Lattice Semiconductor Corporation

Welcome everyone to the Lattice Semiconductor 2021 conference call. I would now turn the call over to Rick Mechet, Director of Investor Relations.

Thank you, Operator, and good afternoon, everyone. With me today are Jim Anderson, Lattice's President and CEO, and Sherry Luther, Lattice's CFO. We'll provide a financial and business review for the first quarter of 2021 and the business outlook for the second quarter of 2021. If you have not obtained a copy of our earnings press release, it can be found at our company website in the investor relations section at lettucesemline.com. I would like to remind everyone that during our conference call today, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution you that such statements are predictions based on information that is currently available and that actual results may differ materially. We refer you to the documents that the company files with the SEC, including our 10-Ks, 10-Qs, and 8-Ks. These documents contain and identify important risk factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements. This call includes and constitutes the company's official guidance for the second quarter of 2021. If at any time after this call we communicate any material changes to this guidance, we intend that such updates will be done using a public forum, such as a press release or publicly announced conference call. Some financial information that we present during the call will be provided on both a GAAP and a non-GAAP basis. By disclosing certain non-GAAP information, management intends to provide investors with additional information to permit further analysis of the company's performance and underlying trends. Management uses non-GAAP measures to better assess operating performance and to establish operational goals. For historical periods, we provided reconciliations of these non-GAAP financial measures to GAAP financial measures that can be found on the investor relations section of our website at LatticeSemi.com. Let me now turn the call over to Jim Anderson, our CEO.

Thank you, Rick, and thank you, everyone, for joining us on our call today. I'm very pleased with our strong results in Q1 as we continue to execute to our strategy, drive product leadership, and deliver shareholder value. Let me start by covering a few highlights from Q1 of 2021. We grew revenue 19% year-over-year with continued double-digit year-over-year growth in our two largest segments of communications and computing in industrial and automotive, which represent over 80% of our total revenue. We also grew revenue sequentially by 8% with sequential growth in each of our key market segments. In particular, we're pleased to see a second quarter of sequential growth in our consumer segment. We expanded non-GAAP gross margin by 190 basis points year over year as we continue to execute on our gross margin expansion strategy. We achieved record non-GAAP operating profit of 28%, while non-GAAP net income increased 52% year over year. And we've delivered sequential growth from our Lattice Nexus platform with our second device family, CertiCenter NX, entering production in the quarter. Let me now provide an overview of our business buy-in market. In the communications and computing market, revenue increased 7% sequentially and 28% on a year-over-year basis. Our key growth drivers remain data center servers, client computing, and 5G infrastructure. In servers, growth was driven by expansion of both attach rates and ASPs as we continue to drive an increase in Lattice's dollar content per server. In client computing, as we've discussed in prior earnings calls, we continue to ramp new client computing platforms that began production in 2020. In 5G infrastructure, we're benefiting from ongoing deployments with higher revenue both sequentially and year-over-year. We continue to see communications and computing as a long-term growth driver given its multiple growth vectors. Turning now to industrial and automotive market, revenue increased 9% sequentially and was up 20% on a year-over-year basis. Q1 growth in the industrial segment reflects consistently strong customer adoption in a broad range of applications, including industrial automation and robotics. As the digital transformation in industrial and automotive applications continues to accelerate, the Lattice product portfolio is well-positioned for sustained long-term growth. Turning now to consumer, revenue increased 14% sequentially, our second consecutive quarter of sequential growth, and was down 6% year over year. The revenue base in consumer has begun to reflect the results of our strategic shift to applications with multi-year revenue streams and higher margins, and where our solutions are enabling customers to differentiate their products. I'll now provide some product roadmap highlights. I continue to be very pleased with our team's execution. Since the launch of Nexus at the end of 2019, we've launched three device families based on the platform. Crosslink NX, the first device family from Nexus platform, achieved first revenue in Q4 of 2020 within 12 months after launch and grew sequentially in Q1. Also, Certus NX, the second device family from the Nexus platform, began production in Q1, and our third Nexus device family, Mach NX, which launched at the end of last year, remains on track to generate revenue towards the end of this year. We continue to be pleased with the broad adoption of our Nexus platform across all our market segments, where the power efficiency and faster performance are helping our customers differentiate their applications and systems. Software remains an integral part of our strategy as well, and we continue to develop a portfolio of higher-level software solutions that make it easy for our customers to adopt Lattice products and get to market quickly. During the quarter, we expanded the capabilities and improved the performance of two of our award-winning software stacks, mVision, focused on embedded vision applications, and Sentry, for platform security applications. In summary, we're very pleased with the strong revenue growth and profit expansion and continued execution of our product roadmap. We're excited to be entering a new growth phase for Lattice and look forward to sharing more of our future plans at our investor day next week. I'll now turn the call over to our CFO, Sherry Luther.