Lattice Semiconductor(LSCC) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Fourth quarter 2024 revenue was $117.4 million, down 8$509.4 million, down 31% from 2023, with a strong EBITDA margin of 31.8% [24][35] - Non-GAAP gross margin for Q4 was 62.1%, which would have been 68.1% without a $7 million one-time charge [36] - Non-GAAP operating expenses for Q4 were$52.8 million, down 2% sequentially and down 5% year-over-year [37] - Non-GAAP EPS for Q4 was $0.15, which would have been$0.20 without the one-time charge [40] Business Line Data and Key Metrics Changes - The computing subsegment grew in 2024, while communications and industrial automotive segments declined by double digits [35][24] - Revenue from new products, including Nexus and Avant, grew double digits in 2024 compared to 2023 [25] Market Data and Key Metrics Changes - Communications and computing markets saw a 5% sequential decline, while industrial automotive was down 9% [22] - The book-to-bill ratio has been over one for the past few weeks, indicating improvement in customer consumption [21] Company Strategy and Development Direction - The company is focusing on leveraging trends such as AI, increasing ASIC and ASSP development costs, and the need for programmability in emerging applications like post-quantum cryptography [15][16][17] - The company aims for long-term revenue growth targets of 15% to 20% in 2026 and beyond, supported by new product launches and design wins [28][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a U-shaped recovery in 2025, with expectations for low single-digit revenue growth compared to 2024 [28][30] - The company is encouraged by improvements in customer consumption and a stronger backlog, indicating positive trends for the coming quarters [20][21] Other Important Information - The company announced a $100 million share buyback for 2025, continuing its commitment to return capital to shareholders [43] - The new R&D center in Pune, India, is expected to enhance the company's capabilities and support local and global customers [66][68] Q&A Session Summary Question: Are there particular end-markets performing better than others? - Management noted improvements in industrial automotive and communications sectors, with expectations for all segments to grow into Q1 [50][54] Question: What are the trends in communications and computing segments? - Management indicated that communications showed slight strength in Q4 compared to Q3, while computing remained strong [56][54] Question: Where is demand picking up in the automotive segment? - Demand is increasing across various applications, including infotainment, ADAS, and electrification [60] Question: What is the outlook for inventory levels? - Management expects to bring inventory down to the midpoint of the target range by mid-year 2025, with positive trends in consumption and demand [98][99] Question: How much of the server and computing business is driven by content gains? - Management reported a 50% increase in content from one generation to the next, indicating strong growth in the server segment [114] Question: What is the company's strategy regarding post-quantum cryptography? - The company is the only one with a solution for post-quantum cryptography and is seeing rapid adoption among major Tier 1 OEMs [138][140] Question: How does the company plan to balance OpEx and R&D spending? - Management is focused on maintaining financial discipline while ramping up R&D in lower-cost geographies to capture market opportunities [145][144]