Lattice Semiconductor Corporation ((LSCC)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Lattice Semiconductor Corporation’s recent earnings call for Q2 2025 was marked by a strong performance, particularly in the Communications and Compute segments, and a positive outlook for Q3. Despite facing challenges in the Industrial and Automotive segments, the overall sentiment was buoyant, driven by record design wins and robust financial metrics.
Record Design Wins and Growth Opportunities
Lattice Semiconductor achieved record levels of design wins, expanding its opportunities with major partners, especially in the Communications and Compute segments. The company is optimistic about growth prospects stemming from these significant design wins, particularly with AI accelerators in cloud data centers and industrial robotics, which are expected to drive impactful growth.
Strong Q2 Financial Performance
In Q2, Lattice reported revenue of $124 million, marking a 3% increase from Q1 and remaining flat year-over-year. The company demonstrated strong financial health with a non-GAAP gross margin of 69.3% and an adjusted EBITDA that expanded to 34.1%, underscoring its solid financial performance.
Communications and Compute Segment Surge
The Communications and Compute segment experienced remarkable growth, increasing by 20% sequentially and 26% year-over-year. This surge represents the highest growth for this segment in five years, highlighting the company’s successful strategies in these areas.
Strong Free Cash Flow and Capital Allocation
Lattice’s financial strength was further evidenced by an increase in GAAP net cash flow from operating activities to $38.5 million. The company also reported free cash flow of $31.3 million with a 25.2% margin, up from $23.3 million in Q1. Additionally, Lattice repurchased $46 million of common stock during the quarter, reflecting its commitment to returning value to shareholders.
Industrial and Automotive Segment Decline
The Industrial and Automotive segment saw a sequential decline as Lattice continues to ship under true demand to normalize channel inventory. Although the automotive sector is slower to recover, it remains a smaller portion of the segment, with expectations for recovery by the end of the year.
Inventory Normalization Challenge
Lattice is actively working on normalizing inventory levels in the Industrial and Automotive segments. The company expects to achieve this by the end of the year, which should help stabilize these segments moving forward.
Positive Outlook for Q3 2025
Looking ahead, Lattice projects Q3 2025 revenue to reach $133 million at the midpoint, representing a 7.2% sequential growth, the largest in three years. The company anticipates a gross margin improvement to 69.5% at the midpoint, with EPS expected to be $0.28, surpassing current expectations. Lattice remains optimistic about long-term growth, targeting a return to 15%-20% revenue growth in 2026.
In summary, Lattice Semiconductor’s Q2 2025 earnings call conveyed a positive sentiment, driven by strong performance in key segments and a promising outlook for the future. With record design wins and strategic growth opportunities, the company is well-positioned for continued success, despite challenges in the Industrial and Automotive segments.