Q1 2024 Lattice Semiconductor Corp Earnings Call

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Speaker Change: Greetings and welcome to be lattice semiconductor first quarter 'twenty 'twenty four earnings call.

Operator: Greetings and welcome to the Lattice Semiconductor First Quarter 2024 Earnings Call. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rick Muscha, Vice President of Investor Relations. Thank you. You may begin.

Speaker Change: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Rick you Shea Vice President of Investor Relations. Thank you you may begin.

Rick Muscha: Thank you, Operator, and good afternoon, everyone. With me today are Jim Anderson, Lattice's President and CEO, and Sherri Luther, Lattice's CFO. We'll provide a financial and business review for the first quarter of 2024 and the business outlook for the second quarter of 2024. If you have not obtained a copy of our earnings press release, it can be found on our company website in the Investor Relations section at latticesemi.com. I would 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.

Thank you operator, and good afternoon, everyone with me today are Jim Anderson licensed President and CEO and Sherri Luther <unk> CFO will provide a financial and business review of the first quarter 2024, and the business outlook for the second quarter of 2024.

Speaker Change: 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 that is semi dot com.

Speaker Change: I would 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.

Rick Muscha: We wish to caution you that such statements are predictions based on information that is currently available, and actual results may differ materially. We refer you to the documents that the company files with the SEC, including our 10-Ks, 10-Qs, and 8-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 second quarter of 2024.

Speaker Change: We wish to caution you that such statements are predictions based on information that is currently available and that actual results may differ materially. We refer you to the documents that the company files with the SEC, including our 10-K's 10-Q's and 8-K's.

Speaker Change: 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 second quarter of 2024, if 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.

Rick Muscha: If at any time after this call we communicate any material changes to this guidance, we intend that such updates will be done in a public forum, such as a press release or publicly announced conference call. We will refer primarily to non-GAAP financial measures during this call. 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. For historical periods, we have provided reconciliations of these non-GAAP financial measures to GAAP financial measures that can be found on the investor relations section of our website at latticesemi.com. Let me now turn the call over to Jim Anderson, our CEO.

Speaker Change: We will refer primarily to non-GAAP financial measures during this call.

Speaker Change: 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.

Speaker Change: All 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 at night if semi dotcom.

Speaker Change: Let me now turn the call over to Jim Anderson, our CEO.

James Anderson: Thank you, Rick, and thank you, everyone, for joining us on our call today. Q1-24 results were in line with expectations for revenue, margin, and profitability. The industrial and automotive segment was down 25% sequentially as demand softened and end customers reduced their inventory levels. The communications and computing segment was down 7% sequentially in Q1.

James Anderson: Thank you Rick and thank you everyone for joining us on our call today Q1, 'twenty four our results were in line with expectations for revenue margin and profitability the industrial and automotive segment was down 25% sequentially as demand softened in the end customers to reduce their inventory levels.

James Anderson: The indications and computing segment was down 7% sequentially in Q1 within that segment computing was sequentially up on stronger demand for our products used in servers, which was offset by weaker demand in the communications segment.

James Anderson: Within that segment, computing was sequentially up on stronger demand for our products used in servers, which was offset by weaker demand in the communications segment. We expect Q2 revenue to be down sequentially from Q1, primarily driven by softer end customer demand and continued inventory normalization. In particular, we're seeing incremental softness in the communications segment related to weaker telecommunications infrastructure deployment.

James Anderson: We expect Q2 revenue to be down sequentially from Q1, primarily driven by softer end customer demand and continued inventory normalization in particular, we're seeing incremental softness in the communications segment related to weaker telecommunications infrastructure deployment.

James Anderson: Looking forward to the second half of the year. Based on our current view of anticipated near-term business conditions, we continue to expect revenue in the second half of 2024 to be higher than the first half. We believe the second half improvement will be driven by improving end market conditions as end customer inventory levels normalize, as well as a new nexus and a bond to product ramps. Turning now to our product portfolio.

James Anderson: Looking forward to the second half of the year based on our current view of anticipated near term business conditions. We continue to expect revenue in the second half of 'twenty 'twenty four to be higher than the first half.

James Anderson: We believe the second half improvement will be driven by improving end market conditions as end customer inventory levels normalize as well as new Nexus and a bond product ramps.

James Anderson: Turning now to our product portfolio and our smaller FPGA portfolio. We now have seven Nexus device families launched and six in production and the seventh going into production in Q3.

James Anderson: In our small FPGA portfolio, we now have seven Nexus device families launched, six in production, and the seventh going into production in Q3. We recently shared with our customers the latest small FPGA product roadmap. This includes continued expansion of the number of Nexus device options coming to market over the coming quarters, which received a very positive reaction from our customers. In our mid-range FPGA portfolio, we now have three Avant device families in the hands of our customers.

James Anderson: We recently shared with our customers the latest small FPGA product roadmap.

James Anderson: This includes continued expansion of the number of Nexus device options coming to market over the coming quarters, which received a very positive reaction from our customers.

James Anderson: And our midrange at P. J a portfolio. We now have three advanced device families in the hands of our customers. The first device family bounty achieved initial revenue at the end of 2023, and we expect revenue to ramp through the course of this year and into the coming years. The second and third device families are buying G and acts are expected to achieve initial revenue.

James Anderson: The first device family, Avant E, achieved initial revenue at the end of 2023, and we expect revenue to ramp through the course of this year and into the coming years. The second and third device families, Avant G and X, are expected to achieve initial revenue toward the end of this year and to ramp over the coming years. As a reminder, 90% of the target customers for Avant are already customers of Lattice today, and Avant leverages the same software that customers use today on Nexus.

James Anderson: Toward the end of this year and to ramp over the following years as a reminder, 90% of the target customers for a bond are already customers of wireless today antibody leverages. The same software that customers use today on access.

James Anderson: The strong competitive differentiation of Avant, which we demonstrated at a recent developer conference, combined with our software support, continues to produce a healthy growing design opportunity pipeline. As we discussed on our previous earnings call, Lattice hardware and software solutions are increasingly being used in a wide variety of AI-related applications. For example, in AI-optimized servers in the data center, where the system is running generative AI workloads, Lattice devices are used for the control, management, and security of the AI computing system.

James Anderson: Our strong competitive differentiation of our bond, which we demonstrated at our recent developers conference combined with our software support continues to produce healthy growing design opportunity pipeline.

James Anderson: As we discussed on our previous earnings call flattish hardware and software solutions are increasingly being used and used in a wide variety of AI related applications. For example in AI optimized sugars in the data center, where the system is running January 10th AI workloads lattice devices are used in the control management and security of the AI.

James Anderson: Puting system.

James Anderson: Another example is in AI-enabled PCs, where Lattice hardware and software solutions are used to run the AI inference algorithm that provides features such as user presence and gaze detection. We recently shared that Lattice is designed into multiple new Dell Latitude systems, which we expect to benefit us in the second half of this year. In these types of AI applications, software is a key part of our strategy and how we enable customers to adopt our solutions.

James Anderson: Another example is an AI enabled P c's, where allowed us hardware and software solutions are used to run the AI inference algorithms that provides features such as user presence engage detection.

James Anderson: We recently shared the lattices designed into multiple new Dell latitude systems, which we expect to benefit us in the second half of this year.

James Anderson: And these types of AI applications to software as a key part of our strategy and how we enable customers in adopting our solutions.

James Anderson: In summary, we're excited to be in the midst of the largest product portfolio expansion in our history, which is driving strong customer momentum. Despite near-term industry headwinds, the company is well positioned with a rapidly expanding product portfolio, and we remain focused on long-term value creation. I'll now turn the call over to our CFO, Sherri Luther.

James Anderson: I mean, we're excited to be in the Miss of the largest product portfolio expansion in our history, which is driving strong customer momentum despite near term industry headwinds. The company is well positioned with a rapidly expanding product portfolio and we remain focused on long term value creation.

James Anderson: Now I'll turn the call over to our CFO Sherri Luther.

Sherri Luther: Jim, the first quarter turned out as expected, with results in line with our prior outlook. We maintained strong profitability and cash generation, and returned cash to shareholders through share buybacks. Let me now provide a summary of our results.

Sherri Luther: Thank you Jim.

The first quarter it turned out as expected with results in line with our prior outlook we.

Sherri Luther: We maintained strong profitability and cash generation and returns cash to shareholders through share buybacks.

Sherri Luther: Let me now provide a summary of our results.

Sherri Luther: First quarter revenue was $140.8 million, down 17.5% sequentially from the fourth quarter and down 24% year over year, primarily reflecting end market demand softness and end customer inventory rebalancing. Our Q1 non-GAAP growth margin declined 140 basis points to 69% compared to the prior quarter and 130 basis points compared to the year-ago quarter due to mix in our MRQ segment. Q1 non-GAAP operating expenses were $54.9 million compared to $55.5 million in the prior quarter and $54 million in the year-ago quarter.

