Q3 2021 Lattice Semiconductor Corp Earnings Call
Okay.
Ladies and gentlemen, welcome to the lattice Semiconductor's third quarter 2021 earnings conference call.
Lines are in a listen only mode. We will open up questions. After managements prepared comments to ask a question press star one on your telephone keypad.
I would now turn the call over to Mr. A rec machine lattice is director of Investor Relations. Please go ahead.
Thank you operator, and good afternoon, everyone with me today are Jim Anderson, <unk>, President and CEO and Sherri Luther <unk> CFO will provide a financial and business review of the third quarter of 2021, and the business outlook for the fourth quarter of 2021.
Yes.
If you have not obtained a copy of our earnings press release. It can be found at our company website in the Investor Relations section of that is semi dot com.
I'd like to remind everyone that during our conference call today, we may make projections or other forward looking statements regarding future events or the future financial performance of the company.
We wish to caution you that such statements are predictions based on information that is currently available.
Results may differ materially.
We refer you to the documents that the company files with the SEC, including our 10, Ks 10, Qs and eight Ks. These documents contain and identify important risk factors that could cause the actual results to differ materially from those contained in our projections or forward looking statements.
This call includes and constitutes the company's official guidance for the fourth quarter of 2021.
At any time after this call we communicate any material changes to this guidance, we intend that such updates will be done using a public forum such as a press release or publicly announced conference call.
Some financial information that we presented during the call will be provided on both a GAAP and a non-GAAP basis by disclosing certain non-GAAP information management intends to provide investors with additional information to permit further analysis of the company's performance and underlying trends.
Management uses non-GAAP measures to better assess operating performance and to establish operational goals for historical periods. We provided reconciliations of these non-GAAP financial measures to GAAP financial measures that can be found on the Investor Relations section of our website that let us semi dot com.
Let me now I'll turn the call over to Jim Anderson, our CEO.
Thank you Rick and thank you everyone for joining us on our call today I am pleased with our strong results in Q3, as we delivered double digit year over year revenue growth driven by our expanding product portfolio and multiple growth vectors across our end markets.
Let me start by covering a few highlights from Q3 of 2021.
We grew revenue, 20% year over year, and 5% sequentially with double digit year over year growth in each of our three market segments. We expanded non-GAAP gross margin by 210 basis points year over year to a record 63, 6% as we continue to execute on our gross margin expansion strategy.
We achieved record non-GAAP operating profit of 34%.
In addition, we drove 49% year over year increase in non-GAAP net income.
And we continue to expand our hardware and software capabilities with new product enhancements.
Let me now provide an overview of our business by end market.
In the communications and computing market revenue increased 6% sequentially and 26% on a year over year basis as we've highlighted previously our key long term growth drivers in this segment into our data center servers client computing and <unk> infrastructure.
In servers growth continues to be driven by expansion in both attach rate in ESP as we continued to drive an increase in our dollar content per server with each new server generation.
In client computing growth is driven by the ramp of customer programs that started last year and it continued into this year.
In addition, we are engaged with customers on new programs that will generate revenue in the coming quarters. Lastly, we were pleased with our growth in <unk> infrastructure in Q3, <unk> continues to be deployed worldwide.
Turning now to the industrial and automotive market revenue increased 3% sequentially and was up 40% on a year over year basis Q3 growth in the industrial segment reflects strong customer adoption in a broad range of applications, including industrial automation and robotics, where laddish solutions provide significant.
Competitive advantages for our customers.
We've recently seen an accelerated rate of customer adoption and conversion to lattice devices used in this segment.
Combination in power efficiency performance flexibility and software content makes our device as a natural fit for the industrial market as.
And as the digital transformation industrial and automotive applications continues our product portfolio is well positioned for sustained long term growth.
Turning now to consumer revenue was up 1% sequentially and was up 25% year over year.
As we've discussed previously our focus is on applications with multiyear revenue streams and higher margins, where our solutions are enabling customers to differentiate their products.
I'll now provide some product roadmap highlights.
I continue to be pleased with our team's execution on our product roadmap since the launch of lattice Nexus. We've launched four device families based on the platform. The first two device families crossing Ken IX and <unk> are already in production and ramping with customers.
Our third Nexus device family mechanics remains on track to generate revenue towards the end of this year.
<unk> the fourth device family.
