Lattice Semiconductor Reports Disappointing Q4 FY2023 Results, Misses Sales Expectations
Lattice Semiconductor (NASDAQ:LSCC) reported disappointing Q4 FY2023 results, with a 3% decline in revenue to $170.6 million, missing sales expectations. The company’s guidance for Q1 2024, forecasting revenue of $140 million, fell significantly short of analyst predictions, deviating by 19.7%. However, Lattice Semiconductor managed to achieve a stable non-GAAP earnings per share (EPS) of $0.45, reflecting a slight decrease from the previous year’s same quarter.
Jim Anderson, the president and CEO, highlighted the company’s accomplishments, including double-digit annual revenue growth in 2023, record gross margins, and continued profit expansion. Anderson emphasized Lattice Semiconductor’s strong positioning for long-term success, driven by an expanding product portfolio and strong customer momentum.
Lattice Semiconductor is well-known for its customer-programmable chips that enhance CPU performance for machine learning and other tasks. The company has experienced robust average annual revenue growth of 22.2% over the past three years. However, this quarter marked a shift to negative growth, with revenue falling from $176 million in the previous year’s quarter to $170.6 million. This decline is a common occurrence in the cyclical nature of the semiconductor industry, indicating a potential contraction after periods of high growth.
One concerning sign is the increase in Inventory Days Outstanding (DIO) from 164 to 174, suggesting rising inventory levels. This can be a signal of weakening demand, requiring potential adjustments in production.
Despite the challenges faced in the fourth quarter, including revenue shortfalls and a bleak outlook for the next quarter, Lattice Semiconductor’s long-term fundamentals remain strong. The company has demonstrated sustained revenue growth throughout 2023 and has strategically expanded its product portfolio. However, investors reacted negatively to the quarterly performance, resulting in a 7% decline in the stock price. The current trading price stands at $66 per share.
Analyst comment
The news is predominantly negative. The decline in revenue and shortfall in sales expectations for Q4 FY2023, along with the significantly lower revenue forecast for Q1 2024, indicate market challenges. However, the company’s stable non-GAAP earnings per share and strong long-term fundamentals provide hope for recovery. The increase in Inventory Days Outstanding suggests weakening demand and may necessitate adjustments in production. As a result, the market is expected to experience some contraction in the near term.
