Lattice Semiconductor Corporation ((LSCC)) has held its Q4 earnings call. Read on for the main highlights of the call.
Maximize Your Portfolio with Data Driven Insights:
- Leverage the power of TipRanks' Smart Score, a data-driven tool to help you uncover top performing stocks and make informed investment decisions.
- Monitor your stock picks and compare them to top Wall Street Analysts' recommendations with Your Smart Portfolio
Lattice Semiconductor’s recent earnings call painted a picture of resilience amidst challenges, demonstrating strong new product growth and strategic leadership enhancements. Despite these positive developments, the company faced significant hurdles, including revenue declines and challenges related to inventory normalization and one-time charges.
Successful Leadership and Team Expansion
Lattice Semiconductor has bolstered its executive team by appointing Lorenzo Flores as CFO, Nicole Singer as Chief People Officer, and promoting Erhaan Shaikh to Senior Vice President of Worldwide Sales. This strategic expansion is expected to drive significant growth for the company, enhancing its leadership capabilities and aligning with its long-term objectives.
New Product Momentum with Nexus and Avant
The company’s new products, Nexus and Avant, have shown remarkable growth, with revenue increasing by double digits in 2024 compared to the previous year. These products have become more integral to Lattice’s revenue streams, shifting from a single-digit to a mid-teens percentage of total revenue, underscoring their growing importance in the company’s portfolio.
Growth in Computing Segment
The computing subsegment has experienced notable growth, with design wins reaching unprecedented levels in 2024. This growth is primarily driven by strong demand in the server market, especially in AI and general-purpose servers, highlighting Lattice’s ability to capitalize on industry trends.
Positive Financial Metrics
Lattice demonstrated strong financial performance with an EBITDA margin of 31.8% for 2024 and a Q4 adjusted EBITDA margin of 24.9%. The announcement of a $100 million share buyback for 2025 further underscores the company’s commitment to delivering shareholder value.
Encouraging Signs of Market Recovery
For the first time in six quarters, Lattice reported a book-to-bill ratio exceeding one, indicating a shift towards a positive trend where orders surpass shipments. This development suggests potential recovery in the market, offering a promising outlook for future growth.
Decline in Revenue
Despite positive trends in some areas, Lattice experienced a decline in revenue, with Q4 2024 figures at $117.4 million, marking an 8% sequential drop and a 31% decrease year-over-year. The full-year revenue for 2024 stood at $509.4 million, reflecting a similar 31% decline from 2023.
Inventory Normalization Challenges
Challenges with inventory normalization affected both the communications and computing, and industrial and automotive segments. These segments saw declines of 5% and 9%, respectively, as the company worked to align its inventory levels with market demand.
One-Time Financial Charges
Lattice incurred a $7 million one-time charge that impacted the non-GAAP gross margin. This charge was due to materials purchased during previous supply constraints, which are no longer expected to be used before expiration, affecting financial performance.
Workforce Reduction
In response to current business conditions, Lattice implemented a 14% reduction in workforce. This measure aims to align resources with business levels and drive double-digit earnings growth in 2025, positioning the company for future success.
Forward-Looking Guidance
Looking ahead to the first quarter of 2025, Lattice Semiconductor anticipates revenues between $115 million and $125 million, with a non-GAAP gross margin of 69% ± 1%. Operating expenses are expected to range from $50 million to $52 million, and non-GAAP EPS is projected to be between $0.20 and $0.24 per share. The company is optimistic about a positive book-to-bill ratio, indicating stronger customer demand and backlog. Lattice targets low single-digit revenue growth in 2025, with plans to achieve a 15% to 20% long-term growth rate by 2026, alongside channel inventory normalization by mid-2025.
In conclusion, Lattice Semiconductor’s earnings call highlighted a mixed sentiment, with notable advancements in product development and leadership, tempered by revenue declines and inventory challenges. The company’s forward-looking guidance suggests cautious optimism, with strategic initiatives aimed at sustainable growth.