Launch in June and is expected to go into production next year <unk> is significantly better power efficiency best in class system bandwidth and a much smaller footprint than our competition.
We continue to be pleased with the broad adoption of our nexus platform across all our market segments.
We're also excited about our upcoming Atlanta Savant platform that we announced at our Investor day in May.
Ivan will double our addressable market and allow us to address mid range FPGA applications customer engagement and momentum continues to grow and execution is going well.
We remain on track for launch in the second half of next year.
As we've discussed over the past few years software is a key component of our strategy, we have been increasing organic investment in our software portfolio not just the development environment, but increasing the investment in our application specific solution stacks as well.
For example, during Q3, we further enhanced the capabilities and performance of envision Our award winning solution stack focused on embedded vision applications. These investments are focused on making it easier for our customers to adopt flattish products and get to market quickly.
In summary, we're pleased with the strong revenue growth and profit expansion and we continue to make solid progress on our expanding product portfolio.
Now I'll turn the call over to our CFO Sherri Luther.
Thank you Jim we are pleased with our strong Q3 financial results as we continue to execute to our financial model.
We go strong sequential and year over year revenue growth significantly expanded gross margin and delivered record profitability, while continuing to invest in our leadership product roadmap.
We got a strong cash generation and continued to return cash to shareholders. Let me now provide a summary of our Q3 results.
Third quarter revenue was $131 9 million up 5% sequentially from the second quarter and up 28% year over year.
Revenue grew double digit year over year in all three of our end markets with sequential growth as well.
Revenue was down year over year was up on a sequential basis.
Gross margin on a GAAP basis was up 150 basis point to 62, 8% in Q3 compared to the prior quarter and was up 230 basis points compared to the year ago quarter.
Our non-GAAP gross margin increased 150 basis points to a record 63, 6% in Q3 compared to the prior quarter and was up 210 basis points compared to the year ago quarter.
Both the sequential and year over year increases in gross margin continued to be driven by our margin expansion strategy.
On a sequential basis, we also benefited from higher IP revenue.
Q3, GAAP operating expenses were $55 8 million compared to $53 9 million in the prior quarter and $49 5 million in the year ago quarter.
On a non-GAAP basis operating expenses were $43 8 million compared to $41 5 million in the prior quarter and $36 million in the year ago quarter.
Our R&D expenses increased sequentially as we continue to invest in our product portfolio.
Q3, GAAP earnings per basic share was <unk> 20, and 19 cents per diluted share compared to 16 and 15 in the prior quarter and nine in the year ago quarter.
Q3, non-GAAP earnings per basic share was 29, and 28 cents per diluted share, which increased from 26 and 25 in the prior quarter and increased from 20 and 19 in the year ago quarter.
This represents 49% year over year growth for non-GAAP earnings per diluted share.
Driving cash flow generation continues to be a key focus area for the company.
We generated $45 million in cash from operations in Q3 and $116 million through the first nine months of 2021.
This is up approximately 70% compared to the cash generated from operations through the first nine months of 2020.
In Q3, we repurchased approximately 250000 shares or $15 million in stock under our buyback program.
This brings our year to date total of stock repurchase to $55 million. Finally, our Q3, ending cash balance was $182 million.
Let me now review our outlook for the fourth quarter.
Revenue for the fourth quarter of 2021 is expected to be between $129 million and $139 million.
Gross margin is expected to be 64% plus or minus 1% on a non-GAAP basis.
Total operating expenses for the fourth quarter are expected to be between $44 million and $46 million on a non-GAAP basis.
We are focused on continuing to drive sustained revenue growth and profit expansion led by the strength and differentiation of our leadership product roadmap.
Operator that concludes my formal comments, we can now open the call for questions.
And at this time, if you would like to ask any questions. Just press star one on your telephone keypad to withdraw your question just press the pound key we'll pause for just a moment to compile the Q&A roster.
And your first question comes from the line of Alex Vecchi from William Blair. Your line is open.
Hello, everyone. Congratulations on another impressive quarter I guess to start I'll hit on what should we use this imaginative but the impressive gross margin results you guys really hit it out of the park. There can you maybe give a little more color into maybe some of the mix or within that.
Each end market for certain products that that lifted the overall gross margin given that as a percentage of revenue the end markets with relatively stable and maybe comment on if you've been able to sort of raise prices or pushed through on the increased costs from from the constraints out there.
