Lattice Semi's Q3 Net Income Plunges 61% Amid Soaring Expenses

TL;DR

**Lattice Semi's Q3 profit dive is a red flag; rising expenses are eating into revenue gains, signaling a tough road ahead for margins.**

AI Summary

Lattice Semiconductor Corporation reported a mixed financial performance for the three and nine months ended September 27, 2025. For the three months, revenue increased to $133.35 million from $127.09 million in the prior year, a 4.9% rise. However, net income significantly decreased to $2.79 million, down 61.1% from $7.19 million in the same period of 2024. This decline was primarily driven by a substantial increase in operating expenses, which rose to $92.06 million from $80.16 million, a 14.8% increase. Research and development expenses climbed 19.9% to $49.63 million, and selling, general, and administrative expenses surged 33.6% to $41.40 million. For the nine-month period, revenue decreased by 3.7% to $377.47 million from $391.98 million, and net income plummeted 75.9% to $10.73 million from $44.62 million in the prior year. The company also saw a significant increase in stock-based compensation expense, which more than doubled to $80.23 million for the nine months ended September 27, 2025, compared to $38.31 million in the prior year.

Why It Matters

Lattice Semiconductor's significant drop in net income, despite a modest revenue increase in Q3, signals potential margin pressures and increased operational costs that could concern investors. The substantial rise in R&D and SG&A expenses, coupled with a more than doubling of stock-based compensation, suggests aggressive investment in future growth or potential inefficiencies, impacting profitability. This performance contrasts with competitors who might be managing expenses more effectively in a competitive semiconductor market. For employees, increased stock-based compensation could be a positive, but declining net income might raise long-term stability questions. Customers could benefit from increased R&D leading to new products, but the overall financial health is crucial for sustained innovation.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant decline in net income for both the three-month (down 61.1% to $2.79 million) and nine-month periods (down 75.9% to $10.73 million), despite a slight revenue increase in Q3. This is primarily driven by a substantial increase in operating expenses, including a 19.9% rise in R&D and a 33.6% increase in SG&A for the three months ended September 27, 2025, indicating potential challenges in cost management and profitability.

Analyst Insight

Investors should scrutinize Lattice Semiconductor's expense management strategies and the return on its increased R&D and SG&A investments. Await further clarity on how these investments are expected to translate into future revenue growth and improved profitability, as current trends show significant profit erosion despite revenue stability.

Financial Highlights

revenue

$133.35M

net Income

$2.79M

eps

$0.02

gross Margin

67.9%

cash Position

$117.91M

revenue Growth

+4.9%

Revenue Breakdown

Key Numbers

• $133.35M — Revenue (Q3 2025) (Increased from $127.09M in Q3 2024, a 4.9% rise.)
• $2.79M — Net Income (Q3 2025) (Decreased 61.1% from $7.19M in Q3 2024.)
• $92.06M — Total Operating Expenses (Q3 2025) (Increased 14.8% from $80.16M in Q3 2024.)
• $49.63M — Research and Development (Q3 2025) (Increased 19.9% from $41.40M in Q3 2024.)
• $41.40M — Selling, General, and Administrative (Q3 2025) (Increased 33.6% from $30.99M in Q3 2024.)
• $377.47M — Revenue (YTD 2025) (Decreased 3.7% from $391.98M in YTD 2024.)
• $10.73M — Net Income (YTD 2025) (Decreased 75.9% from $44.62M in YTD 2024.)
• $80.23M — Stock-based Compensation (YTD 2025) (More than doubled from $38.31M in YTD 2024.)
• 136,786,394 — Common Stock Outstanding (As of October 30, 2025.)

Key Players & Entities

• LATTICE SEMICONDUCTOR CORPORATION (company) — Registrant
• Nasdaq Global Select Market (company) — exchange where LSCC is registered
• SEC (regulator) — U.S. Securities and Exchange Commission
• Ukraine (country) — military conflict
• Russia (country) — military conflict
• Taiwan (country) — relations with China
• China (country) — relations with Taiwan
• Hillsboro, OR (location) — principal executive offices
• Bloomberg (company) — financial news outlet

FAQ

Risk Factors

• Increased Operating Expenses [high — operational]: Total operating expenses rose by 14.8% to $92.06 million in Q3 2025 from $80.16 million in Q3 2024. This was driven by a 19.9% increase in R&D to $49.63 million and a 33.6% surge in SG&A to $41.40 million.
• Declining Net Income [high — financial]: Net income for Q3 2025 fell 61.1% to $2.79 million from $7.19 million in Q3 2024. For the nine-month period, net income plummeted 75.9% to $10.73 million from $44.62 million.
• Significant Stock-Based Compensation Increase [medium — financial]: Stock-based compensation expense more than doubled to $80.23 million for the nine months ended September 27, 2025, compared to $38.31 million in the prior year, impacting profitability.
• Revenue Decline in Nine-Month Period [medium — market]: Despite a Q3 revenue increase, the year-to-date revenue for the nine months ended September 27, 2025, decreased by 3.7% to $377.47 million from $391.98 million in the prior year.
• Amortization of Acquired Intangible Assets Reduction [low — operational]: Amortization of acquired intangible assets decreased significantly from $2,609 thousand in the nine months of 2024 to $33 thousand in the nine months of 2025, indicating the completion of amortization for certain assets.
• Restructuring and Other Expense Reduction [low — operational]: Restructuring and other expenses decreased substantially from $11,182 thousand in the nine months of 2024 to $2,938 thousand in the nine months of 2025, suggesting fewer restructuring activities.