Sherri Luther: First quarter revenue was $140 8 million down 17.5% sequentially from the fourth quarter and down 24% year over year.

Sherri Luther: Primarily reflecting end market demand softness and end customer inventory rebalancing.

Sherri Luther: Our Q1, non-GAAP gross margin declined 140 basis points to 16, 9% compared to the prior quarter and 130 basis points compared to the year ago quarter due to mix and our market segment.

Sherri Luther: Q1, non-GAAP operating expenses were $54 9 million compared to 55 5 million of prior quarter.

Sherri Luther: And 54 million in the year ago quarter.

Sherri Luther: We continue to be disciplined in the management of SG&A expenses while ensuring that we invest in our product portfolio. Our Q1 non-path operating margin decreased 780 basis points to 30% compared to the prior quarter and was down 1100 basis points compared to the year-ago quarter. Q1 non-GAAP earnings per diluted share was $0.29 compared to $0.51 in the year-ago quarter. In Q1, we repurchased approximately 265,000 shares, or $20 million worth of stock, making Q1 our 14th consecutive quarter of executing share buybacks. Over that period, we have repurchased approximately 5 million shares, thereby reducing our dilution by 3.6%.

Sherri Luther: We continue to be disciplined in the management of SG&A expenses, while ensuring that we invest in our product portfolio.

Sherri Luther: Q1, non-GAAP operating margin decreased 780 basis points to 30 per cent compared to the prior quarter and was down 1100 basis points compared to the year ago quarter.

Sherri Luther: Q1, non-GAAP earnings per diluted share with 29 compared to 51 cents in the year ago quarter.

Sherri Luther: In Q1, we repurchased approximately 265000 shares or $20 million worth of stock, making Q1, our 14th consecutive quarter of executing share buybacks.

Sherri Luther: Over that period, we have repurchased approximately 5 million shares, thereby reducing our dilution by three 6%.

Let me now review our outlook for the second quarter.

Sherri Luther: Revenue for the second quarter of 'twenty 'twenty, four is expected to be between $120 million and $140 million.

Sherri Luther: Let me now review our outlook for the second quarter. Revenue for the second quarter of 2024 is expected to be between $120 million and $140 million. Gross margin is expected to be 69% plus or minus 1% on a non-GAAP basis due to a less favorable mix from our end market. Total operating expenses for the second quarter are expected to be between $54 million and $56 million on a non-GAAP basis, which is in line with Q1 at the midpoint.

Sherri Luther: Gross margin is expected to be 69% plus or minus 1% on a non-GAAP basis.

Sherri Luther: Due to a less favorable mix from our end market.

Total operating expenses for the second quarter are expected to be between 54 million and 56 million on a non-GAAP basis, which is in line with Q1 at the midpoint.

Sherri Luther: Overall, we believe we are well positioned for long term growth.

Sherri Luther: As we navigate the near term cyclical softness in our end markets. We remain focused on supporting the expansion of our product portfolio and continued execution.

Operator: Overall, we believe we are well-positioned for long-term growth. As we navigate the near-term cyclic softness in our end market, we remain focused on supporting the expansion of our product portfolio and continued execution. Operator, that concludes my formal comments. We can now open the call for questions. Thank you.

Speaker Change: Operator that concludes my formal comments, we can now open the call for questions.

Speaker Change: Thank you.

Speaker Change: We will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key.

Speaker Change: Thank you.

Speaker Change: Our first question comes from the line of Melissa Weathers with Deutsche Bank. Please proceed with your question.

Melissa Weathers: Hi, guys and thank you for letting me ask a question I guess I have one bigger picture question and then a second one that is more related to the near term cycle on the bigger picture you guys talked about some new in excess product launches I know you have seven in the market now with six coming in maybe one more can you just think about like how is this.

Operator: One moment, please, while we pull for questions. Thank you. Our first question comes from the line of Melissa Weathers with Deutsche Bank. Please proceed with your question.

Melissa Weathers: Hi guys. Thank you for letting me ask you a question.

Melissa Weathers: Newish product family I'm going to start flowing into revenues and what kind of traction are you seeing with customers with those products.

Melissa Weathers: I guess I have one bigger picture question and then a second one that's more related to the near-term cycle. On the bigger picture, you guys talked about some new Nexus product launches. I know you have seven in the market now with six coming and maybe one more. Can you help us think about how this newish product family is going to start flowing into revenues and what kind of traction are you seeing with customers with those products?

Speaker Change: Sure. Thanks Melissa.

Speaker Change: We're actually really excited about this which is why one of the dimension. It in the prepared remarks and actually the customer feedback that we've gotten on this is very positive. We recently, we did as we recently shared our latest small FPGA roadmap with all of our customers and that includes some of the near term.

Speaker Change: <unk> additions that were adding to the roadmap as well as our long term investment and in particular, we shared that we're going to significantly expand the number of device options on access and.

James Anderson: Thanks, Melissa. Yeah, we're actually really excited about this, which is why I wanted to mention it in the prepared remarks. And actually, the customer feedback that we've gotten on this is very positive. We recently, what we did is, we recently shared our latest small FPGA roadmap with all of our customers. And that includes some of the near-term additions that we're adding to the roadmap, as well as our long-term investment. And in particular, we shared that we're going to significantly expand the number of device options on Nexus, and we added other new products for the long term. This was really positively received by our customers.

Speaker Change: And we added the other new products to the long term. This is really positively received by our customers.

Speaker Change: First of all just because to them. It just indicates a sustained focus from Atlantis on continuing to invest in innovation in this small FPGA portion of the market, which is really important to our customers.

Speaker Change: So its sustained investment that they can count on but then also they've been able to see that Nexus is incredibly differentiated has great power efficiency benefits features capabilities.

Speaker Change: I think demonstrate clear leadership in the industry and so that combined just give them confidence to continue to shift more business over time to lattice. We believe we've gained significant share in this part of the market over the past years, and I think theres just positions us to continue to grow and expand our.

Speaker Change: Our presence in this part of the market over the long term and then that combined with our in parallel we continue to invest in a bond and the expansion of our bond portfolio for midrange devices and you take those two combined are our customers who are just really excited about the continued expansion of our product portfolio and our.

James Anderson: First of all, just because to them, it just indicates a sustained focus from Lattice on continuing to invest in innovation in this small FPGA portion of the market, which is really important to our customers. So it's sustained investment that they can count on, but then also they've been able to see that Nexus is incredibly differentiated, has great power efficiency benefits, features, and capabilities that I think demonstrate clear leadership in the industry. And so that combined just gives them confidence to continue to shift more business over time to Lattice.

Speaker Change: Investment in the long term roadmap.

Speaker Change: Thank you for that clarification, I guess on the more cyclical side a couple of your peers have talked about two Q hopefully marking the bottom for this F. P. J cycle them and I think last quarter, you guys talked about channel inventory burn.

Speaker Change: Inventory Brennan general completing in this quarter is.

James Anderson: We believe we've gained a significant share in this part of the market over the past years, and I think this just positions us to continue to grow and expand our presence in this part of the market over the long term. And then, combined with, we continue to invest in Avant and the expansion of our Avant portfolio for mid-range devices. And when you take those two combined, our customers are just really excited about the continued expansion of our product portfolio and our investment for the long term.

Speaker Change: Is that still your expectation and how should we think about in the near term a lot us resuming shipments to be closer to sell through rates.

Speaker Change: Yes, certainly our Q2 guidance factors that in we know the first half of this year you know what.

Speaker Change: What we saw in Q1, where we're expecting in Q2 is across our customer base, our customers are reducing their semiconductor inventory overall, they're drawing down those inventories that includes gladys the inventory that our end customers are holding in terms of lattice inventory.

James Anderson: Thank you for that clarification. I guess on the more cyclical side, a couple of your peers have talked about 2Q hopefully marking the bottom for this FPGA cycle, and I think last quarter you guys talked about channel inventory burn, or just inventory burn in general, finishing in this quarter. Is that still your expectation, and how should we think about, in the near term, Lattice resuming shipments to be closer to the sell-through rate? Yeah, certainly our Q2 guidance.

Speaker Change: And they view this as bringing inventory levels back to normalized levels and so we believe that affect certainly continues through the current quarter Q2, and then into the second half of the year. We believe that that drawdown of inventory starts starts to dissipate through the second half of the year So had gradually dissipate.

Speaker Change: Since now that it turns off like a light switch, but that dissipates over the second half of the year and that's why in my prepared remarks, I mentioned that we believe the second half.