Yeah. Thanks, Alex so from a gross margin perspective, we're actually really pleased with the results for the quarter a record 63, 6%, a 150 basis point sequential improvement and 210 basis points improvement year over year.
It's really coming from our gross margin expansion strategy that we.
I talked about at our Investor Day earlier, this year end and actually that we have put in place back in 2019, as we continued to execute primarily on pricing optimization. In Q3 is where you saw a lot of the benefit coming from and really strengthen and in all of our markets driving that gross margin improvement.
When you look at QR, our Q4 guide at the midpoint that reflects again sequential improvement in gross margin from a gross margin expansion strategy and as we drive towards our long term target model that we laid out a 65%.
Perfect that's helpful.
And then just in terms of industry supply constrained.
It looks like inventory dollars were roughly flat in days were also roughly flat.
Can you maybe comment on if you're seeing sort of any.
The slower growth there because you're unable to meet sort of customer demand or I know you guys did a good job back in April of really sort of building up inventory in front of Covid.
But maybe if you could touch on that a little bit.
Yeah, Thanks, Alex so on.
On supply constraints, yes, certainly the industry wide, there's certainly supply chain tightness and of course, we're not immune to that.
But I do think our supply chain team has been doing a really good job navigating the environment and supporting our customers and if you remember last year, we actually proactively build strategic inventory to get ahead of the potential supply chain tightness. We started doing that in Q2 of last year, and we and we grew.
Through our lattice inventory in Q2, Q3, and Q4 of last year and that that.
Tori build last year, certainly helped us navigate and stuff.
The current environment and support our customers well this year and another there may be.
In particular.
Particular silicon package combinations that are tight.
Tight in terms of supply for us, but in general I think again, our team continues to do a good job supporting our customers I think our customers would agree with that.
That as well, but hopefully that's a little bit of color Alex.
And that's very helpful with that I'll go back in queue.
Thanks, Alex.
And your next question comes from the line of Tristan <unk> from Baird. Your line is open.
Hi, good afternoon.
Quick follow up question on the gross margin so.
Is your price optimization strategy benefiting from the current tightness in supply is it helping or is it completely separate and if the current environment continues should we start thinking about a potential longer term for yoga with smaller <unk> to be similar to that of high density of Ppas.
And finally are you deemphasizing any product that you consider either legacy or no margin.
Given the tightness in supply that could also help with the mix. Thank you.
Yeah. Thanks, Kristen so first of all on the pricing.
Remember, we've had a pricing optimization strategy that we put in place back at the beginning of 2019. So that's almost three years now we've had that strategy.
And again, that's really focused on.
View it is making sure that we're pricing our products correctly in the marketplace for the value and the differentiation that they bring to our customers.
And I would say the current supply chain constraints.
Kind of irregardless of that we've been driving that pricing optimization strategy, but certainly in the current environment. It makes it even a little bit easier no doubt.
On the second part of your question around I think.
If you are getting at gross margin target over time as you remember from the May Investor day that we did earlier this year.
We put a target out of 65% certainly now we're focused on driving towards that 65% gross margin target when we get to that target and we will take a look at.
If theres, a new target for us to set for ourselves, but in the meantime, we're focused on making progress towards our gross margin target as COO.
Quickly as we can on the I think the third part of your question was around are we deemphasizing any lower margin product.
Yes, that's not the case, what we're trying to do is make sure that we're supporting all of our customers and making sure. We're meeting demand for for all of our customers across all of our end markets. So yes, not deemphasizing any particular products.
Okay, great that's very useful.
Just a quick follow up.
How much of the momentum you're seeing is coming from that.
Some nexus and any touch point, you could give us on where that could be as a percent of revenue exiting next year.
Yeah. Thanks, Kristen so nexus certainly a contributor to the growth that we're seeing this year, we're quite pleased with our revenue growth for the first three quarters here of the year this quarter being 28%.
Year over year in Q3, and Nexus is certainly a contributor to that although our pre nexus products are driving growth as well just as a reminder, on kind of where we're at in the Nexus ramp is we've.
Launched for Nexus device families. The first two which is crossing connex and <unk>. Those are already entered production had been ramping nicely.
Into production and then we have a third device that goes into production towards the end of this year, that's <unk> X and then the fourth device. We launched earlier this year that will start.
Generate production revenue next year so.
All of that those products executing on track, we're pleased with the revenue ramp they're contributing to growth. This year and we would certainly expect them to contribute to growth next year as well.