Industry Context

Lattice Semiconductor operates in the programmable logic semiconductor market, a segment characterized by innovation and demand for specialized solutions in areas like AI, automotive, and industrial applications. The industry is competitive, with companies focusing on differentiated product offerings and advanced technology to capture market share. Trends include increasing complexity of chip designs and a growing need for power-efficient solutions.

Regulatory Implications

As a publicly traded company, Lattice Semiconductor is subject to SEC regulations and U.S. GAAP reporting standards. Compliance with these regulations is crucial for maintaining investor confidence and market access. Any misstatements or failures in financial reporting could lead to regulatory scrutiny and penalties.

What Investors Should Do

1. Monitor operating expense trends closely.
2. Analyze the drivers of stock-based compensation.
3. Evaluate the sustainability of Q3 revenue growth.
4. Assess the company's competitive positioning and product roadmap.

Key Dates

• 2025-09-27: End of Q3 Fiscal 2025 — Reporting period for the latest financial results, showing increased revenue but significantly decreased net income.
• 2024-09-28: End of Q3 Fiscal 2024 — Prior year comparable period for Q3 results, showing higher net income and lower operating expenses.
• 2025-01-03: Expected End of Fiscal Year 2025 — The company's fiscal year is 53 weeks and ends on the Saturday closest to December 31.
• 2024-12-28: End of Fiscal Year 2024 — The prior fiscal year-end, used for balance sheet comparisons.

Glossary

Operating Expenses

Costs incurred by a business in its normal course of operations, excluding cost of goods sold. This includes R&D, SG&A, and other operating costs. (A significant increase in operating expenses, particularly R&D and SG&A, is a primary driver of the net income decline.)

Research and Development (R&D)

Expenses incurred by a company to develop new products or services, or to improve existing ones. (R&D expenses increased by 19.9% in Q3 2025, indicating continued investment in innovation, but contributing to higher overall operating costs.)

Selling, General, and Administrative (SG&A)

Costs associated with marketing, selling, and distributing a company's products, as well as general corporate overhead and administrative expenses. (SG&A expenses saw a substantial 33.6% increase in Q3 2025, significantly impacting profitability.)

Stock-based Compensation

Compensation provided to employees in the form of stock options or awards, rather than cash. (A more than doubling of stock-based compensation expense for the nine-month period is a major factor in the sharp decline in net income.)

Gross Margin

The difference between revenue and cost of revenue, expressed as a percentage of revenue. It indicates profitability before operating expenses. (Gross margin remained relatively stable, increasing slightly to 67.9% in Q3 2025 from 69.0% in Q3 2024, suggesting cost of revenue management was effective despite revenue changes.)

Net Income

The profit remaining after all expenses, including taxes and interest, have been deducted from revenue. (Net income experienced a severe decline in both the three-month and nine-month periods, driven by rising operating expenses and stock-based compensation.)

Year-Over-Year Comparison

Compared to the prior year, Lattice Semiconductor's Q3 2025 revenue saw a modest 4.9% increase to $133.35 million, but net income experienced a sharp 61.1% decline to $2.79 million. This was primarily due to a 14.8% rise in total operating expenses, with R&D up 19.9% and SG&A up 33.6%. For the nine-month period, revenue decreased 3.7% to $377.47 million, and net income plummeted 75.9% to $10.73 million, exacerbated by stock-based compensation more than doubling to $80.23 million.

Filing Documents

• lscc20250927_10q.htm (10-Q) — 1319KB
• ex_857382.htm (EX-31.1) — 12KB
• ex_857383.htm (EX-31.2) — 11KB
• ex_857384.htm (EX-32.1) — 5KB
• ex_857385.htm (EX-32.2) — 5KB
• latticelogocolorpmsa49.jpg (GRAPHIC) — 24KB
• 0001437749-25-032777.txt ( ) — 5857KB
• lscc-20250927.xsd (EX-101.SCH) — 53KB
• lscc-20250927_cal.xml (EX-101.CAL) — 43KB
• lscc-20250927_def.xml (EX-101.DEF) — 317KB
• lscc-20250927_lab.xml (EX-101.LAB) — 296KB
• lscc-20250927_pre.xml (EX-101.PRE) — 354KB
• lscc20250927_10q_htm.xml (XML) — 874KB

Financial Statements

Financial Statements 4 Consolidated Statements of Operations – Three and Nine Months Ended September 27, 2025 and September 28, 2024 (unaudited) 4 Consolidated Statements of Comprehensive Income – Three and Nine Months Ended September 27 , 2025 and September 28 , 2024 (unaudited) 5 Consolidated Balance Sheets – September 27 , 2025 and December 28, 2024 (unaudited) 6 Consolidated Statements of Cash Flows – Nine Months Ended September 27 , 2025 and September 28 , 2024 (unaudited) 7 Consolidated Statements of Stockholders' Equity – Three and Nine Months Ended September 27 , 2025 and September 28 , 2024 (unaudited) 8

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 10 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 19 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 26 Item 4.

