LATTICE SEMICONDUCTOR CORP Q4 FY2024 earnings call

• Ford Tamer returned from customer and partner meetings across regions, inaugurated new R&D site in Pune, India, and held successful Developers Conference with 6,000 registrants. • Announced new executive hires: Lorenzo Flores as CFO, Nicole Singer as Chief People Officer, and promoted Erhaan Shaikh. • Made progress in resource realignment, including cleaning up a material liability. • Q4 revenue was $117.4 million, full year 2024 revenue $509.4 million with 31.8% EBITDA margin. • New products like Nexus and Avant expanded leadership in small-to-mid range FPGA segments with connectivity, performance, security, and reliability features.

Fourth quarter 2024 revenue was $117.4 million, in-line with guidance. Full year 2024 revenue was $509.4 million. The computing subsegment grew in 2024. New products including Nexus and Avant had double-digit revenue growth in 2024 compared to 2023. Communications and computing segments saw sequential declines due to inventory normalization, while industrial automotive also declined. The computing subsegment was strong, driven by server applications with multiple FPGAs per server.

• Expect Q1 EPS above current consensus estimate. • Anticipate low single-digit revenue growth for full year 2025. • Expect channel inventory to move back to midpoint of target range, enabling long-term revenue growth target of 15% to 20% in 2026 and beyond.

• Actual results may differ materially from forward-looking statements due to risk factors in SEC filings. • Challenges with inventory normalization and market recovery uncertainties could impact performance.

Q: Any particular end-markets performing better and how much Lattice specific vs channel inventory progress?

A: Ford Tamer mentioned three factors: channel inventory progress, taking share via design wins, and improvements across industrial automotive and communication sectors.

Q: Trends in comms and computing subsegments?

A: Ford Tamer said comms and compute percent was similar to prior quarter, slight increase in comms, slight decrease in industrial/auto, with automotive showing recovery in Q4.

Q: Demand in automotive segment, electrification vs ADAS?

A: Ford Tamer said Lattice is in various automotive applications like infotainment, display, ADAS, charging, and sees automotive as a long-term growth driver with FPGAs near sensors for far Edge AI.

Q: R&D center in India opportunity?

A: Ford Tamer said R&D center in Pune has great skill set, supports local and global customers, and is part of expanding operations.

Q: Interest in acquisitions in low-to-mid range FPGA segments?

A: Ford Tamer said focus is on small-to-mid range FPGA segments as they are growing faster, but open to broadening portfolio in a differentiated way.

Q: New products in networking and AI with FPGAs?

A: Ford Tamer said Lattice works with partners in networking and AI on reference designs, focuses on far Edge near sensor applications with low power, fast boot time, and small size.

Q: AI driving shorter system design cycles impact on products?

A: Ford Tamer said shorter design cycles make FPGAs suitable for auxillary functions in older processes, with evidence from developer conference.

Q: Inventory commentary and target?

A: Tonya Stevens and Ford Tamer said inventory is being brought down to midpoint of target range, expecting market recovery to reach midpoint by mid-2025.

Q: Server and computing revenue drivers?

A: Ford Tamer said computing revenue grew due to server applications with multiple FPGAs per rack in data centers, strong across security, IO expansion, bridging, and control test functions.

Q: Avant and Nexus revenue contribution?

A: Ford Tamer said Avant and Nexus were mid-teens in revenue contribution, up from single digits in 2023, showing growth from new products.

Q: Post-quantum cryptography and Lattice's benefit?

A: Ford Tamer said Lattice is the only one with a solution for post-quantum cryptography, adopted widely by customers, with examples from Microsoft keynote at developers conference.

Q: OpEx and R&D spend?

A: Ford Tamer and Tonya Stevens said they are aggressively hiring in international locations like Pune, India, to transform OpEx and maintain R&D investment while controlling costs.