Lattice Semiconductor Corporation (LSCC) Earnings & Analysis

Latest quarter

Lattice reported Q2 FY2026 revenue of $201.1 million, above the $185.1 million consensus. Adjusted earnings per share were $0.53, also above the $0.44 consensus. Revenue rose 62.2% from a year earlier, when it was $124.0 million.

The company’s filing attributed Compute and Communications growth to demand for data center applications, including servers and networking components. It linked Industrial and Embedded growth to recovering demand, particularly from industrial and aerospace customers.

Gross margin rose to 70.3% from 68.4%. The filing attributed the increase primarily to product mix and volume, partly offset by higher stock-based compensation expense. Operating margin increased to 11.1% from 3.80%, while diluted earnings per share rose to $0.14 from $0.02. Lattice reported free cash flow of $62.2 million, compared with $27.0 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Fouad Tamer said demand for Lattice’s programmable chips was being fueled by data center spending, more AI content per server, increasing security requirements and more complex architectures. He also described a recovery in Industrial and Embedded, with design wins beginning to ramp in applications including industrial automation, aerospace, medical devices and robotics.

Tamer said bookings had accelerated and backlog extended into 2027. In the question-and-answer session, he said 2027 was “pretty much booked” and that Lattice was arranging capacity commitments with suppliers and customers.

On supply, Tamer said assembly constraints were affecting the industry. Lattice was putting capacity agreements in place and qualifying new capacity, which he expected to bring supply and demand into line by September. He said costs and expedite fees were rising and that Lattice would absorb some increases and pass some on to customers.

CFO Lorenzo Flores said Q2 non-GAAP gross margin benefited from product and customer mix. He attributed the sequential increase in non-GAAP operating expense primarily to continued research and development investment, with performance bonuses and commissions also contributing. For Q3, he said most of the expected operating-expense growth would be in research and development.

Tamer said the recently closed AMI acquisition adds firmware and infrastructure-management capabilities. Flores said AMI earns revenue from licensing, subscriptions, maintenance, royalties and platform enablement services. He expects AMI to exit a low-margin hardware pass-through business by the end of 2026, while retaining its royalty stream.

Asked about the combined business model, Flores said Lattice continued to invest and expected improved margins over time as revenue grew. He also said the companies were beginning to develop joint solutions, but had yet to quantify their potential contribution to AMI’s growth.

Guidance

Tamer said Lattice now expects new products to exceed 25.0% of total revenue in 2026, above the high end of its earlier guided range. He also said the combined Lattice and AMI business had reached its annualized revenue run-rate goal in the Q3 guide, a quarter earlier than previously expected.