James Anderson: Yeah, certainly, our Q2 guidance factors that in. We know the first half of this year, you know, what we saw in Q1, what we're expecting in Q2, is that across our customer base, our customers are reducing their semiconductor inventory overall, they're drawing down those inventories, that includes lattice, the inventory that our end customers are holding in terms of lattice inventory. And they view this as bringing inventory levels back to normal

Speaker Change: It would be stronger than the first half for the reason number one that we believe that that drawdown of inventory. This effect dissipates in the second half of the year, but then the second reason is Atlanta specific reason of we believe that the <unk>.

Speaker Change: <unk> the Nexus into bond products sold continue to ramp over the course of this year and that that'll be additive to our revenue in the second half of the year as well as I mentioned, there's a the six nexus device family just went into production, which will benefit from that in the second half of this year. The seventh we expect to go into production in Q.

James Anderson: And so we believe that effect certainly continues through the current quarter, Q2. And then into the second half of the year, we believe that that drawdown of inventory starts to dissipate through the second half of the year. So it gradually dissipates; it's not that it turns off like a light switch, but that it dissipates over the second half of the year.

Speaker Change: Three and then the first device family of Avant is ramping this year. We saw initial revenue from our bond at the very end of last year, we expect that to ramp through the course of this year into next year.

With more benefit from that a bond E series in the second half of this year and so for all those reasons, we think the second half will be stronger than the first half.

James Anderson: And that's why, in my prepared remarks, I mentioned that we believe the second half revenue will be stronger than the first half for the reasons, number one, that we believe that the drawdown of inventory this effect dissipates in the second half of the year. But then the second reason is a lattice specific reason of we believe that, you know, the products, the Nexus and Avon products, will continue to ramp up over the course of this year.

Speaker Change: Great. Thank you Jim.

James Anderson: Thanks Melissa.

Melissa Weathers: Thank you. Our next question comes from the line of Quinn Bolton with Needham and company. Please proceed with your question.

Quinn Bolton: Hey, guys. Thanks for taking my question I just wanted to start with your comments Jim on the communications side.

Quinn Bolton: I think it's probably no surprise to many of US the communications remains weak, but wondering if you had any signals that that comms portion maybe starting to reach a bottom or do you have any any further comments you might be able to give us on.

James Anderson: And that that'll be additive to our revenue in the second half of the year as well. As I mentioned, there is a sixth Nexus device family just went into production. So we'll benefit from that in the second half of this year; the seventh, we expect to go into production in Q3. And then the first device family of Avon is ramping this year; we saw initial revenue from Avon at the very end of last year; we expect that to ramp through the course of this year and into next year, with more benefit from the Avon E series in the second half of this year. And so, for all those reasons, we think the second half will be

Quinn Bolton: When you think.

Quinn Bolton: Comms infrastructure markets may stabilize.

Quinn Bolton: Im not sure that Youll give us about Alaska.

Quinn Bolton: Within comms and computing can you give us a rough sense.

Quinn Bolton: A bigger or smaller portion of that overall bucket just to help try to size the exposure.

Speaker Change: Yeah. Thanks Quinn on first party of your question.

Quinn Bolton: Yeah, we did see.

Quinn Bolton: Some incremental weakness in communications, specifically in telecom infrastructure, especially over the last one two months, we saw some weaker demand. There. That's you know towards the end of Q1, that's rolling into Q2.

Operator: Thank you. Our next question comes from the line of Quinn Bolton with Needham & Company. Please proceed with your question.

Nathaniel Quinn Bolton: You guys, thanks for taking my question. I just wanted to start with your comments, Jim, on the communications side. I think it's probably no surprise to many of us that communications remains weak, but I was wondering if you had any signals that that comms portion may be starting to reach a bottom, or any further comments you might be able to give us on when you think the comms infrastructure markets may stabilize. I'm not sure that you'll give it, but I'll ask within comms and computing, can you give us a Is communications a bigger or smaller portion of that overall bucket just to help try to size the exposure?

Quinn Bolton: And that telecom infrastructure spending related to <unk> infrastructure, that's really ultimately at the end of the day tied to telecom capex by the Big Telecom carriers.

Quinn Bolton: And so I think once we start to see telecom capex pick back up and improve that's what'll drive the the telecom equipment spending which will ripple back to us and that's when we'll start to see improvement from the end market perspective with the band for for Telecom for our devices used in telecom infrastructure.

Quinn Bolton: But it's certainly a part.

Part of the sequential a big part of the sequential decline that we're seeing from Q1 to Q2 is that the telecom weakness and then on the second part of your question is just the relative sizing of comms and computing.

James Anderson: Yeah, thanks, Quinn. On the first part of your question. Yeah, we didn't see some incremental weakness in communication, specifically in telecom infrastructure, especially over the last one to two months. We saw some weaker demand there that's, you know, towards the end of Q1 that's rolling into Q2. And that telecom infrastructure spending related to 5G infrastructure, that's really ultimately, at the end of the day, tied to telecom capex by the big telecom carriers. And so I think once we start to see telecom capex tick back up and improve, that's what will drive telecom equipment spending, which will ripple back to us.

Quinn Bolton: Computer has been doing relatively well we actually in Q1, we saw compute go up sequentially from Q4 to Q1 remember that what's in compute is a big driver of our computers server that is both general purpose servers and AI optimized servers. So we saw a good step up in demand from.

Quinn Bolton: Q4 to Q1 and compute while communications declined in Q1 and and moving into Q2, we're expecting.

Quinn Bolton: <unk> to be sequentially up in communications did decline again and so at this point compute is is larger it's the the majority of that part of our segment and because communications has been a weaker as of late.

James Anderson: And that's when we'll start to see improvement from the end market perspective of demand for telecom for our devices used in telecom infrastructure. But it's certainly, you know, part of the sequential, a big part of the sequential decline that we're seeing from Q1 to Q2 is that telecom weakness. And then on the second part of your questions, just the relative sizing of comms and compute, you know, compute has been doing relatively well; we actually saw compute go up sequentially from Q4 to Q1.

Speaker Change: Got it perfect and then just.

Quinn Bolton: On the industrial side of the market.

Quinn Bolton: Hmm.

Speaker Change: Wondering if there are any specific trends to call out other than this this idea that the inventory drawdown will dissipate.

Speaker Change: In the second half.

Speaker Change: <unk> helps the industrial business to get back to consumption levels, but are you seeing any specific trends in the industrial segment.

Speaker Change: Worth calling out thank you.

Speaker Change: Yes, I would say in that segment. It is a it has been a bit mixed if you look at some of the some segments. Some of the sub segments are showing.

James Anderson: Remember that what's in compute is a big driver of our compute is the server, that's both general purpose servers and AI optimized servers. So we saw a good step up in demand from Q4 to Q1 in compute, while communications declined in Q1. And moving into Q2, we're expecting compute to be sequentially up and communications to decline again. And so at this point, compute is larger, it's the majority of that part of our segment, and because communications has been weaker as of late.

Speaker Change: Steady stable demand or even growing demand you know for instance in <unk>.

Speaker Change: Medical equipment has been quite stable aerospace and defense has been strong and so it's a bit of a mixed depending on that that segment and then the automotive portion, which is smaller part of that segment for us.

Speaker Change: We've seen some sequential weakness there, but the net net is as we as we look towards the second half.

Speaker Change: We believe that that inventory drawdown, that's happening in the industrial and automotive segment.

James Anderson: Unknown Speaker Got it. Perfect. And then, you know, on the industrial side of the market, wondering if there are any specific trends to call out other than this idea that the inventory drawdown will dissipate in the second half of the year, which I imagine will help the industrial business get back to consumption levels. But are you seeing any specific trends in industrial segments that

Speaker Change: Is that a fact that negative effect on our demand that that effect starts to dissipate in the second half just as customers reach their normal inventory levels.

Speaker Change: Perfect. Thank you.

Speaker Change: Thanks Glenn.

Speaker Change: Thank you. Our next question comes from the line of Matt Ramsay with TD Cowen. Please proceed with your question.

James Anderson: Yeah, I would say in that segment, it is a bit mixed. If you look at some of the sub-segments, some of the sub-segments are showing, you know, steady, stable demand or even growing demand. You know, for instance, medical equipment has been quite stable. Aerospace and defense has been strong. And so it's, it's a bit of a mix, depending on that segment. And then the automotive version, which is a smaller part of that segment for us, we've seen some sequential weakness there.

Matthew D. Ramsay: Thank you very much good afternoon everybody.

Jim I, just kind of bounce off of you a couple of questions that I've been getting from investors on and I think it'd be helpful. For you to maybe a dresser respond to them I think the first one is.

Matthew D. Ramsay: Not only yourself, but you're too much larger FPGA competitors have been going through this inventory digestion, and it's very well documented and I wanted to sort of explore the.

James Anderson: But the net net is, as we look towards the second half, we believe that the inventory drawdown that's happening in the industrial and automotive segment, that that effect, that negative effect on our demand, that effect starts to dissipate in the second half, just as customers reach their

Matthew D. Ramsay: The top the relationship between that correction and what it's done to the market versus the new design wins that you guys have with the bonds do you feel like the the timing of these new programs. The avant because there are new wins and new products ramping are relatively independent of the inventory situation in the industry or do you think that the.

