Lattice Semiconductor 2025 Q1 Earnings Misses Targets as Net Income Declines 66.1%

Lattice Semiconductor (LSCC) reported its fiscal 2025 Q1 earnings on May 5th, 2025. The company missed expectations with a significant decline in net income, which dropped by 66.1% compared to the previous year. The earnings results were accompanied by a cautious outlook for the second quarter, reflecting concerns over potential tariff impacts and ongoing macroeconomic uncertainties. Despite these challenges, the company maintained its focus on operational efficiency and growth within its core market segments.

Revenue

Lattice Semiconductor experienced a 14.7% decline in total revenue for Q1 2025, decreasing to $120.15 million from $140.81 million in Q1 2024. Revenue from the Communications and Computing segment was $57.43 million, while the Industrial and Automotive segment contributed $52.16 million. The Consumer segment generated $10.55 million, rounding out the total revenue for the quarter.

Earnings/Net Income

Lattice Semiconductor's earnings per share fell significantly by 63.6%, down to $0.04 in Q1 2025 from $0.11 in Q1 2024. The company's net income also saw a substantial decline, reaching $5.02 million in Q1 2025, a 66.1% drop from $14.80 million in the previous year. This performance indicates a challenging quarter for the company.

Price Action

The stock price of Lattice Semiconductor has edged up 1.92% during the latest trading day, has climbed 7.15% during the most recent full trading week, and has edged up 2.42% month-to-date.

Post-Earnings Price Action Review

The strategy of purchasing Lattice Semiconductor (LSCC) shares post-earnings release and holding them for 30 days has delivered robust returns over the past five years, achieving a 109.63% return that notably outperformed the benchmark. Despite this impressive performance, the strategy's Sharpe ratio stood at a modest 0.46, suggesting moderate risk-adjusted returns. The strategy also faced a maximum drawdown of -33.79% during periods of volatility, underscoring the need for effective risk management. With a compound annual growth rate (CAGR) of 16.97% and a volatility rate of 36.58%, the strategy has shown resilience but at the cost of considerable volatility. These factors highlight the importance of careful consideration for investors following this approach.

CEO Commentary

Ford Tamer, Chief Executive Officer, highlighted that Lattice Semiconductor is navigating a period of "historic volatility and uncertainty," but has not yet seen material impacts from new tariffs. He emphasized the company's focus on operational efficiency and shareholder value while executing its product roadmap. Tamer noted improved design win rates and growth in new product revenue, forecasting a strong performance in communication and computing sectors. He expressed optimism about the company’s position in industrial and automotive markets, stating, "Lattice is uniquely positioned to help enable the next wave of innovation," but acknowledged caution regarding the second half of the year due to macroeconomic factors.

Guidance

For Q2 2025, Lattice Semiconductor expects revenue to range between $118.5 million and $128.5 million, with a non-GAAP gross margin of 69% plus or minus 1%. The company anticipates total operating expenses to be between $50.5 million and $52.5 million, along with a non-GAAP net income per share expected to be between $0.22 and $0.26. Tamer noted a cautious outlook for the second half due to tariff uncertainties while maintaining optimism about continued revenue and profitability growth.

Additional News

In recent developments, Lattice Semiconductor has announced a strategic expansion of its board of directors, appointing two new members with extensive experience in the semiconductor industry. This move aims to strengthen the company's governance and strategic oversight as it navigates current market challenges. Additionally, Lattice Semiconductor has initiated a share buyback program, authorizing the repurchase of up to $50 million worth of shares. This decision underscores the company's commitment to enhancing shareholder value. Meanwhile, the company continues to focus on its innovation pipeline, particularly in the areas of low-power solutions and security enhancements for emerging technologies.