Lattice Semiconductor Corporation ((LSCC)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Lattice Semiconductor’s recent earnings call paints a picture of robust revenue growth, particularly in the communications and computing sectors, with a promising outlook for 2026. Despite facing challenges in the Industrial and Automotive segments, the company remains optimistic due to its strategic initiatives and strong bookings.
Strong Revenue Growth
In Q3 2025, Lattice Semiconductor reported a revenue increase of 7.6% quarter-on-quarter and 4.9% year-over-year, reaching $133.3 million. This marks the highest revenue in five quarters, underscoring the company’s strong performance and strategic execution.
Record Performance in Communications and Computing
The communications and computing segment achieved record growth, expanding 8% sequentially and 21% year-over-year. This impressive performance highlights the segment’s critical role in driving overall company growth.
Positive Outlook for 2026
Lattice Semiconductor’s guidance for Q4 2025 projects revenue at $143 million at the midpoint, representing a 22% year-on-year growth. Strong bookings and strategic initiatives bolster confidence in continued revenue growth through 2026.
Gross Margin Improvement
The company’s non-GAAP gross margin improved by 20 basis points quarter-over-quarter and 50 basis points year-over-year, reaching 69.5%. This improvement reflects effective cost management and operational efficiency.
Strong Free Cash Flow
Lattice reported an increase in GAAP net cash flow from operating activities to $47.1 million in Q3, up from $38.5 million in Q2, with a free cash flow margin of 25.5%. This strong cash flow supports the company’s strategic investments and growth initiatives.
Increased AI Adoption
AI adoption across Lattice’s product portfolio is expected to reach high teens in 2025 and mid-20s in 2026, indicating the company’s focus on innovation and future-ready technologies.
Industrial and Automotive Segment Challenges
The Industrial and Automotive segments face growth challenges due to strategic shifts aimed at normalizing channel inventory. However, the company expects normalization by the end of 2025, which should stabilize these segments.
Client Business Decline
The client business segment presents a significant headwind, impacting overall growth. Addressing this decline is crucial for maintaining the company’s growth trajectory.
Automotive Market Weakness
The automotive segment remains small, with no significant tailwinds except in China. This highlights a need for strategic focus to capitalize on potential opportunities in this market.
Forward-Looking Guidance
For Q4 2025, Lattice Semiconductor projects revenue between $138 million and $148 million, with a midpoint indicating a 22% year-over-year increase. The company expects continued growth in the communications and computing segment, driven by AI-optimized servers and data center infrastructure. Gross margin is projected to remain around 69.5% on a non-GAAP basis, with EPS between $0.30 and $0.34. Lattice remains confident in its strategic positioning for 2026, supported by expanding AI usage and a robust innovation pipeline.
In summary, Lattice Semiconductor’s earnings call reflects a strong performance, particularly in the communications and computing sectors, with a positive outlook for future growth. Despite challenges in certain segments, the company’s strategic initiatives and robust bookings provide a solid foundation for continued success.