Lattice Semiconductor (LSCC) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $127.1 million, up 2% sequentially but down 34% year-over-year, in line with guidance and reflecting inventory normalization and disciplined execution.

• Gross margin remained stable at 69%, demonstrating resilience despite market softness.

• A 14% workforce and non-headcount OpEx reduction was implemented, incurring a $6.5M one-time GAAP charge; no further reductions are anticipated.

• Leadership transition with Dr. Ford Tamer appointed as CEO and Board member.

• Continued focus on expanding market share, product innovation, and robust design win momentum, especially in AI and server applications.

Financial highlights

• Q3 non-GAAP operating expenses were $54 million, flat sequentially and down 7% year-over-year; GAAP operating expenses rose due to restructuring.

• Q3 non-GAAP operating margin was 26.6%, while GAAP operating margin was 5.9%.

• Q3 non-GAAP EPS was $0.24, up from $0.23 in Q2; GAAP EPS was $0.05.

• EBITDA margin reached 33.7%, up 160 basis points sequentially.

• Operating cash flow more than doubled sequentially to $44 million; free cash flow margin rose to 31%.

Outlook and guidance

• Q4 2024 revenue expected between $112 million and $122 million.

• Q4 non-GAAP gross margin projected at 68% ±1%; OpEx between $52 million and $54 million.

• Q4 non-GAAP EPS expected in the range of $0.15–$0.23.

• 2025 revenue growth anticipated in the low single digits, with a U-shaped recovery and normalization of channel inventory by mid-2025.

• Long-term revenue growth target of 15%-20% reaffirmed for 2026.