Great. Thanks again.
And your next question comes from the line of Pat Melissa Smith for Rosenblatt. Your line is open.
Thanks, Congratulations team.
Sure.
On your side of the business.
You guys are not raising prices.
Input costs are going up, but you're not passing that onto customers is that correct.
Yeah. So.
Thanks for the question so the way that we're looking at it if it makes sense for us to pass it onto customers. Then then we will.
But if you recall, we have gross margin expansion strategy for pricing optimization. We've we've had that underway. Since 2019. So we've got a number of initiatives underway where that kick in at various points in time.
So you can really get the value for our products. So that's really what we're focused on getting the value for our products.
From our customers, yes, and the only thing I would add so certainly if we see a higher.
Product costs will certainly seek to pass that along to our customers as well.
Okay, and then as a follow on Jim on these new Nexus products.
Is the incremental design activity better than the previous generation product is that one way to look at it and then if you can give us the granularity on.
What's the interest level over the past quarter is it.
Can just give us some subjective commentary that'd be helpful. Thanks.
And I think sense, yes, so on Nexus I definitely the design momentum is much stronger than prior product generations. In fact, I think probably our strongest platform launch of an FPGA ever or certainly within the last decade for the company and our sales team as you can imagine very happy right now.
Now they're in.
In terms of the design win progress on Nexus multiple new families that we've launched in.
We're still seeing very strong customer engagement and design win momentum actually across each one of our our market segments. And then you asked about a bond to we're really excited about that the execution is going very well.
We're continuing to execute towards that target launch in the second half of next year and then on customer momentum there as well customer amendment are very strong as we shared earlier this year over 100 customers engaged in the bond some many of our large strategic customers engaged since <unk> inception.
And so yes, we're really excited about that the engineering team is executing well and the sales team is very busy engaged with many customers and working on many different design wins.
Okay. Thank you.
And your next question comes from the line of Matt Ramsay from Cowen Your line is open.
Thank you very much good afternoon.
I guess, Jim I wanted to ask a couple of questions about some particular end market that you guys are exposed to it.
And no doubt driving some of the growth Youre seeing in the model. The first one is in the data center space.
It looks like.
Comms and computing businesses up.
25% or so year over year, which is a great number and.
The reason I'm, bringing it up is we talked a number of times over the years about the.
Content expansion that you guys expected going from.
Grand Lido, partly to Whitley at Intel when they wouldn't the majority of the market and you have.
Genoa from AMD, and Sapphire Rapids on the Eagle stream platform and Intel coming.
In the next several quarters, so both big vendors upgrading systems at the same time, maybe you could give us a little color on what you're expecting there from a lattice opportunity standpoint.
Yeah.
Yes, sure thing expand the server space or a data center in general this is Ben.
Really strong growth area for us for actually several years now and definitely a contributor to the strong growth. We saw in the most recent quarter the 26% year over year growth. Although I will note really quickly not just servers grew for us.
In Q3, but so did our client.
Revenue as well as <unk> revenue with us, which also fall in that category, but on servers.
What our focus has always been is to with each new server generation to increase our dollars of content per server, so that with each new server generation. We've got more dollar footprint on that server across all of our customers and we've been able to do that over multiple generations.
And certainly focused on that on the next generation as well in fact as we shared at the Investor day back in May in the next generation, we're targeting a 50% increase in the dollars of content per server and the two main drivers of that our attach rate and ASP.
And on attach rate, we've seen our attach rates steadily increase on servers and now our attach rate exceeds one ex meaning that on average if you take the global number of servers that ship on average.
There is more than one lattice device used on each server and so our attach rate continues to increase and then with each new generation, we brought additional content and capability to the servers and that's translated into higher Asps.
And when you multiply those two factors together you see a strong dollar content.
Increase in each server generation and so that's certainly what we're focused on not just for this near term server generation, but over multiple generations with our key strategic customers.
Got it.
Really helpful. Jim.
I guess a similar question.
Different end market drivers et cetera, but in the automotive space.
There is a.
A lot going on.
Supply constraints.
Super topical, but you have these sort of parallel vectors of electrification and intelligence slash autonomy, which I think many investors would agree are driving semiconductor content opportunities.
I Wonder if you might talk about.
What youre seeing in the automotive market from a design win perspective, and how much of a driver that can be for your company over the next couple of years. Thanks.