Operator: Thank you. Our next question comes from the line of Matt Ramsey with TD Cowan. Please proceed with your question.

Matthew D. Ramsay: Thank you very much. Good afternoon, everybody.

Matthew D. Ramsay: Tori situation and the drawdown may change some of the timing of the avant ramp one way or the other thanks.

Matthew D. Ramsay: Jim, I'm just going to bounce off of you a couple of questions that I've been getting from investors, and I think it would be helpful for you to maybe address or respond to them. I think the first one is... Not only yourselves, but your two much larger FPGA competitors have been going through this inventory digestion process, and it's very well documented. And I wanted to sort of explore the relationship between that correction and what it's done to the market versus the new design wins that you guys have with Avant.

Speaker Change: Yeah. Thanks, Matt.

On the <unk> because we're we're still early in their bond Tramp and maybe just a step back and just summarize where we're at in the <unk>. So to date, we've launched three of on device families. The EG and the <unk>. The E. We began to generate revenue at the <unk>.

Speaker Change: The end of last year, we expect to eat or ramp through the course of this year and into the following years seeing the contribution of the.

Matthew D. Ramsay: Do you feel that the timing of these new programs with Avant because their new wins and new product ramp-up is relatively independent of the inventory situation in the industry, or do you think that the inventory situation and the drawdown may change some of the timing of the Avant ramp one way or the other? Thanks.

Speaker Change: The revenue contribution of <unk> will be more in the in the second half of this year since we're going through the ramp and then the G and the Ax, which we launched at our developers conference in.

James Anderson: Yeah, thanks, Matt. I think about the AvantRamp because we're, we're still early in the AvantRamp, and maybe just a step back and just summarize where we're at in the AvantRamp. So to date, we've launched three Avant device families, the E, the G, and the X. The E began to generate revenue at the very end of last year, and we expect the E to ramp through the course of this year and into the following years.

Speaker Change: In December of last year, we would expect to see a little bit of revenue from <unk> before the end of this year. That's our kind of typical timeframe from launch to first revenue is usually about 12 to 18 months <unk> would be more of a benefit in 2025.

Speaker Change: Because that that ramp we're still relatively early and the inventory drawdowns that that we're going through are happening now I don't really see that affecting your bond a ramp in the short term the the avant ramp here is in the coming quarters.

James Anderson: And the contribution of revenue of Avant E will be more in the second half of this year since we're going through the ramp. And then the G and the X, which we launched at our developers conference in December of last year, we would expect to see a little bit of revenue from G and X before the end of this year. That's our kind of typical timeframe from launch to first revenue is usually about 12 to 18 months. But G and X would be more of a benefit in 2025. And because of that ramp, we're still relatively early.

Speaker Change: It's much more driven by actually the rate and pace of the customer's own development program. So now that we've put the devices in the hands of customers, we're supporting our customers that the new design wins that will ramp much more driven by the customers development cycles are qualification cycles et cetera.

Speaker Change: Less and less about the end market.

Speaker Change: <unk> fluctuations now I would say nexis that ramp can be affected by the end market demand fluctuations because nexus is much much further in its ramp.

James Anderson: And the inventory drawdowns that we're going through are happening now; I don't really see that affecting the AvantRamp in the short term. The AvantRamp here in the coming quarters is much more driven by the rate and pace of the customer's own development program. So now that we've put the devices in the hands of customers, we're supporting our customers that the new design wins will ramp much more driven by the customer's own development cycles or qualification cycles, etc.

Speaker Change: We have six device families now that are in production and so some of those really device families that we launched a you know maybe a couple of years ago, those would be affected by end market demand fluctuations because they're they're much further along right, but avant I think.

Speaker Change: Really not affected by the end markets this year.

Speaker Change: No. Thank you for that color Jim I appreciate it.

James Anderson: Less about the end market demand fluctuations. Now, I would say Nexus, that ramp can be affected by the end market demand fluctuations because Nexus is much, much further in its ramp. You know, we have six device families now that are in production. And so some of those early device families that we launched, you know, maybe a couple of years ago, those would be affected by end market demand fluctuations because they're much further along, right? But Avant, I think, is really not affected by the

Speaker Change: Second.

Speaker Change: Second question.

Speaker Change: I've been getting some some questions from investors about specifically about your server sockets.

The FPGA sockets that you have for basically all server vendors and may.

Speaker Change: Maybe not.

Speaker Change: We went through a correction in server and our seemingly coming back out of it and you guys have spoken to that but I think the questions are more about.

Speaker Change: Over the next several years, how confident your team is that the share position that you've grown over the last several years you can continue to maintain and the visibility that you have into maybe the next two or three server generations, maybe you could talk about that a little bit and if theres any different competitive dynamic.

Matthew D. Ramsay: Thank you for that color, Jim. I appreciate it.

Matthew D. Ramsay: My second question is, I've been getting some questions from investors about, specifically the server sockets, the FPGA sockets that you have for basically all server vendors. Maybe not that, I mean, we went through a correction in servers, and now we're seemingly coming back out of it, and you guys have spoken about that, but I think the questions are more about, over the next several years, how confident your team is that the share position that you've grown over the last several years, you can continue to maintain, and the visibility that you have into maybe the next two or three server generations. Maybe you could talk about that And if there are any different competitive dynamics for those sockets than there have been in the past.

Speaker Change: For those sockets and never been in the past thanks.

Speaker Change: Yes, certainly servers, if you look over the past years. This has been a great growth area for us.

Speaker Change: Over the past years, we've been able to grow both our attach rate as well as our asp's or attach rates have grown as atlantis's lavish.

Speaker Change: A lot of trips had been used in a higher percentage of servers, but also in some cases, where there's multiple lattice chips used in one server and so our attach rates are now well over one acts a on average a server uses more than one lattice kept per server and then at the same time with each new generation, we have been trying.

James Anderson: Yeah, certainly servers. If you look over the past years, this has been a great growth area for us. Over the past years, we've been able to grow both our attach rate as well as our ASPs. Our attach rates have grown like lattices. Lattice chips have been used in a higher percentage of servers, but also in some cases where there are multiple lattice chips used in one server. And so our attach rates are now well over 1x.

Speaker Change: Bring more capability, both from a hardware and a software standpoint to our customers to bring new features new capabilities, which raises our ESP overtime in the current generation that's ramping.

Speaker Change: We began began ramping last year, but it's ramping through the course of this year that new server General purpose server generation, we have significantly more dollars of content per server.

James Anderson: On average, a server uses more than one lattice chip per server. And then, at the same time, with each new generation, we've been trying to bring more capability, both from a hardware and a software standpoint, to our customers to bring new features, new capabilities, which increases our ASP over time. In the current generation that's ramping, that began ramping last year, but it's ramping through the course of this year, that new server, general purpose server generation, we have significantly more dollars of content per server, a step up of about roughly 50% more dollars of content per server.

Step up of about roughly 50% more dollars of content per server. So as that generation of servers goes into full production. That's a natural tailwind for US and then as we look out over the next few generations. We feel good about our ability to continue to increase our dollars of content for sure just in terms.

Speaker Change: EMS is the the new device functionality that we're bringing new capabilities over time and as we get to those new server generations, we'll certainly share more details about that but we feel good about our ability to continue to drive innovation.

Speaker Change: And additional content on those server generations overtime.

Speaker Change: Thank you very much Jim I appreciate it.

James Anderson: Thanks, Matt.

James Anderson: Thank you. Our next question comes from the line of David Williams with Benchmark Company. Please proceed with your question.

James Anderson: So as that generation of servers goes into full production, that's a natural tailwind for us. And then, as we look out over the next few generations, we feel good about our ability to continue to increase our dollars of content per server, just in terms of the new device functionality that we're bringing, and new capabilities over time. And as we get to those new server generations, we'll certainly share more details about that, but we feel good about our ability to continue to drive innovation and additional content on those server generations over time. Thank you very much.

David Neil Williams: Hey, good afternoon, and thanks for taking my question.

David Neil Williams: First maybe if.

David Neil Williams: If you could talk maybe a little bit about design traction and maybe where you're seeing that.

David Neil Williams: What are you seeing the most traction maybe today, maybe some color around the number of size of those and even if you can compare and contrast, maybe gift power mix has performed during a similar stage of the ramp.

Speaker Change: Sure. Thanks, David So first of all we're really pleased by the our bond design win opportunity just the growth in the overall design win opportunity pipeline I think as I shared in at the last earnings call. Yeah. We had said last year, a pretty aggressive goal for the for.

James Anderson: Thank you very much, Jim. I appreciate it.

