Lattice Semiconductor Corporation Q3 2024 Financial Results

Company Overview
Lattice (OTC:LTTC) Semiconductor Corporation (LSCC) is a leader in low-power, small-sized FPGA solutions. The company announced its third-quarter 2024 financial results with a revenue of $127.1 million, marking a 34% decrease from the previous year mainly due to inventory normalization.

Despite the downturn, Lattice maintained a stable gross margin at 69% and announced strategic plans aimed at achieving a U-shaped recovery with low single-digit revenue growth for 2025. The company implemented a 14% reduction in workforce and operating expenses to enhance efficiency while maintaining product integrity. CEO Ford Tamer emphasized the focus on executing the current roadmap and targeting revenues of $1 billion.

Key Takeaways

• Q3 revenue was $127.1 million, a 34% decline year-over-year but aligned with guidance.
• Gross margin remained stable at 69%.
• Communications and computing segments grew 12% sequentially, while industrial and automotive declined 7%.
• Q4 revenue is projected to range from $112 million to $122 million, with a gross margin of approximately 68%.
• A 14% workforce and operating expense reduction was announced to improve efficiency.
• The company aims for $1 billion in revenue and focuses on Edge AI and low-power FPGA solutions.
• Operating cash flows doubled sequentially, and share buybacks continued with $17 million in Q3.
• A Developers Conference is scheduled for December 10-11 in San Jose.

Company Outlook

• Lattice anticipates low single-digit growth for 2025, projecting revenue of approximately $525 million.
• Management expects inventory levels to normalize by mid-2025, leading to a U-shaped recovery.
• The long-term revenue growth target remains 15% to 20%, with stabilization expected in 2024 before resuming growth in 2025.

Bearish Highlights

• Significant decline in revenue year-over-year due to inventory normalization.
• Industrial and automotive segments showed a 7% drop in performance compared to the previous quarter.

Bullish Highlights

• Communications and computing segments rose by 12% sequentially.
• Stable gross margins at 69%, indicating financial resilience.
• Growth in AI revenue with engagement opportunities in client and server markets.
• Non-GAAP earnings per diluted share rose to $0.24, up from $0.23 in the prior quarter.

Summary

Lattice Semiconductor's strategic focus on stabilizing operations, executing its product roadmap, and leading with low-power innovations positions the company to leverage opportunities, particularly in Edge AI. The company aims for long-term growth while managing current market challenges.

InvestingPro Insights

InvestingPro provides further insights on Lattice Semiconductor's financial health. Despite a 34% year-over-year revenue decline, LSCC's market capitalization stands at $7.15 billion, reflecting investor confidence in the company's long-term prospects.

• Lattice is trading at a high earnings multiple with a P/E ratio of 38.17, suggesting future growth expectations.
• Cash flows are sufficient to cover interest payments, supporting operational adjustments.
• Gross profit margins have remained consistent at 69%, demonstrating operational efficiency during revenue decline.

Lattice Semiconductor's recent financial outcomes and strategic outlook position the company as a compelling investment opportunity amid market headwinds while paving the way for future growth in Edge AI and low-power FPGA solutions.