Okay.
Thanks Man, it's definitely we see this as a great long term growth driver for the company even in the most recent quarter Q3 year or through the first three quarters of this year seen really strong growth year.
Year over year, and so it's been a great growth engine for us this year, although in that segment of industrial and auto it's still a relatively small percentage industrial is still the larger portion of that industrial automotive.
Market for us, but as we move into future years, we definitely have a very full design win pipeline design wins across Adas and infotainment applications.
There's a number of different ways that we can get used in automotive electronics that we're getting designed into so it's certainly an area that we see.
Good growth today, but multiple years of good growth that we're expecting in the years to come as well.
Thanks, Jim just a quick one to squeeze in for Sherri, If you have any color on that.
By segment breakdown in the guide for the fourth quarter that'd be really helpful. Thank you so much.
Yeah.
Gasoline, we don't actually provide right.
Breakdown, but.
In detail, but what I will say is that the we're expecting it to be flat to sequentially up for pretty much all of the end market. So that's probably the best the best way you can look at it.
Thanks, so much.
I'm sorry.
And again, if you have any questions just press star one on your telephone keypad. Your next question will come from the line of David Williams from Benchmark. Your line is open.
Hey, good afternoon. Thanks for letting me ask the question and congrats on the quarter.
I wanted to kind of touch maybe on just the mix and how you think about that over time, especially as you make progress in the automotive space industrial has been very strong, but do you think there is opportunity to grow your automotive content, especially kind of given that the transition of perhaps some MCU to over to FPGA and maybe anything in terms of.
The mix there that you think could could benefit in the future.
Yes, I think.
Within the industrial automotive segment within that segment I think overtime.
Yes, I think over time, we do expect automotive to become a bigger percentage of that segment over time at a higher level at a company level. When you look at comms <unk> compute and is one of our large segment in industrial and automotive as the other large segment in fact, those two combined represent over 85% of our revenue.
I think that we expect both of those segments to grow at a very healthy clip over the coming years, and so I'm not sure there'll be so much mix change between those two bigger segments, but within the industrial automotive segment.
Automotive could become a larger portion of that over time.
Okay, Great and then maybe one for you if we were kind of thinking about the revenue growth trajectory for the next over the next year, given where you are tracking about 24%. It looks like on the guidance do you think that the new products and design win momentum that you have can you continue this growth maybe in the high teens range, maybe on an annual basis or how should we think about.
The intermediate term kind of growth trajectory here.
So if you if you go back to our Investor day in May this year, when we talked about our targets.
And we said that when they are at a low low double digit revenue growth until we get to.
<unk> platform that will really drive the double digit growth in the longer term and so that's kind of the way you can think about the short term to the longer term trajectory going really avant driving that double digit long term perspective.
Okay. That's fair. Thank you and then maybe just one last one just thinking about the solution stack for the five D. O ran I was just wondering what the feedback has been and how thats progressing its still on track for release next year.
Yeah, David on track for release in the first half of next year.
I think our customer feedback has been very positive.
So looking forward to that and we're working with them to make sure. We're fine tuning the feature set so that it's exactly what the customers need but remains on track and we'll certainly provide more details.
On that <unk> stack as we get closer to the launch.
Fantastic. Thanks, so much.
Thanks, David Your next.
And your next question will come from the line of Christopher Rolland from Susquehanna. Your line is open.
Hey, guys. Thanks for the question.
I guess my question is about a six substitution by FPGA here.
And you've seen a lot of the large <unk>.
<unk> is out there.
Decommit.
And I was wondering if you and the team had a thought around how much you know there was a substitution by FPGA.
I don't imagine, it's a lot of your revenue but.
Is it is it any have you heard of these stories.
And have you guys contemplated.
That kind of mixes out or what happens to that overtime.
Yes, Chris we don't for our devices, we don't typically see.
Basic substitution I remember, we're focused on the smaller FPGA is very power efficient.
<unk> to us.
It's not it's very rare that we see customers.
Substituting out our part for <unk>.
Most customers are actually designing our chips in or FPGA is in general because of the reconfigurability of them. So for instance, a lot of our customers are designing in artificial intelligence capability. They wanted to add more decision, making capability to their system. So theyre designing in artificial intelligence.
<unk> or inference processing and our FPGA as a just a great match for that they do.