Operator: Thank you. Our next question comes from the line of David Williams with Benchmark Company. Please proceed with your question.

Speaker Change: For the team in terms of driving new about design wins and they actually exceeded that goal.

Speaker Change: So we're really pleased with their performance and design wins last year, we set another aggressive goal for this year, but we're we're pleased with the momentum we're seeing adoption across all sorts of all sorts of different applications. We believe a bond overtime will be adopted across all of our end markets for sure.

David Neil Williams: Hey, good afternoon, and thanks for taking my question. Jim, first, maybe if you could talk a little bit about a font.

James Anderson: Sure, thanks, David. So first of all, we're really pleased with the Avant DesignWin opportunity, just the growth in the overall DesignWin opportunity pipeline. I think, as I shared on the last earnings call, we had set last year a pretty aggressive goal for the team in terms of driving new Avant DesignWins, and they actually exceeded that goal. And so we're really pleased with their performance on DesignWins last year. We've set another aggressive goal for this year.

Speaker Change: The scene.

Speaker Change: Great opportunities in industrial applications like automation robotics automotive applications automotive Adas systems for instance.

Speaker Change: Communications applications.

Speaker Change: Datacenter as well over time.

Speaker Change: Example, in communications is one of the things that are bond opens up for us is and specifically the a bond X family.

James Anderson: But we're pleased with the momentum. We're seeing adoption across all sorts of different applications. We believe Avant, over time, will be adopted across all of our end markets. We're certainly seeing great opportunities in industrial applications like automation, robotics, automotive applications, automotive ADAS systems, for instance, communications applications, and data centers as well. You know, an example in communications is one of the things that Avant opens up for us, and specifically the Avant X family, Avant X has higher connectivity speeds that allow us to address data. Up until this point, with the Nexus, a small FPGA portfolio, we've really been addressing primarily control plane applications in communication systems, for instance, both data center communications and telecom.

Speaker Change: Is von tax has higher connectivity speeds that allow us to address data plane applications up until this point with the Nexus of small FPGA portfolio. We've really been addressing are primarily control plane applications in our communication systems for instance, volt datacenter communications and telecom this now or.

Speaker Change: <unk>.

Speaker Change: <unk> now opens up data plane applications for US I think you know we're we're pretty excited about the continued expansion of the design win pipeline.

Speaker Change: We're we're now in the revenue ramping phase with a bond he being the first as I mentioned earlier, the first device family ramping into production, but we're also really excited to get <unk> into revenue as well, we launched <unk> X V is for general purpose axis for additional connectivity speed and ER.

We expect those to start to generate a little bit of revenue before the end of this year, but contribute to revenue next year and then as you can imagine we've got we've got a lot more in the roadmap on the roadmap beyond that and we will share more about that we'll definitely share more about that at or developers conference. In Q4, we will share more about the future of bond.

James Anderson: This now opens up, Avant now opens up data plane applications for us. So I think, you know, we're pretty excited about the continued expansion of the DesignWin pipeline. You know, we're now in the revenue ramping phase, with Avant E being the first, as I mentioned earlier, the first device family ramping into production. But we're also really excited to get G and X into revenue as well. We launched G and X; G is for general purpose, and X is for additional connectivity speed.

Speaker Change: Roadmap as well as Nexus at AR, but we yes, the customer feedback and traction continues to be very positive on bard.

Speaker Change: Thanks, so much for that color and maybe secondly, just anything from a geographic standpoint that stood out to you. It seems like Europe was.

Speaker Change: Just quickly on year over year, but is there is there anything in particular, you would point to and then maybe just sort of what youre seeing in Asia, that's a better worse or anything that you'd point to as a positive or negative. Thank you.

James Anderson: And we expect those to start to generate a little bit of revenue before the end of this year, but they will contribute to revenue next year. And then, as you can imagine, we've got a lot more on the roadmap beyond that, and we'll share more about that. We'll definitely share more.

Speaker Change: Yeah sure. Thanks, Yeah. Thanks, David Yeah in the geographies if you look at Q1.

Speaker Change: The three geographies Americas was pretty much pretty close to our overall company average in terms of what we saw from a for instance from a sequential revenue change from Q4 to Q1, North America kind of track our overall.

David Neil Williams: Thanks so much for that caller. And maybe, secondly, just anything from a geographic standpoint that stood out to you. It seems like Europe was down considerably sequentially year-over-year, but is there anything in particular you'd point to?

Speaker Change: Company average Europe as you mentioned that was weaker than our overall company.

Speaker Change: Revenue that specifically due to weakness in telecommunications as you might expect we have customers that are.

James Anderson: Yeah, sure. Thanks. Thanks, David.

Speaker Change: There are that they will provide telecommunications infrastructure systems, and we saw weakness with those customers and then also specific industrial and automotive customers invest in Europe is of course has some large industrial and automotive customers we saw weakness there.

James Anderson: Yeah, and the geographies, if you look at Q1, the three geographies, America's was pretty close to our overall company average in terms of what we saw from, for instance, a sequential revenue change from Q4 to Q1. North America kind of cracked our overall company average. Europe, as you mentioned, was weaker than our overall company revenue. That was specifically due to weakness in telecommunications. As you might expect, we have customers that provide telecommunications infrastructure systems, and we saw weakness with those customers. And then there are specific industrial and automotive customers. Europe, of course, has some large industrial and automotive customers. We saw weakness there.

Speaker Change: So that that's what drove the weaker performance of Europe in Q1, and then on the flip side, we saw stronger performance than our overall company average in Asia and I would say the main factor there was server growth, where you know a lot of our products that are used in sugar applications are shipped in to ease.

Speaker Change: <unk>, where the servers are assembled and so we saw good strength in <unk> in Asia server demand in particular and as I mentioned before overall compute our computing portion of pounds in compute was sequentially up from Q4 to Q1, primarily on the server demand.

James Anderson: And so that's what drove the weaker performance of Europe in Q1. And then, on the flip side, we saw stronger performance than our overall company average in Asia. And I would say the main factor there was server growth, where a lot of our products that are used in server applications are shipped into Asia, where the servers are assembled. And so we saw good strength in Asia, and server demand in particular. And, as I mentioned before, overall compute our computing portion of comms.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Christopher Rolland with Susquehanna. Please proceed with your question.

Christopher Adam Jackson Rolland: Hey, guys. Thanks for the question.

Christopher Adam Jackson Rolland: I guess first of all Jim going back to <unk>.

James Anderson: to Q1, primarily on server devices.

Christopher Adam Jackson Rolland: Our previous statement that you made I think you said around $50 of.

Operator: Our next question comes from the line of Christopher Rolland with Susquehanna. Please proceed with your question.

Christopher Adam Jackson Rolland: F. P. G. A latest content per server I was wondering what is that content number for nexgen, So Sierra forest granite Rapids terrain.

Christopher Adam Jackson Rolland: Hey guys, thanks for the question. I guess first of all, Jim, going back to a previous statement that you made, I think you said around $50 of FPGA Lattice content per server. I was wondering, what is that content number for next gen?

Christopher Adam Jackson Rolland: So Sierra Forest, Granite Rapids, Turin. And then, you know, it's hard to do compares for AI servers, but I would love to know, kind of, do you think about it on a GPU basis, you know, dollar content per GPU? How do you look at that market, the metrics, and your content there?

And then you know it's hard to do compares for AI servers.

Christopher Adam Jackson Rolland: But I would love to know kind of do you think about it on a GPU base as you know dollar content per GPU, how do you look at that market the metrics and your content there. Thank you.

James Anderson: Yeah, thanks, Chris. On the first part of the question on the server content growth in the current generation, just to correct you, I said 50%. And so we see a 50% increase from the prior generation to the generation that's ramping now, the generation that's ramping now being, in the case of Intel CPUs, a Sapphire Rapids CPU or Gen. AMD.

Speaker Change: Yeah. Thanks, Chris on the first part of the question on the server content growth in the current generation just to correct I said, 50%.

Speaker Change: And so we see a 50% increase from the prior generation to the generation that's ramping now the generation that ramping now being in the case of Intel Cpus, the Sapphire Rapids, a CPU or a generalized CPU from AMD and so we generally see on average when we look across all of our shared with customers about.

James Anderson: And so we generally see, on average, when we look across all of our server customers, about a 50% increase. And then on the second part of your question, oh, just to finish the first part of your question, and then on future generations, we'll share more thoughts on the content increases that we expect on future generations as we get a little closer to those server ramps. But we do believe we continue to have the ability to drive higher levels of dollars of content per server in future generations as well. Like I said, we'll share more details as we get a little closer.

Speaker Change: A 50% increase in content and then on the second.

Speaker Change: A part of your question Oh, Yeah, just to finish the first part of your question and then on the future generations will share more thoughts on on the content increases that we expect on the future generations as we get a little closer to those surber ramps, but we do believe we continue to have the ability to drive.

