Lattice Semi Q1 EPS beats by $0.04, revenue up 42%

Lattice Semiconductor reported first-quarter earnings and revenue that beat consensus on Saturday, as demand for its low-power programmable chips from data-centre and AI server makers drove a 42 per cent jump in year-over-year revenue. The stock gained 1.08 per cent in aftermarket trading and added 2.14 per cent in the premarket session to reach $122.49, within sight of its 52-week high of $127.95.

The Hillsboro, Oregon-based company posted non-GAAP earnings of $0.41 per share for the quarter ended March, exceeding the consensus estimate of $0.37 by 10.81 per cent. Revenue reached $170.9m, topping the $164.89m analysts had pencilled in, according to data compiled by Investing.com. Gross margin widened 100 basis points to 70.0 per cent, while operating margin expanded 370 basis points to 34.4 per cent. Net earnings grew 86 per cent from the same quarter a year earlier, outpacing revenue growth. Chief executive Ford Tamer described the spread as “the operating leverage in our model.”

The Compute and Communications segment, which covers server and networking FPGA shipments, delivered record revenue and accounted for 62 per cent of total sales, growing 86 per cent year over year. Server revenue is on track to reach 38 per cent of total company revenue in 2026, up from the teens two years ago. AI-related revenue is projected to hit 25 per cent of the total. The Industrial and Embedded unit, which now includes the former consumer business, rose 21 per cent sequentially on improving factory automation, robotics, and medical equipment demand. Channel inventory fell from three months to about two months and the company expects it to drop below two months in the current quarter, a level last seen before a ten-quarter growth cycle. Free cash flow was $39.7m, down from $44m in the fourth quarter on annual bonus payouts and revenue linearity. CFO Lorenzo Flores told analysts the company expects “a strong recovery of cash flow as we continue to grow.”

For the second quarter, Lattice guided revenue of $175m to $195m, a midpoint of $185m that implies roughly 50 per cent year-over-year growth, and non-GAAP EPS of $0.42 to $0.46. The midpoint EPS of $0.44 represents about 80 per cent growth from the prior year. Gross margin is expected to hold at 70 per cent ±1 percentage point, while operating expense is guided to $64m to $67m as the company invests in research and development to capture what Tamer described as “the early innings of a multi-year growth cycle.”

The company also announced a definitive agreement to acquire AMI, a firmware and platform management software provider, for $1.65bn, comprising $1bn in cash and $650m in equity. The deal, expected to close in the third quarter, will be immediately accretive to gross margin, free cash flow, and non-GAAP EPS, Flores said. AMI generates about $200m in annual revenue with an asset-light, high-margin profile, and expands Lattice’s addressable market from $6bn to an estimated $12bn over the next three to four years. Tamer said the combined entity would create “the industry’s most comprehensive, secure management and control platform” and projected the standalone Lattice business would surpass a $1bn annual revenue run rate by the end of 2026.

With bookings extending well into 2027 and cash of $140m against zero debt, Tamer told analysts the company enters the second half with “high confidence” in sustained above-market growth. “This is the seventh earnings call since I joined Lattice. I hope we have now demonstrated that we consistently say what we do and do what we say,” he said.