In furniture, AI processing incredibly efficiently because it can be programmed as apparel.
Processor AI algorithms are inherently parallel algorithms and they know that those algorithms are going to change over time, and so they want the flexibility of being able to reprogram. The FPGA. So yes, we typically don't see.
Basic substitution.
I guess, what I was saying was have you seen fpga's replaced a sick.
When a six aren't available because of <unk>.
Because they can't board.
The other ones.
Yes.
That's your way around.
Okay, sorry for the misunderstanding.
Hi.
Yes.
The way I would say it is there are for instance, I'll give an example in industrial.
So there's a number of customers we're working with in the industrial space that we're already strategically aligned.
To us to move towards the latest roadmap the lightest product portfolio and the roadmap moving forward.
And so we were already they were already planning to switch to <unk>.
<unk> devices for the very reasons I, just talked about the artificial intelligence processing the flexibility and some of the software content that we're providing I would say that the.
The supply chain constraints are really.
In some cases, catalyzing that or accelerating that customer transition. So transitions at the customers were already planning to do we've seen an acceleration in their timeline.
Because.
With many of those customers, we have supported them much better than some of their other suppliers through the supply chain constraints and so they've accelerated their plans to switch or convert to lattice and that can mean switching from a competitor's FPGA with lattice FPGA or in a number of cases switching from a microcontroller.
The most common ASIC.
Basic switching from a microcontroller to lattice FPGA. So yes, we are seeing an acceleration in.
In that activity.
Yes.
I guess now that you bring it up.
I think guys some of your competitors.
In the in the high density space.
Have just incredibly long lead times right now they just can't service products.
Have you do you think you are a beneficiary there have people moved.
No advance not out yet but is there any fungibility between the.
The two platforms.
Yes, we believe that we're benefiting from.
The fact that we have a very strong fresh product portfolio.
With Nexus in the multiple device families that we've launched as well as a bond to the roadmap the customers see that we've got a very fresh set of products brand new strong software content and then you combine that with the fact that we've generally we believe done a really good job of supporting our customers and I think our customers.
I definitely see that as well and in a number of cases, they've accelerated the transition from.
One of our competitors FPGA to us or as I mentioned micro.
Controls.
To lattice devices. So yes, certainly we believe we're benefiting from that.
Great. Thanks, guys I'll get back in queue.
Thanks, Chris.
And again, if you would like to ask any questions just press star one on your telephone keypad.
Your next question comes from the line of Derek Soderberg from Colliers. Your line is open.
Hi, guys. Thanks for taking my questions I wanted to start with the supply environment. It seems like you guys have executed well on that front.
I'm wondering first if you guys need to secure additional supply commitments to sort of meet your long term revenue growth targets for next fiscal year.
And beyond that just given the demand trends.
Do you feel comfortable with where your supply commitments are today to service quite a bit more of them.
More demand then.
You've sort of been servicing today.
If that's the case.
So we'll start there and then just one on top of that.
Are your suppliers, adding capacity and if so when would you expect that to come on line.
Thanks to Eric So on the first part of the question, we're certainly always working with our suppliers.
Not just next year's capacity, but multiple years out and in fact.
All the way back to the beginning of 2019, we were working with our.
Suppliers on multi year roadmaps.
On both product cost as well as capacity. So it's something that we're always engaged with our suppliers on over the long term to make sure that the capacity is in place and so yes. We are very actively engaged with our suppliers on that on the second part of.
Your question yes.
Yes, certainly we're seeing all of our suppliers continuing to add capacity.
In anticipation of future year demand not just from growth from us, but from the growth from the industry in general So yes, we're seeing our suppliers add capacity at a pretty fast rate.
Got it and then my.
Follow up revenue guidance was a little bit wider than I think that historically has been granted only by a couple million dollars.
Is there anything out there that's contributing to wider revenue range guidance range or should we really not read into that just curious if theres anything youre seeing out there that led to a slightly wider revenue guidance range. Thanks.
Thanks, Derek no I wouldn't read anything into that I think it's actually if you look at the range as a percentage of baseline revenue I think it's actually pretty consistent with what we have.
What we've done in the past I think our revenue has grown and so we've widened the range a little bit but kept the kind of percentage range about the same.
Great. Thank you.
And your next question comes from the line of Richard Shannon from Craig Hallum. Your line is open.
Thanks for taking my questions gentlemen.
Kind of a three part question on competition.