Higher levels of dollars of content for sure were on the future generations as well, we'll like I said, we'll share more details as we get a little closer and then on the second part of your question on AI servers.

James Anderson: And then on the second part of your question on AI servers, Yeah, in general, if you look at an AI server versus a general purpose server, we have either equal to or greater levels of content. You know, AI servers, as you kind of mentioned, can come in a lot of different configurations. A more simple configuration that's actually closer to what a general purpose server would look like, and then a very highly configured system with many, many GPU cards.

Speaker Change: Yeah in general if you look at an <unk> versus a general purpose server, we have either equal to or greater levels of content.

Speaker Change: Servers as you kind of mentioned can come in a lot of different configurations of more simple configuration, that's actually closer to what a general purpose server would look like and then a very highly configured system with many many GPU.

Cards, and you know simple configuration, we basically have about the same level of content as a general purpose server in one of those and then on the other end of the spectrum and one was highly configure systems, we have generally significantly more content on the highly configured systems, but overall, we see the AI optimized server.

James Anderson: And in a simple configuration, we basically have about the same level of content as a general purpose server on one of those. And then, on the other end of the spectrum, in one of those highly configured systems, we generally have significantly more content on the highly configured systems. But overall, we see the AI-optimized server as a net positive for Lattice, and we've certainly seen strong demand for our products that are used in AI-optimized servers, and that was one of the contributors to growth that we saw in our computing segment from Q4 to Q1, and specifically within that server demand, you know, one of the clear drivers was the AI-optimized server.

As a as a net positive for Lantus and we've certainly seen strong demand for our products that are used in AI optimized servers and that was one of the contributors to growth that we saw in our computing segment from Q4 to Q1 and specifically within that server demand.

Speaker Change: One of the clear drivers was AI optimized servers.

Christopher Adam Jackson Rolland: Great, thanks Jim. For my second one, it's really about kind of some select opportunities that you have and competition for those opportunities. So I think a previous, uh... uh... question was around human uh... I think it was server security, and I think ASPEED is, you know, making some progress there. Google also has their own internal solutions they announced. I don't know if you have an opinion on that. But also, human presence; guys like Synaptics are saying they're taking a share in that market. And then, if you have any new opportunities or new applications that have been popping up that are starting to become meaningful dollar drivers that you might want to put on our radar. Yeah, thanks, Chris. Actually,

Speaker Change: Great. Thanks Jan.

Speaker Change: For my second one it's really about kind of some select opportunities that you have.

Speaker Change: And competition in those opportunities so I think a previous.

Speaker Change: A.

Speaker Change: Question was around human.

Think of a server security and I think a speed is.

Speaker Change: We're making some progress there Google also has their own internal solution. They announced I don't know if you had an opinion on that.

Speaker Change: But also human presence skies like Synaptics are saying, they're taking share in that market and then if you had any new opportunities or new applications that have been popping up that are starting to become meaningful dollar drivers that you might want to put on our radar.

James Anderson: Yeah, thanks, Chris. Actually, on the last part of your question around new opportunities, we did recently share I mentioned this in the prepared remarks that Lattice hardware software is now used on Dell Latitude laptops. We're doing AI, basically an AI algorithm is run on the lattice chip using the video stream to detect things like human presence detection, gaze detection, etc. We're really excited about that partnership with Dell and we expect to benefit in terms of revenue from that in the second half of this year. So that's a relatively new announcement that we made, and that's around AI PCs. And you know, in the past, we shared that we've had a partnership for a number of years with Lenovo.

Speaker Change: Yeah. Thanks, Chris it's actually at the on the last part of your question around new opportunities. We did recently share and I mentioned this in the prepared remarks that lattice hardware shoppers now used on Dell latitude laptops, we're doing.

I basically AI algorithm is run on the latest yet using the video stream to detect our or to detect things like human presence detection gaze detection.

Speaker Change: We're really excited about that partnership with Dell and <unk> and we expect to benefit in terms of revenue from that in the second half of this year. So that's a that's a relatively new announcement that we made and that's around AI P. CS and you know in the past we've shared that we've had a partnership for a number of years.

Speaker Change: With Lenovo, so you'd find lattice chips and software used on Lenovo Thinkpad. For example, so there's a number of places that we've been able to establish proof points in terms of lattices technology being able to you being able to be used for AI processing on the FPGA.

James Anderson: So you'd find lattice chips and software used on Lenovo ThinkPads, for example. So there are a number of places that we've been able to establish a few points in terms of lattice technology being able to be used for AI processing on the FPGA using our software. And this is primarily for inference processing, and as I said, to enable new usage models, AI usage models related to presence detection or gaze detection.

Using our software and this is primarily for inference processing and as I said to enable and a new usage models Ah yeah usage models related.

Speaker Change: Our presence detection or gaze detection and then on the first part of your question, which I think goes back to our security.

James Anderson: And then on the first part of your question, which I think goes back to security or servers, I think, you know, there's a number of different places that lattice chips get used on a server. They can be used for control, management, and security is another place.

Speaker Change: Our servers I think.

Speaker Change: There's a number of different places that lattice chips get used on a on a server that can get used for control management security is another place we feel I'll just reiterate what I said earlier, which is we feel very good about the ability to continue to expand our dollars of content over the coming generation.

James Anderson: We feel, I'll just reiterate what I said earlier, which is, we feel very good about the ability to continue to expand our dollars of content over the coming generations. Now, certainly, you know, there is competition across all of our markets. We face competitors in all of our markets and across all of our products, but we feel, you know, based on customer feedback, we've got a very differentiated, unique solution, not just at the hardware level but software as well. And we believe we're well positioned to continue to expand our footprint and our revenue and servers as well over the coming generations.

Speaker Change: Now certainly there is competition across all of our markets. We we faced competitors in all of our markets and across all of our products.

Speaker Change: But we feel.

Speaker Change: Based on customer feedback, we've got very differentiated unique solution not just at the hardware level, but software as well.

Speaker Change: And we believe we're well positioned to continue to expand our footprint and our revenue and servers as well over the coming generations.

Speaker Change: Thanks, Joe.

Operator: Thank you. Our next question comes from the line of Tristan Gerra with Baird. Please proceed with your question.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Tristan <unk> with Baird. Please proceed with your question.

Tristan Gerra: Hi, good afternoon. Going back on the industrial automotive trends, if we assume kind of 65 million for Q2 in that segment, which takes us slightly below the Q1 20 to one rate, how do we look at true end demand? You know, if you have visibility on that, relative to that kind of mid-60s, you know, quarterly one rate, and is your commentary about second half recovery applying to industry, or if that's the case, which geography do you think is going to emerge first from that on the shipping dynamic?

Hi, good afternoon.

Going back on the industrial and automotive trends, if we assume.

Tristan: 65 million for Q2 in that segment.

Tristan: Which takes us slightly below the Q1 'twenty two run rate.

How do we look at our true end demand.

If you have visibility on that what it is.

Tristan: That kind of mid sixties quarterly.

Tristan: Quarter, one right.

Tristan: Is your commentary about second half recovery applying to industrial Iot. If that's the case with Shojo question do you think is going to emerge first from marathon debt under shipping dynamic.

James Anderson: Yeah, thanks, Tristan. On the first part of your question, yeah, we believe that at this point, for instance, if you take the guidance that we provided for Q2, if we look at the end customer and how much Lattice content that they're consuming as they build their systems, we believe we're under shipping right now in Q2, due to end customer demand. And that's something that we believe happened to Q1 as well. But we also believe that that effect starts to dissipate in the second half.

Tristan: Okay.

Speaker Change: Yeah. Thanks Kristen.

Speaker Change: First part of your question, Yes, we believe that at this point for instance, if you take the guidance that we provided for Q2, if we look at the end customer and how.

Speaker Change: How many how much lattice content that they're consuming as they build their systems. We believe we're under shipping right now in Q2, the end customer demand and that's something that we believe are happened in Q1, as well and but we also believe that that effect starts to dissipate.

Speaker Change: Paid in the second half and it's a gradual dissipation over time, but as customers started to.

James Anderson: And it's a gradual dissipation over time, but as customers start to get their inventory levels back to normal, that drawdown of inventory dissipates in the second half. And then the demand that we start to see from customers naturally goes up to their actual consumption level. So that's what we believe will happen through the rest of this year. And it can be a little bit different by subsegment within industrial and auto, as well as by individual customer.

Get their inventory levels back to normal.

Speaker Change: Is that that drawdown of inventory dissipates in the second half and then the demand that we start to see from the customers naturally goes up to their actual consumption levels. So that's what we believe happens through.

The rest of this year and then it can be a little bit different by subsegment within industrial auto as well as you know are by individual customer we have a lot of customers over 10000 customers, but in aggregate, we believe that that dissipation or that that industry don't draw down inventory.

