Lattice Semiconductor Reports 14.7% Revenue Decline in Q1 Fiscal 2025

Lattice Semiconductor Corporation reported a decline in financial performance for the first quarter of fiscal 2025, with revenue totaling $120.2 million, down 14.7% from $140.8 million in the same period last year. The company's net income also decreased significantly, falling to $5.0 million, or $0.04 per diluted share, compared to $14.8 million, or $0.11 per diluted share, in the prior year. The gross margin for the quarter was $81.7 million, representing a gross margin percentage of 68.0%, slightly down from 68.3% in the previous year.

The decrease in revenue was attributed to a combination of factors, including a 31% decline in the Industrial and Automotive segment, which was primarily due to softer market demand and ongoing inventory normalization by customers. In contrast, revenue from the Communications and Computing segment increased by 5%, driven by stronger demand in data center applications. The company noted that revenue from distributors accounted for 79% of total revenue, down from 87% in the prior year, indicating a shift in sales dynamics.

Operationally, Lattice Semiconductor has made strategic adjustments, including a focus on research and development, which saw expenses rise to $41.4 million, up 2% from the previous year. This increase was largely due to higher stock-based compensation. Selling, general, and administrative expenses decreased by 9.2% to $33.1 million, reflecting lower legal expenses. The company also reported a reduction in restructuring costs, which fell to $241,000 from $1.7 million in the prior year, indicating a decrease in workforce-related expenses.

In terms of cash flow, Lattice generated $31.9 million from operating activities, an increase from $29.5 million in the same quarter last year. However, cash and cash equivalents decreased by 6.4% to $127.6 million, primarily due to cash used in financing activities, including a $25 million stock repurchase program. The company repurchased approximately 394,000 shares during the quarter, leaving approximately $75 million remaining under its repurchase authorization.

Looking ahead, Lattice Semiconductor anticipates continued challenges due to global economic conditions, including inflationary pressures and geopolitical tensions. The company remains focused on expanding its addressable market, particularly in AI-related applications, and expects to see growth in this area over the coming years. Despite the current downturn, Lattice is committed to investing in research and development to drive innovation and maintain its competitive edge in the semiconductor industry.