The overlap with some of the previous questions, but look to kind of put this all together here. So in the last few years, you've really been aggressive in past and introducing new product lines and global when do the FPGA space.
And then more recently announced one in kind of the mid range here I'm wondering if you've seen any change in competitive dynamics with the kind of legacy competitors in the space, whether they increase their level of compensation or alternatively, even decrease that's clearly not where their focus is.
And then to add to this when you look at your kind of emerging competitor base. Here Microcontrollers are you seeing any increased competitive dynamics coming from that set of companies as well.
Thanks, Richard So on the first said kind of our traditional FPGA competitors I don't think we've seen a significant change in the competitive environment.
Lattices focused is today is really focused on the small FPGA is with our Nexus platform small very power efficient easy to use lots of software content to get to market quickly for our customers.
And where we see our two traditional competitors is really.
At the other end of the spectrum, making focused on very large complex FPGA is optimized around for instance data center computing offload and we really haven't seen a significant change in that strategic focus and then as you mentioned, we're certainly executing on our new bond platform, which is <unk>.
You did a midrange FPGA is and there again, we haven't seen any significant change in the competitive landscape of where avant is targeted either.
In terms of on the MCU competition.
I would say that.
We're we're in a very good competitive position in share against certain parts of the MCU market.
And it's it has to do with what I talked about earlier is if you look at.
Customers and what they're doing with their system design is in a number of cases. They are trying to add more intelligence more decision, making capability to their systems and what that means is any more AI and inference processing.
And FPGA is in general, but lattice FPGA is in particular are really good at doing inference processing, especially in edge applications because of the parallel nature of <unk> and Thats a great match for those algorithms and the fact that the FPGA can be programmed reprogram desk.
Algorithm changes it just makes it a really good fit for a number of applications. So we are seeing a good conversion from microcontrollers to FPGA is as those customers want to add more intelligence and AI capability to their systems.
Okay, great. Thanks for the detail Jim that's all for me.
And your next question comes from the line of Christopher Rolland from Susquehanna. Your line is open.
Thanks for the follow up guys.
It's been a while since we've talked about M&A and that could be the next leg for your story as well.
I guess, maybe talk about your interest in doing M&A and kind of what you see out there.
Whether you are more interested in pursuing kind of an FPGA centric technology out there or something maybe more broad IP that you could fold into the FPGA category.
Thanks, Chris.
On M&A.
Something that we're actively looking at I would start by saying, though that were never confused about what job. One is job one is always to grow our organic business to make sure our organic business is growing as fast as possible, but that said, we're always scanning the environment the landscape for inorganic options the way we look at it.
As we're looking for things that are very complementary very adjacent to our existing product portfolio and strategy really looking for things that would accelerate our organic strategy and those those type of things could be more hardware centric acquisitions, which could be more software centric and.
They would really fall into I think two years or three buckets, one would be could be product related.
Inorganic options one could be as you mentioned technology related where we're looking for a particular piece of technology that we think will be important in the future and one could be for customer or market access to access new customers or markets. So those are the kind of three categories that.
We think about it in but yes, it's something that we are actively looking at in parallel.
Thanks, guys.
And your last question comes from the line of Hans Melissa Smith from Rosenblatt. Your line is open.
Hey, Jim if you look at advantage mid mid tier FPGA offering.
Can we expect those products to address both control plane and data plane type applications, where sockets.
Yes, good question.
And the answer is definitely yes, it would address ball yes.
Whereas today, our products are mostly control plane applications of onto it to open up not just control plane applications, but data plane applications as well.
Yes.
What's the mix look like over time.
If you can estimate that.
Yeah. Good question I think we'll probably talk about that as we get closer to the avant launch because when we get to the upon launch we will talk about the.
<unk> the capabilities.
The <unk> speed, the communication speeds et cetera, and then it would be easier to explain where we see the potential in terms of both control and data plane.
Excellent Thanks, a lot.
Thanks.
And that concludes our question and answer session I will now turn the call back to <unk> CEO, Mr. Jim Anderson for closing remarks.
Alright, Thank you operator, and thanks, everybody for joining us on the call today.
Pleased with our revenue and profit growth in Q3, as we continue to execute to our strategy and expand our product portfolio and we look forward to providing more updates at our next earnings call operator that concludes today's call.
And that concludes today's conference call. Thank you for participating you may now disconnect.
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