Lattice Semiconductor Corporation

Greetings and welcome to the Lattice Semiconductor's second quarter 2025 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 requires operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Rick Mouchet, Lattice Semiconductor's Vice President of Investor Relations. You may begin.

Thank you, Operator, and good afternoon, everyone. With me today are Ford Tamer, Lattice's CEO, and Lorenzo Flores, Lattice's CFO. We'll provide a financial and business review of the second quarter of 2025 and the business outlook for the third quarter of 2025. If you have not obtained a copy of our earnings press release, It can be found on our company website in the investor relations section at latissemi.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 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 containing our projections or forward-looking statements. This call includes and constitutes the company's official guidance for the third quarter of 2025. 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 our CEO, Ford Tamer.

Thank you, Rick, and thank you everyone for joining us on our call today. Let me begin by saying that Q2 was a solid quarter for Lattice, with results in line with expectations. We continue to execute our long-term strategy, leverage our competitive position, and expand our growth opportunities. We continue to see the adoption for Lattice products increasing across our core markets, demonstrated by our record level of design wins and expanded opportunities with our partners. At a high level, we delivered Q2 revenue of $124 million, up 3% over Q1, and flat with the year-ago period. Our non-GAAP gross margin remained strong at 69.3%, and our adjusted EBITDA expanded to 34.1%. We achieved these impressive results in an uncertain market, underscoring our continued discipline, execution, and strengths of our differentiated product portfolio. We exited Q2 with increased optimism about the market environment versus Q1. Our confidence is based on several factors. Communications and compute demand remains strong with normalized inventory and continued growth expected through the second half and beyond. Industrial and automotive continues to perform as expected. We believe we've passed the bottom with channel inventory levels decreasing as we continue to recognize revenue under channel point of sales outflows. We remain on track to be at normalized inventory level by year end, as we previously indicated. We expect the companionship opportunity will become an increasingly significant growth driver for us. We are seeing impactful growth opportunities from major design ways alongside AI accelerators and cloud data centers, wired communications, industrial robotics, ADAS, infotainment, and far-edge AI applications. And customer meetings throughout Q2 were energized to see how Lattice is increasingly enabling innovations for our customer strategic applications. A particular note was the recent successful Asia Tech Summit. We were able to engage with over 100 customers and showcase our leadership in low-power programmable innovation alongside key partners. We reinforced how Lattice FPGAs are complementary to ASICs and MCUs with a clear focus on Lattice's sweet spot in small to mid-range FPGAs. At that same conference, we highlighted our expanded role as a companionship in AI and other advanced use cases, supporting functions such as bridging, sensor fusion, and board management. In far-edge AI, our solutions are optimized for applications requiring less than one TOPS, operations per second, and under one watt of power. making them ideal for industrial and automotive deployments. We are also increasingly convinced of our value propositions in emerging areas like humanoids, industrial robotics, vision systems, and security. With respect to end markets in the second quarter of 2025, communications and computing grew 20% sequentially, which was Lattice's highest sequential growth for the segment in five years, and grew 26% on a year-over-year basis. Both subsegments were up double digits, both sequentially and year-over-year. The growth in computing is driven by our expanded footprint in both general-purpose and AI-optimized servers. And the growth in communications is primarily driven by related strengths in data center infrastructure, including network interface cards, switches, routers, and security appliances. In line with the macro market, our industrial and automotive segment declined sequentially as we continued to shift under true demand to normalize channel inventory. As I previously stated, we are confident we're past the bottom and we remain on track for channel inventory to be back to normal by end of this year. This is consistent with what we previously said. Please note that while automotive is slower to recover, it continues to be the much smaller portion of this segment. And with additional share gains in multiple applications, including smart factory, robotics, medical, and aerospace and defense, we expect industrial will again be a strong growth driver for Lattice in 2026. Finally, total revenue for our new products continues to grow at a strong rate, and we're on track to exceed our 2025 goal that we've discussed on prior earning calls. We are encouraged by this momentum, which reflects both the strength of our products and our deep customer relationships. Turning to Q3 guidance, we now expect $133 million in revenue at the midpoint, or 7.2 percent sequential growth, the largest we've achieved in three years. We also expect a continued improvement in channel inventory, strong gross margin with a 69.5 percent midpoint, and EPS of 28 cents at the midpoint, which is above current expectations. This shows the strength and leverage of our financial model, where normalized revenue delivers higher benefits to the bottom line. To summarize, we delivered another strong quarter in Q2, with broad-based growth across key financial metrics and record design wins. We executed well, stayed laser-focused on innovation, and deepened our customer engagement. The Lattice team is energized and committed to delivering on our long-term strategy. Our Q3 guidance reflects our expectation for strong growth in both revenue and profitability. As you can see, for the past four quarters, we told you what we were going to do, and we did what we said we would. And we are confident we can continue to do more of the same in the future. Let me now turn the call over to Lorenzo for a detailed review of our Q2 results. Lorenzo?