James Anderson: We have a lot of customers, over 10,000 customers. But in aggregate, we believe that that dissipation or that the industry drawdown, inventory drawdown effect will dissipate in the second half. And the different customers are at different stages of where they're at in that respect. And then on the second part of your question about geographically, we would probably expect to see improvement, let's see, across the geographies. But I would expect to see North America and Europe's industrial and auto sectors probably start to pick up first as that inventory dissipation effect, or that inventory drawdown effect, starts to dissipate.

Speaker Change: On effect dissipates in the second half and there's different customers are at different stages of where they're at in that in that effect.

Speaker Change: And then the second part of your question on geographically.

Speaker Change: We would expect to probably see improve.

Speaker Change: Improvement, let's see across the geographies, but I would I would expect to see North America, and Europe, industrial and auto is probably start to pick up a bit.

Speaker Change: Start to pick up first as that inventory this dissipation effect or.

Speaker Change: Or that inventory drawdown effect starts to dissipate.

Tristan Gerra: Okay, thank you. And then, as a follow-up, how is your distributor dollar inventory comparing with the prior quarter? Is it increasing? If so, by how much was it declining? And then also, if you could quantify this, you know, in weeks' inventory weeks at this season's average?

Speaker Change: Okay. Thank you and then if I may follow up.

Speaker Change: How is your distributor donor inventory comparing with the prior quarter.

Speaker Change: Is it is it increasing and if so by how much or is it declining.

Speaker Change: And then also if you could quantify this.

Speaker Change: Weeks inventory weeks at <unk>.

James Anderson: Yeah, thanks, Tristan. When we look at the distribution inventory, and we have pretty good visibility on that, it's really back to the levels that we saw pre-pandemic. So basically, it's back to that same level, pre-pandemic, before the whole supply chain disruption started. So we view that as a good thing that it's back to those levels, because we think those levels are the right levels to support our end customers and make sure that there's inventory in place, in case demand does start to pick up quickly.

Speaker Change: On average.

Yeah. Thanks, Chris then when we look at the distribution inventory and we have pretty good visibility on that it's really back to the levels that we saw pre pandemic. So basically approximately back to that same level pre pandemic before the the the whole supply chain.

Speaker Change: Disruptions started so we view that as a good thing that it's back to those levels. Because we think those others are the right levels to support our end customers make sure that there is.

Inventory in place in case demand does start to pick up quickly if the market starts to snap back quickly we want to make sure we have inventory position to support them and so I would I would characterize those inventory levels is really back to those pre pandemic levels in and.

James Anderson: If the market starts to snap back quickly, we want to make sure we have an inventory position to support them. And so I would, I would characterize those inventory levels as really back to those pre-pandemic levels. And, and, and then the second part of your question, I think was on weeks of inventory; we don't typically break that out for our distribution partners.

Speaker Change: And then the second part of your question I think was on weeks of inventory, we don't typically break that out for our distribution partners.

Tristan Gerra: Great, thank you very much.

Speaker Change: Great. Thank you very much.

Operator: Thank you. As a reminder, please press star 1 to ask a question at this time. Our next question comes from the line of Ruben Roy with Steve. Please proceed with your question.

Thanks Kristen.

Speaker Change: Thank you as a reminder, please press star one to ask a question at this time.

Speaker Change: Our next question comes from the line of Ruben Roy with Stifel. Please proceed with your question.

Ruben Roy: Thank you. Jim, my first question is a clarification, I think, just on the commentary around the new Nexus devices. At the analyst event last year, I think you talked about some new Nexus devices in development. Is that kind of what you're referring to, or has something changed and you're accelerating the roadmap around Nexus?

Ruben Roy: Thank you Jim My first question is a clarification I think just on the commentary around the new Nexus devices at the at the analyst event last year I think you talked about.

Ruben Roy: Some new Nexus devices in development is that kind of what you're referring to or has something changed in your accelerating the roadmap around nexus.

Yeah.

James Anderson: Yeah, something's changed where we have accelerated the roadmap on Nexus. And yes, we've added additional device options. Think about this as a wider portfolio that we're going to bring out faster than Even what we had back at the developers conference. We've, we've just continued to look at the potential for long-term growth in this segment. And we believe there's, there's great potential for the company to continue to grow in this segment. And so we wanted to bring out even more device options.

Ruben Roy: Yeah.

Ruben Roy: Things changed where we have accelerated the roadmap on Nexus, yes, we've added.

Ruben Roy: Additional device options are think about this as a wider portfolio that we're going to bring out faster than.

Ruben Roy: Even while we had back at the Developers' conference. We've we've just continued to look at the potential for long term growth in this segment and we believe there's a great potential for the company to continue to grow in this segment.

Ruben Roy: So we wanted to.

Ruben Roy: Bring out even more device options to support our customers over the long term and that's in parallel to us continuing to drive the avant roadmap at full speed right that doesn't I want to stress that that doesn't detract in any way from the avant roadmap. That's also very aggressive, but we we found the ability to enhance.

James Anderson: And that's in parallel to us continuing to drive the Avant road map at full speed, right? That doesn't, I want to stress, detract in any way from the Avant road map. That's also very aggressive, but we found the ability to enhance the Nexus road map in parallel to driving a very aggressive Avant road map of introductions of new devices.

Ruben Roy: And then excess roadmap in parallel to driving a very aggressive avant a roadmap of introductions of new devices.

Ruben Roy: Thanks, Jim. Yeah, that's what I thought you were saying, but I want just to make sure on that. And then just as a follow-up on Avant, I just want to make sure I have this right in terms of, you know, sort of the design activity you're seeing, E, and Avani being out first, and I'm not sure if I have this right, but that seemed like it was more specific to, you know, certain processing and really edge processing applications, whereas the other two, G and X, are more general purpose. Would you say that the design activity or, you know, sort of the engagements with your customers are more skewed towards the general purpose, or is that not the right way to think about it?

Speaker Change: Thanks, Tim Yeah. That's that's what I thought you were saying, but I wanted to just make sure on that so thank you for that and then just as a follow up on an avant.

Speaker Change: Okay.

Speaker Change: Just wanted to make sure I have this right in terms of sort of the design activity you're seeing.

Speaker Change: Avanti being out first and I'm not sure if I have this right, but that was it.

Speaker Change: It seemed like it was more specific to certain processing and that it really edge processing applications, whereas the other two gene X are more general purpose would you say that the design activity or or sort of the engagements with your customers are more skewed towards the general purpose or is that not the right way to think about it.

James Anderson: I think, you know, we've got good engagements across all of those different flavors of bonds. They all serve a slightly different purpose. G is, yeah, the broadest general purpose family, while E was more optimized for edge applications. And X has higher connectivity speeds, really optimized more for, for instance, data plane applications. So they all fit a little bit different needs. We're seeing good engagement across all of those. E is just further along in terms of generating revenue, primarily because that was the first one that we introduced. And so we introduced that one first. And so it's just ahead of the G and the X in terms of generating revenue and its revenue ramp over time. Got it. OK.

Speaker Change: I think you know we've got good engagements across all of those different flavors of the bonds. They all serve a slightly different purpose G is yeah. The most broad general purpose family.

Speaker Change: Was more optimized for edge applications and X has higher connectivity speeds really.

Speaker Change: Optimize marker for instance data plane applications. So they all fit a little bit different need we're seeing good engagement across all of those.

Speaker Change: He is just further along in terms of generating revenue because.

Speaker Change: Primarily because that was the first one that we introduced them to introduce that one person. So it's just ahead of the G and the acts in terms of generating revenue in its revenue ramp over it.

Speaker Change: Got it okay.

Ruben Roy: Got it. Okay, that's all I had. Thank you, Jim.

Speaker Change: Okay. That's all I had thank you Jim.

Speaker Change: Yep. Thank you.

Speaker Change: Thank you. Our next question comes from the line of Ducks fan Zhang with Bank of America. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Daxan Jiang with Bank of America. Please proceed with your question.

Daxan Jiang: Hi, good afternoon. Thanks for taking my question. One on software attach, it's been a big push for you guys, obviously. Could you remind us where you are in that progress today? And if the downturn has any impact on that attach rate, would you say when we get out of the downturn in the second half, should we also expect that attach rate to accelerate going forward?

Speaker Change: Hi, good afternoon, Thanks for taking my question.

Speaker Change: One on software attach it's been I think a question you guys. Obviously could you remind us where you are in that progress today and if the downturn.

Zhang: Has any impact on that attachment.

Zhang: Would you say when we get out of a downturn in the second half should we also expect that attach rate to accelerate going forward.

James Anderson: Thanks, Dexan. The quick answer is no; we don't see the downturn affecting the software attach rate at all. And our software attach rate is now over 50%. That means over half the time when we win a new design with customers, customers are choosing to not just use lattice silicon, but more than half the time, they're using one of our software solution stacks as well. And we've got a pretty wide portfolio of software solution stacks now that we've rolled out to the market.

