122 million, indicating ongoing market challenges.

The company faces industry-wide headwinds, with continued softness in its largest end market, industrial and automotive.

Q: Can you provide insights on the future of the Nexus product line and any plans for new product introductions? A: Ford Tamer, CEO, explained that the Nexus and Avant product lines are performing well, with significant revenue growth driven by these products. Lattice plans to continue focusing on small and mid-range FPGA segments, with more details to be shared at the upcoming developer conference.

Q: How is Lattice Semiconductor positioned in the AI market, and what are the expectations for growth in this area? A: Ford Tamer, CEO, highlighted that Lattice is seeing strong traction in AI applications across servers, laptops, and industrial sectors. The company is engaged with top OEMs and expects significant demand for its FPGA solutions in AI servers, with continued growth anticipated in AI-related revenue.

Q: Can you elaborate on the expected U-shaped recovery and its impact on Lattice's financial outlook? A: Ford Tamer, CEO, noted that the company anticipates a U-shaped recovery, with revenue expected to be flat through mid-2025. Inventory levels are being managed to return to normal by mid-2025, and Lattice expects to achieve low single-digit revenue growth in 2025, with a return to 15-20% growth in 2026.

Q: How does Lattice plan to manage its operating expenses following the recent workforce reduction? A: Tonya Stevens, Interim CFO, stated that the 14% workforce reduction is part of a strategy to align resources with business needs. The company expects this to result in a high single-digit reduction in operating expenses for 2025, contributing to low double-digit EPS growth.

Q: What is Lattice's strategy regarding partnerships with microcontroller and AI accelerator companies? A: Ford Tamer, CEO, explained that Lattice partners with companies like NVIDIA and various microcontroller firms instead of developing its own solutions. This approach allows Lattice to be a flexible and friendly partner, enhancing its product offerings through collaborations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.