Lattice Semiconductor Corporation is a leading provider of programmable logic semiconductor products, silicon-enabling products, system solutions, design services, and technology licenses. The company has a rich history of innovation, delivering differentiated solutions that enable customers to create smart, secure, and connected products across a wide range of end markets.
Business Overview
Lattice's strategic focus on low power, small size, and ease of use has positioned the company as a trusted partner for customers in the Communications and Computing, Industrial and Automotive, and Consumer markets. The company's product portfolio includes a diverse range of programmable logic devices, such as the Nexus and Avant families, which are designed to address the evolving needs of its customers.
Financials
In fiscal year 2023, Lattice reported annual revenue of $737,154,000 and net income of $259,061,000. The company's strong financial performance was driven by its ability to capitalize on the growing demand for programmable logic solutions across its target markets. Lattice's annual operating cash flow was $269,588,000, and its free cash flow reached $236,338,000, further strengthening its financial position and enabling continued investment in product innovation and market expansion.
Recent Quarterly Performance
During the second quarter of fiscal 2024, Lattice reported revenue of $124,076,000, a decrease of 35% year-over-year, as the company navigated industry-wide inventory normalization challenges. Gross margin remained stable at 69%, demonstrating the resilience of Lattice's business model. The company's non-GAAP operating margin for the quarter was 25.4%, reflecting its disciplined approach to cost management.
Lattice's performance in the second quarter was impacted by softness in the Industrial and Automotive end market, where revenue declined 23% sequentially. However, the company's Communications and Computing segment remained relatively flat, with strength in data center networking and servers offsetting weakness in wireless communications.
Outlook
Looking ahead, Lattice expects revenue for the third quarter of fiscal 2024 to be between $117 million and $137 million, with a non-GAAP gross margin of 69% plus or minus 1%. The company's guidance reflects its continued focus on navigating the near-term industry headwinds while investing in its long-term product portfolio expansion.
Geographic Revenue Breakdown
Lattice's geographic revenue breakdown for the second quarter of fiscal 2024 was as follows: Asia (66.6%), Americas (19.0%), and Europe (14.4%). The company's diversified customer base and global reach have been instrumental in its ability to weather industry cycles and capitalize on emerging opportunities.
Recent Developments
One of the key drivers of Lattice's growth has been its focus on innovative programmable solutions, particularly in the areas of Edge Artificial Intelligence, wireless and wireline infrastructure, platform security, and factory automation. The company's Nexus and Avant product families have been instrumental in expanding its addressable market and deepening customer relationships.
Lattice's Avant family of mid-range FPGAs, for example, has more than doubled the company's market opportunity, opening up new avenues for growth in data networking, storage, and AI-enabled applications. The company has reported that 90% of Avant's target customers are already Lattice customers, leveraging the company's established software tools and solution stacks.
In addition to its product portfolio expansion, Lattice has also been actively investing in its software capabilities, with the goal of providing customers with comprehensive, easy-to-use solutions. The company's software strategy, which includes the development of solution stacks and software-enabled features, has been a key contributor to its gross margin expansion and customer loyalty.
Liquidity
Lattice's liquidity position remains strong, with $109,216,000 in cash and cash equivalents as of June 29, 2023. The company has a secured revolving loan facility of up to $350 million, providing additional financial flexibility to support its growth initiatives and strategic investments.
Conclusion
Despite the near-term industry headwinds, Lattice remains well-positioned for long-term success. The company's focus on innovative programmable solutions, software-enabled features, and customer-centric approach have been instrumental in driving its growth and profitability. As Lattice navigates the current inventory normalization cycle, the company's strong product pipeline, diversified customer base, and disciplined execution position it to capitalize on the emerging opportunities in its target markets.