Controls and Procedures

Controls and Procedures 26 PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 27 Item 1A.

Risk Factors

Risk Factors 27 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 27 Item 5. Other Information 28 Item 6. Exhibits 28

Signatures

Signatures 29 - 2 - Table of Contents Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements that involve estimates, assumptions, risks, and uncertainties. Any statements about our expectations, beliefs, plans, objectives, assumptions, or future events or performance are not historical facts and may be forward-looking. We use words or phrases such as "anticipate," "believe," "could," "estimate," "expect," "intend," "plan," "possible," "predict," "projects," "may," "will," "should," "continue," "ongoing," "future," "potential," and similar words or phrases to identify forward-looking statements. Forward-looking statements include, but are not limited to, statements about: our target or expected financial performance and our ability to achieve those results; the impact of increasing trade or travel restrictions or increasing tariffs on the export and import of products between the U.S. and other countries; the impact of tariffs, trade sanctions, license requirements or similar actions on our suppliers, distributors, channel partners, and customers, including the impact on the costs of our products, the products into which they are integrated, and the impact on demand due to costs and uncertainty; our significant reliance on a small number of distributors; the impact of inflationary pressures; future impacts of the ongoing military conflicts between Ukraine and Russia, and in the Middle East, and the outbreak of new, or expansion of current, military conflicts or terrorism; the impact of any deterioration in relations between Taiwan and China, and other factors affecting military, political, or economic conditions in Taiwan or elsewhere in Asia; our business strategy; our opportunities to increase our addressable market; our expectations and strategies regarding market trends and opportunities, including market drivers such as wireless and wireline communications infrastructure deployments, data center

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS LATTICE SEMICONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Three Months Ended Nine Months Ended September 27, September 28, September 27, September 28, (In thousands, except per share data) 2025 2024 2025 2024 Revenue $ 133,349 $ 127,091 $ 377,470 $ 391,982 Cost of revenue 42,822 39,403 120,464 123,335 Gross margin 90,527 87,688 257,006 268,647 Operating expenses: Research and development 49,633 41,398 134,550 120,722 Selling, general, and administrative 41,402 30,994 109,339 87,468 Amortization of acquired intangible assets 20 870 33 2,609 Restructuring and other 1,006 6,899 2,938 11,182 Total operating expenses 92,061 80,161 246,860 221,981 Income (loss) from operations ( 1,534 ) 7,527 10,146 46,666 Interest income (expense), net 602 936 2,268 3,176 Other income (expense), net ( 22 ) ( 249 ) ( 305 ) ( 41 ) Income (loss) before income taxes ( 954 ) 8,214 12,109 49,801 Income tax expense (benefit) ( 3,748 ) 1,024 1,380 5,184 Net income $ 2,794 $ 7,190 $ 10,729 $ 44,617 Net income per share: Basic $ 0.02 $ 0.05 $ 0.08 $ 0.32 Diluted $ 0.02 $ 0.05 $ 0.08 $ 0.32 Shares used in per share calculations: Basic 136,877 137,709 137,224 137,577 Diluted 138,103 137,894 138,069 138,274 See Accompanying Notes to Unaudited Consolidated Financial Statements. - 4 - Table of Contents LATTICE SEMICONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) Three Months Ended Nine Months Ended September 27, September 28, September 27, September 28, (In thousands) 2025 2024 2025 2024 Net income $ 2,794 $ 7,190 $ 10,729 $ 44,617 Other comprehensive income (loss): Translation adjustment ( 515 ) 758 388 ( 12 ) Change in actuarial valuation of de

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 1 - Basis of Presentation Lattice Semiconductor Corporation and its subsidiaries ("Lattice," the "Company," "we," "us," or "our") develop technologies that we monetize through differentiated programmable logic semiconductor products, silicon-enabling products, system solutions, design services, and technology licenses. Basis of Presentation and Use of Estimates The accompanying Consolidated Financial Statements are unaudited and have been prepared in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP") and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). In our opinion, they include all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of results for the interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted by the SEC's rules and regulations for interim reporting. These Consolidated Financial Statements should be read in conjunction with our audited financial statements and notes thereto included in our Annual Report on Form 10 -K for the year ended December 28, 2024 (" 2024 10 -K"). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments affecting the amounts reported in our consolidated condensed financial statements and the accompanying notes. We base our estimates and judgments on historical experience, knowledge of current conditions, and our beliefs of what could occur in the future considering available information. While we believe that our estimates, assumptions, and judgments are reasonable, they are based on information available when made, and because of the uncertainty inherent in these matters, the actual results that we experience may differ materially from these estimates un

View Full Filing

View this 10-Q filing on SEC EDGAR