Lattice Semiconductor Corp. (LSCC) - Q1 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended April 4, 2026 (Fiscal Q1 2026). Lattice Semiconductor Corporation is a leader in low-power programmable logic semiconductor products, serving markets including Compute, Communications, Industrial, and Embedded sectors. The company operates as a single reportable segment.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenue | $170.9 million | $120.2 million |
| Gross Margin | $117.6 million (68.8%) | $81.7 million (68.0%) |
| Operating Income | $26.1 million (15.3%) | $7.0 million (5.8%) |
| Net Income | $21.8 million | $5.0 million |
| Diluted EPS | $0.16 | $0.04 |
| Operating Cash Flow | $50.3 million | $31.9 million |
| Cash & Equivalents | $140.0 million | $127.6 million |
| Debt | $0 (No borrowings on $200M facility) | $0 |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 42% year-over-year, driven primarily by an 86% surge in the Compute and Communications end market (data center and AI servers) and a 71% increase in Asia revenue.
- Profitability Expansion: Operating margin expanded significantly from 5.8% to 15.3%, and Net Income increased 334% due to revenue growth and improved gross margins (up 80 basis points).
- Expense Increases: Operating expenses rose due to higher stock-based compensation ($28.1M vs $20.4M) and increased R&D spending ($50.8M vs $41.4M) to support new product development.
- Capital Allocation: The company repurchased $15.0 million of common stock (165,913 shares) under its 2026 Repurchase Program.
Guidance, Outlook, and Risks
- Strategic Acquisition: On May 4, 2026 (subsequent event), Lattice entered into an agreement to acquire AMI TopCo, Inc. for approximately $1.65 billion ($1B cash + $650M stock). Financing includes a new $950M term loan and $200M revolving facility.
- Market Outlook: Management expects AI-related revenue to grow over the next few years, citing a diverse pipeline of design wins in data centers, AI-enabled PCs, and robotics.
- Risks: Key risks include geopolitical tensions (specifically Taiwan/China relations), trade restrictions/tariffs, supply chain concentration (reliance on limited foundries), and the uncertainty of closing conditions for the AMI acquisition.
- Liquidity: The company maintains strong liquidity with $140M in cash and a $200M undrawn credit facility, deemed sufficient for the next 12 months.
Investor Verification Checklist
- AMI Acquisition Status: Verify the progress and closing conditions of the $1.65B AMI acquisition announced in May 2026.
- AI Revenue Contribution: Monitor the specific growth rate of AI-related revenue within the Compute and Communications segment to validate management's growth thesis.
- Stock-Based Compensation: Review the trajectory of stock-based compensation expenses, which increased significantly ($7.7M YoY) and may impact future operating margins.
- Geographic Concentration: Assess the impact of Greater China revenue (64% of total) on future performance given geopolitical risks.
- Inventory Levels: Track Days of Inventory on Hand (currently 151 days) to ensure it remains optimized as demand fluctuates.