Lattice Semiconductor Corporation

Greetings. Welcome to the Lateef Semiconductor Fourth Quarter 2022 earnings call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I'll now turn the conference over to your host, Rick Mouchet, Lateef's Director of Investor Relations. 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'll provide a financial and business review of the fourth quarter of 2022 and the business outlook for the first quarter of 2023. 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 that actual results may differ materially. We refer you to the documents of 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 first quarter of 2023. 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 provide reconciliations of these non-GAAP financial measures to GAAP financial measures that can be found on the investor relations section of our website at latticeemi.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. 2022 was a remarkable year for Lattice as we significantly expanded our product portfolio and delivered record financial results. Annual revenue grew by 28% driven by growth in our core strategic markets of industrial and automotive and communications and computing. Full year non-GAAP gross margin expanded by 590 basis points to a record 69.1%. And we delivered annual non-GAAP net income growth of 64% year over year. We also continue to expand our product portfolio with multiple hardware and software product launches, including a successful launch of our new Lattice Avant mid-range FPGA platform, which doubles the addressable market of the company. Let me now provide an overview of our business by end market. In the communications and computing market, full year revenue increased 26%, which is the fourth consecutive year of double digit growth for this market segment. We continue to have multiple long-term growth drivers in this segment, including content expansion and data center servers, new Greenfield client computing design rooms, 5G wireless infrastructure, and data center networking. Turning now to the industrial and automotive market, full-year revenue increased 41%, which is the third consecutive year of double-digit growth for this segment. We continue to see this market as a strong long-term growth opportunity for Lattice as our business continues to grow across multiple applications, such as industrial automation and robotics, as well as automotive ADAS and infotainment systems. Turning now to consumer, full year revenue is down 3%, reflecting the macroeconomic softness in the consumer electronics end market. Consumer accounted for only 7% of our overall revenue in 2022. I'll now provide some product roadmap highlights. Since the introduction of Lattice Nexus, we've launched five device families based on the platform. We have four device families in production and ramping with customers. The fifth device family, Mach XL5NX, which launched in the first half of 2022, remains on track to go into production in the first half of this year. We also expect to launch two additional Nexus device families this year. We continue to be pleased with the revenue ramp of our Nexus-based products as each new device family adds a new layer of revenue. We expect the overall Nexus portfolio revenue to continue to ramp over the next several years. In addition to the continued portfolio expansion of Nexus, we further expanded our product portfolio with the launch of our Lattice Avant platform. Avant doubles our addressable market and creates an additional greenfield revenue growth stream as Avant revenue ramps over the coming years. Our customers are excited about Avant, which offers up to two and a half times lower power, two times faster performance, and up to six times smaller physical device size than our competitors' FPGA devices. Each of these competitive advantages provide significant differentiation of value for our customers' applications and systems. Similarly to Nexus, the Avant platform will consist of a series of device families that will be launched over time. The first family, Avant-E, was launched in December, and we expect to launch two additional device families later this year. As we've discussed over the past few years, software is a key element of our strategy. The investments we've been making in our software portfolio are making it easier for our customers to adopt Lattice products and get to market quickly. We've launched five software solution stacks to date and have more on the roadmap. As we mentioned previously, over half of our new silicon design wins are now enabled by at least one of our five software solution stacks. This increases the value that we're delivering to our customers and the long-term stickiness of our products. Avant also leverages the same software that our customers are already using today on our Nexus products, which enables easy customer adoption of Avant. In summary, 2022 was another strong growth year for Lattice. We're well positioned in long-term secular growth markets with a rapidly expanding product portfolio, accelerating customer momentum, and consistent financial execution. I want to thank the Lattice team for all their hard work and dedication. As we begin 2023, while we're certainly not immune to any macroeconomic challenges impacting the industry, we're well positioned to execute on our long-term strategy and continue to focus on unlocking the full potential of the company. I'll now turn the call over to our CFO, Sherry Luther.