Lattice Semiconductor Q4 and FY 2023 Earnings

The News: Lattice Semiconductor announced earnings for the fourth quarter (Q4) and full year (FY) ending December 30, 2023. Lattice, the low power programmable leader, solves customer problems from the edge to the cloud, focusing on the growing communications, computing, industrial, automotive, and consumer markets. Read the press release on the Lattice website.

Lattice Semiconductor Q4 and FY 2023 Earnings Reveal Record Revenue

Analyst Take: Lattice Semiconductor recently released its earnings report for Q4 and FY 2023, ending December 30, 2023. Lattice is an industry leader in low power Field Programmable Gate Array (FPGA) technology and other devices. Its products enable developers to drive innovation and reduce development time in multiple applications such as communications, compute, consumer, automotive and industrial. FPGAs are ideally suited for today’s fastest growing applications, such as edge computing, AI, system security, 5G, factory automation, and robotics. Lattice focuses on the growing communications, computing, industrial, automotive, and consumer markets.

Sherri Luther, CFO, said, “We achieved operating margin of 28.8% on a GAAP basis and a record 39.8% on a non-GAAP basis for the full year 2023, with gross margin expanding to 69.8% on a GAAP basis and 70.4% on a non-GAAP basis. We generated a record level of cash flow from operations in 2023, representing a 13% increase compared to the prior year, and exited the year with zero outstanding debt. In addition, in the fourth quarter, we repurchased approximately 900,000 shares, representing our thirteenth consecutive quarter of share repurchases.”

Additional 2023 highlights include:

Increase in revenue: Lattice experienced a 12% increase in revenue for the full year compared with 2022, slightly below its revenue target.
Expanded repurchase program: Lattice Board of Directors authorized an expanded $250 million share repurchase program through the end of 2024. The company has repurchased a total of approximately 4.8 million shares over the past 13 quarters of consecutive share repurchases.
Inaugural Developers Conference: Lattice’s inaugural developers conference had over 5,000 registrations, 35 sessions, over 40 technology demonstrations, and featured keynote addresses from customers including BMW, Meta, and NVIDIA.
Collaboration with NVIDIA: Lattice announced a new collaboration with NVIDIA to accelerate the development of high-performance edge AI applications using Lattice Nexus and NVIDIA Jetson Orin and IGX Orin platforms.
Over 30 Industry Awards: During 2023, Lattice received over 30 industry awards, including the Global Semiconductor Alliance’s Most Respected Semiconductor Company for the fourth consecutive year and Best Financially Managed Semiconductor Company. In March, Lattice received two Artificial Intelligence Excellence Awards from The Business Intelligence Group. The Lattice Avant FPGA platform and Lattice sensAI solution stack were recognized in the Vehicle Infrastructure Integration and Computer Vision categories for solving key customer challenges around adding intelligence to edge systems and applications.

Lattice earnings by the numbers:

Q4 2023 revenue: $170.6 million
Q4 2023 GAAP and non-GAAP gross margin: 69.7% and 70.4%, respectively
GAAP and non-GAAP net income per diluted share: $0.71 and $0.45, respectively
FY 2023 Revenue: $737.2 million
FY 2023 GAAP and non-GAAP gross margin: 69.8% and 70.4%, respectively
FY 2023 GAAP and non-GAAP net income per diluted share: $1.85 and $2.01

2024 Q4 Financial Outlook

According to Lattice, revenue for Q1 2024 is expected to be between $130 million and $150 million. It expects the gross margin percentage for Q1 2024 to be 69% plus or minus 1% on a non-GAAP basis. In addition, total operating expenses for Q1 2024 are expected to be between $54 million and $56 million on a non-GAAP basis.

Jim Anderson, president and CEO, said, “We achieved double-digit annual revenue growth in 2023, with record gross margin and continued profit expansion. Despite near-term cyclical industry headwinds, we continue to be well positioned for the long-term with a rapidly expanding product portfolio and strong customer momentum.”

Continued Improvement

In the end, Lattice finished the year strong despite coming in slightly below its revenue target. Overall, 2023 was a record year for the company with strength in margin and the continued diversification in its FPGA lineup. According to IDC’s latest research, the semiconductor industry is poised for a new wave of growth driven by an exploding global demand for AI and high-performance computing, coupled with stabilizing demand for smartphones, personal computers, infrastructure, and resilient automotive sector growth. I believe this growth, as well as the development of clear AI content revenue streams, bodes well for continued earnings improvement as the year continues.

Daniel Newman and his co-host of The Six Five Webcast, Patrick Moorhead of Moor Insights and Strategy discusses Lattice’s earnings in their latest episode. Check it out here and be sure to subscribe to The Six Five Webcast so you never miss an episode.

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Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.