Lattice Semiconductor Corporation

Greetings and welcome to Lattice Semiconductor Third Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rick Mouchet, Senior Director of Investor Relations. Thank you. You may begin.

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 will provide a financial and business review of the third quarter of 2022 and the business outlook for the fourth quarter of 2022. 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 latticesemi.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 the next results may differ materially. We refer you to 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 containing our projections or forward-looking statements. This call includes and constitutes the company's official guidance for the fourth quarter of 2022. 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. We will refer primarily to non-GAAP financial measures during this call. 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. 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 lattice-semi.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. We delivered strong results in Q3 with record quarterly revenue, which grew 31% year over year, and non-GAAP net income growth of 68% year over year. We're very pleased with the growth in our current product portfolio, and we're excited about the launch of our newest FPGA platform, Lattice Avant, on December 5th. Avant will double our addressable market and create new greenfield revenue opportunities for Lattice. Let me touch on a few Q3 highlights. In addition to the strong revenue growth, we expanded non-GAAP gross margin by 590 basis points year over year to a record 69.5%. We achieved record non-GAAP operating profit of 39.7%, which was an increase of 930 basis points year over year. And we continued to expand our roadmap with the introduction of an automotive version of our Sirtis Pro NX. Let me now provide an overview of our business by end market. In the communications and computing market, revenue was roughly flat sequentially and up 26% on a year-over-year basis. We remain on track to deliver our fourth consecutive year of double-digit growth for this segment. The three key long-term growth drivers in this segment continue to be content expansion in data center servers, new greenfield client computing design wins, and growth in 5G wireless infrastructure. Turning now to the industrial and automotive market, revenue increased 15% sequentially and was up 45% on a year-over-year basis. We expect this to be our third consecutive year of double-digit revenue growth in this segment. We continue to see this market as a strong long-term growth opportunity for Lattice as we address growing applications in industrial automation and robotics, as well as automotive, ADAS, and infotainment systems. Turning now to consumer, revenue declined 11% sequentially and was down 13% year-over-year, reflecting macroeconomic softness in the consumer electronics end market. Given that consumer represents only 6% of our total revenue in Q3, the revenue decline in consumer was more than offset by growth in our other segments. I'll now provide some product roadmap highlights. I'm pleased that in our most recent quarter, we launched an automotive version of our Certus Pro NX family, with market leading power efficiency, performance, and small form factor. This new product based on our Nexus platform adds to our solutions that are optimized for the automotive market, which we continue to see as a long-term revenue driver for the company. In addition to our leadership position with Nexus, we're looking forward to further expanding our product portfolio with the launch of our Lattice Avant platform. Avant will double our addressable market and will create new greenfield revenue opportunities for Lattice. We're excited to share more details at the upcoming Avant launch event. Turning now to our software strategy, we've been increasing investment in our software portfolio over the past few years. These investments are focused on making it easy for our customers to adopt Lattice products and get to market quickly. As we mentioned on our last earnings call, over half of our new silicon design wins are now enabled by at least one of our five software solution stacks. Avant will also leverage the same software that our customers are using today on our current products. In summary, while we recognize there are macroeconomic headwinds and we continue to watch demand signals very carefully, we're pleased with our continued progress and the growth of our existing product portfolio, including the continued ramp of our Nexus platform. In addition, we're excited about the launch of our new Avant platform and the continued expansion of our product portfolio. I'll now turn the call over to our CFO, Sherry Luther.