PORTLAND, Ore. -- Nov. 7, 2017-- Lattice Semiconductor Corporation (NASDAQ:LSCC), the leading provider of customizable smart connectivity solutions, announced financial results today for the fiscal third quarter ended September 30, 2017.
The Company reported revenue for the third quarter of 2017 of $92.0 million, which decreased 2.3% sequentially, as compared to the second quarter 2017 revenue of $94.1 million, and decreased 18.8%, as compared to the third quarter 2016 revenue of $113.2 million.
Gross margin on a GAAP basis was 58.0% for the third quarter of 2017, as compared to the second quarter of 2017 gross margin of 54.4% and 59.5% for the third quarter of 2016. Gross margin for the third quarter of 2017 was 58.1% on a non-GAAP basis, as compared to 54.6% for the second quarter of 2017 and 59.8% for the third quarter of 2016.
Total operating expenses for the third quarter of 2017 were $90.8 million on a GAAP basis, including an intangible asset impairment charge of $36.2 million, as compared to $59.9 million for the second quarter of 2017 and $73.4 million for the third quarter of 2016. Total operating expenses were $44.6 million for the third quarter of 2017 on a non-GAAP basis, as compared to $46.0 million for the second quarter of 2017, and $52.9 million for the third quarter of 2016.
GAAP net loss for the third quarter of 2017 was $43.1 million ($0.35 per basic and diluted share), as compared to a net loss on a GAAP basis in the prior quarter of $13.0 million ($0.11 per basic and diluted share), and a net loss on a GAAP basis in the year ago period of $12.4 million ($0.10 per basic and diluted share). Non-GAAP net income for the third quarter of 2017 was $5.3 million ($0.04 per basic and diluted share), as compared to $0.1 million ($0.00 per basic and diluted share) in the prior quarter, and $5.9 million ($0.05 per basic and diluted share) in the year ago period. For a reconciliation of U.S. GAAP to Non-GAAP please see the table titled, “Reconciliation of U.S. GAAP to Non-GAAP Financial Measures” provided as part of this press release.
Darin G. Billerbeck, President and Chief Executive Officer, said, "Product revenue increased in our three core markets in the third quarter of 2017 as compared to the second quarter of 2017. Our core business continues to grow while we invest in new solutions for opportunities at the edge of the cloud -- opportunities that perfectly align to Lattice's technology and strategy. While our IP and services were down, growth in our silicon revenue offset a majority of this decline. We expect to exit the year leveraging our core business stability and new design wins to take advantage of the significant growth opportunities in front of us. We will continue to execute on our plan to drive OpEx lower as we focus on generating higher free cash flow to pay down our debt and invest into areas of strength."
Max Downing, Chief Financial Officer, added, "We are seeing positive results from the decisive actions we took to reduce operating expenses and to maximize profitability. In-line with our plan, we completed the sale of our Shanghai building in the quarter, which resulted in a gain on the sale of $4.6 million. We also took an intangible asset impairment charge of $36.2 million related to our previously announced strategic decision to cease future investment in wired application specific standard product development as we concentrate our resources on higher potential growth opportunities. In addition to the headcount and spin-out actions, we have a number of other cost structure improvements that are well underway and expected to benefit us in 2018, putting us on track to deliver additional improved financial results. We ended the third quarter of 2017 with approximately $108 million in cash and investments, up meaningfully from approximately $85 million in the second quarter of 2017."
Recent Business Highlights
- CrossLink Adds Modular IP Cores to Support Intelligence at the Edge Applications: Lattice announced the availability of seven new modular IP cores for its award winning CrossLink FPGA product for increased design flexibility to support consumer, industrial and automotive applications. These modular IP cores offer the building blocks for customers to create their own unique video bridging solutions. Announced in May 2016, the CrossLink product was designed to address barriers faced by the increasingly complex and dynamic video market. Lattice equipped designers with a new way to deliver low power and compact bridging solutions without compromising performance to deliver cutting-edge innovations for multiple growth markets including automotive, AR/VR and drones. The new IP cores add to an already robust suite of tools to support quickly evolving intelligence at the edge applications.
- Continued Success and Leadership in AR and VR Applications: Guangdong Virtual Reality Technology Co., Ltd. (Ximmerse), a provider of interaction systems for mobile AR/VR applications, selected Lattice’s low power, small form factor ECP5™ FPGA to perform stereo vision computing in their AR/VR tracking platform. Lattice’s market-leading ECP5 FPGAs are ideal for flexible connectivity and acceleration at the edge due to their low power, small form factor and low cost, delivering an energy-efficient, low latency solution.
- Launched Solution to Expedite Embedded Vision Design and Prototyping: Lattice’s first-of-its-kind development kit combines its CrossLink™ video bridging FPGA, ECP5™ processing FPGA and high-resolution HDMI® ASSP into a single, modular platform, along with Helion’s pre-packaged ISP options. This provides a complete hardware and software solution to expedite the development of advanced applications at the edge, including embedded vision applications in Industry 4.0 applications, robotics, drones, automotive, AR and intelligent cameras for smart cities.
- Lattice's iCE40 FPGA Enables Low Latency and Concurrent Sensor Processing in SteamVR Tracking: Valve selected Lattice’s low power and low cost iCE40™ FPGA to enable concurrent data capture and processing for its SteamVR™ Tracking. As a low power and low latency sensor hub on the SteamVR tracking platform, Lattice’s iCE40 FPGA significantly reduces the number of signals that need to be routed from the sensors to the applications processor (AP) / microcontrollers (MCUs) on the printed circuit board (PCB), which in turn reduces EMI emissions, PCB congestion and improves signal integrity.
Business Outlook - Fourth Quarter 2017*:
- Revenue for the fourth quarter of 2017 is expected to be between approximately $92 million and $97 million.
- Gross margin percentage for the fourth quarter of 2017 is expected to be approximately 56% plus or minus 2% on both a GAAP and non-GAAP basis.
- Total operating expenses are expected to be between approximately $53 million and $55 million on a GAAP basis and between approximately $43 million and $45 million on a non-GAAP basis.
* For a reconciliation of GAAP to non-GAAP business outlook, see accompanying tables "Reconciliation of U.S. GAAP to Non-GAAP Financial Measures."
Investor Conference Call / Webcast Details:
Lattice Semiconductor will review the Company's financial results for the third quarter of 2017 and business outlook for the fourth quarter of 2017 on Tuesday, November 7 at 5:00 p.m. Eastern Time. The conference call-in number is 1-888-684-5603 or 1-918-398-4852 with conference identification number 51993386. An accompanying presentation and live webcast of the conference call will also be available on Lattice's website at www.latticesemi.com. The Company's financial guidance will be limited to the comments on its public quarterly earnings call and the public business outlook statements contained in this press release.
A replay of the call will be available approximately 2 hours after the conclusion of the live call through 11:59 p.m. Eastern Time on November 21, 2017, by telephone at 1-404-537-3406. To access the replay, use conference identification number 5199386. A webcast replay will also be available on the investor relations section of www.latticesemi.com.
To read financial tables, click here
About Lattice Semiconductor Corporation:
Lattice Semiconductor Corporation (NASDAQ:LSCC) is a leader in smart connectivity solutions at the network edge, where the “things” of IoT live. Our low power FPGA, 60 GHz millimeter wave, video ASSP and IP products deliver edge intelligence, edge connectivity, and control solutions to the consumer, communications, industrial, compute, and automotive markets. Our unwavering commitment to our global customers enables them to accelerate their innovation, creating an ever better and more connected world.
For more information about Lattice please visit www.latticesemi.com.