Zhang: Shannon.

Shannon: Quick answer to the there is no we don't see the downturn affecting the software attach rate at all and our soccer attach rate is now over 50% that means over the half the time when we win the new design with customers.

Shannon: Customers are choosing to not just use latter silicon, but they're over half the time, they're using one of our software solution stacks as well and we've got a pretty wide portfolio of software solution stacks now that we've rolled out to the market and remember the software solution stacks are really.

James Anderson: And remember, these software solution stacks are really purpose-built solution stacks for specific end users, common end use cases that are common across multiple customers. And the purpose of these is, number one, to help our customers innovate, to help them design lattice solutions really quickly, but also to get to market quickly as well. They've been really popular with our customers, and we see very high attach rates. We expect that the attach rate to grow over time.

Shannon: <unk> purpose built solution stacks for specific end use your common and use cases that are common across multiple customers and the purpose of these is to number one to help our customers innovate to help and.

Shannon: Zane Lantus solutions in really quickly, but also to get to market quickly as well they've been really popular with our customers. We can see very high attach rates, we expect that attach rate to grow over time.

Shannon: And and that certainly benefits us overtime. It yes, it's not just.

James Anderson: And that certainly benefits us over time. It not only helps our customers innovate, but it creates long-term stickiness with our customers for those solutions. And then there is a benefit over time to the ASPs that we see with design ones that includes But I wouldn't say the software can't, or was affected in any way by the downturn.

Shannon: It helps our customers innovate, but it creates a long term stickiness with our customers for those solutions and then there is a benefit over time to the asps that we see.

Shannon: With design wins that include soccer attach as well, but I wouldn't say the software attach is affected in any way by the downturn.

Daxan Jiang: And then, as a follow-up, just given your data...

Shannon: Awesome.

Speaker Change: And then as a follow up just given you.

Unknown Attendee: Unknown Attendee Obviously, Intel is trying to go public with Altera. They've been reallocating resources into that business, coming out with new products, etc. So how are you seeing competitive dynamics within the FPGA space? Are your customers seeing any changes in behavior?

Speaker Change: Obviously, Intel is trying to go public with Altera, and reallocating resources onto that business coming out with new products et cetera. So how long are you seeing competitive dynamics within the oxygen space are your customers seeing any changes in behavior.

Unknown Attendee: Any color around our Yeah, I would say that, uh,

Speaker Change: Any color on that would be helpful. Thank you.

James Anderson: Yeah, I would say that, you know, first of all, we always take our competition very seriously. And we've always assumed, since the day I joined Gladys, that there'll be robust competition across every one of our markets and products. That's the philosophy that we use to plan out our product roadmaps over the past five plus years. That said, I think we're really well positioned competitively.

Speaker Change: Yeah, I would say that first of all we always take competition very seriously and we've always assumed since the day I joined Gladys we've always assumed there'll be robust competition across every one of our markets and products. That's the philosophy that we used to plan out our product roadmaps over the <unk>.

Speaker Change: Last five plus years.

Speaker Change: I think we're really well positioned competitively I think if I look at our small FPGA portfolio, we talked about an axis are a few different times over the course of this call Nexus is very very differentiated very good performance.

James Anderson: I think if I look at our small FPGA portfolio, we talked about Nexus a few different times during the course of this call. Nexus is very, very, very good performance per watt. So it's got great power efficiency advantages, great features, great physical, small size. I think it's a very strong product, and our customers would say the same.

Speaker Change: Per watt so it's got great power efficiency advantages right features great physical small size I think it was a very strong product and our customers would say the same and then when I look at our new midrange product line Avant E. G. In the ex versions there as well I think that's highly differentiated and our develop.

James Anderson: And then when I look at our new mid-range product line, Avant, the E, the G, and the X versions there as well, I think that's highly differentiated. And at our developers conference in December, I think we demonstrated the level of differentiation of our mid-range products. And we demonstrated those live in competitive demonstrations in December to show the competitive advantages of Avant. So we certainly feel like we're very well positioned, and we believe in small FPGAs. We've gained significant share over the past years, and we see the opportunity to continue to grow and gain share in small FPGAs.

Speaker Change: <unk> conference in December I think we demonstrated the level of differentiation of our mid range products and we demonstrated those lines in competitive demonstrations in December to show the the competitive advantages of our bonds. So we certainly feel like we're very well positioned and we believe.

Speaker Change: Even small FPGA, we've gained significant share over the past years, and we see the opportunity to continue to grow and gain share in small FPGA and then in mid range. We're at the beginning of that avant.

James Anderson: And then in the mid-range, we're at the beginning of that Avant revenue ramp, but we believe that we can grow Avant significantly over the coming years. And remember that Avant uses all the same software as Nexus, so it leverages the same development software, and the same software solution stacks. And when we look at the target customers for Avant, 90% of the target customers for Avant are already customers of Lattice today. So these are customers that are just buying another product from Lattice's product portfolio.

Speaker Change: Revenue ramp, but we believe that we can grow our advanced significantly over the coming years and remember that are finding uses all the same software as Nexus Leverages. The same development software the same software solution stacks and when we look at the target customers for our bond 90% of the target.

Speaker Change: For our bonds are already customers of lattice today. So these are customers that are just.

Speaker Change: <unk> another product from atlanticist product portfolio. They view of bonds is just an extension of the existing latest portfolio. So for all those reasons, we feel really good about the competitive environment, we never take that for granted we always assume its going to be a robust competitive environment, but we do feel good.

James Anderson: They view Avant as just an extension of the existing Lattice portfolio. So for all those reasons, we feel really good about the competitive environment. We never take that for granted. We always assume when it's gonna be a robust competitive environment, but we do feel good about the positioning that we have today and in the coming years.

Speaker Change: About.

Speaker Change: The positioning that we have today and over the coming years.

Thank you.

Operator: Our next question comes from the line of Srinivas Pajjuri with Raymond James. Please proceed with your question.

Sirrine Pudjoe: Our next question comes from the line of Sirrine Pud jewelry with Raymond James. Please proceed with your question.

Srinivas Reddy Pajjuri: Thank you. Hi Jim, I have a couple of questions.

Speaker Change: Thank you Hi, Jim a couple of questions.

Srinivas Reddy Pajjuri: First on the, you know, one of your larger competitors, I guess, Xilinx, end of life, the low end. I think they put out a press release back in January. Obviously, you have a very strong position there given their exit or potential exit from this market. I mean, just curious if you're seeing any impact on your business, any, you know, any more interest in terms of the design activity, and also, if you could help us understand, maybe, how big this opportunity could potentially be for you, you know, to kind of think about the next couple.

Sirrine Pud: Of course on the.

Speaker Change: Wonder if you are logged with xilinx.

Speaker Change: Xilinx.

Sirrine Pud: And have logged the low end I think they put out a press release back in January.

Sirrine Pud: Obviously, you have a very strong position, there and given their exit or potential exit from this market.

Sirrine Pud: Just curious if you're seeing any impact on your business and you know any more interest in terms of the design activity and also if you could help us understand maybe you know how.

Sirrine Pud: How big this opportunity.

Sirrine Pud: It could be potentially there for you.

James Anderson: Yeah, thanks, Trini. So the answer is yes, very beneficial. It was, we view that as very positive that that particular competitor EOLed the number of parts. Part of the reason we're putting our foot on the gas in that segment is because we see competitive opportunity here. And we see the opportunity to continue to gain more share over time against both of our primary competitors.

Sirrine Pud: And I think over the next couple of years.

Speaker Change: Yeah. Thanks Irene.

Speaker Change: The answer is yes very beneficial.

Speaker Change: It was a we view that as very positive that that particular competitor E O L. A the number of parts.

Speaker Change: Part of the reason, we're putting our foot on the gas in that segment is because we see.

Speaker Change: Competitive opportunity here and we see the opportunity to continue to gain more share over time against both of our primary competitors and and so you see us basically doing the opposite which is investing more bringing out more products and I think that's viewed incredibly positive.

James Anderson: And so you see us basically doing the opposite, which is investing more and bringing out more products. And I think that's viewed incredibly positively by our customers. Look, small FPGAs are a critical part of all of our customers' systems, and I think with Lattice, they see a company that's dedicated to sustained investment and innovation in this segment that continues to innovate with every new generation. It is expanding its product offerings and adding new software.

Speaker Change: Our customers look small FPGA is a critical part of all of our customers' systems and I think with lattice. They see a company that's that's.

Speaker Change: That's dedicated to sustained investment in innovation in this segment are that.

Speaker Change: And that continues to innovate on every new generation that is expanding its product offerings, that's adding new software and that's giving them.

James Anderson: And that's giving them long-term assurance on the lifetime of these products that they can rely on for the lifetime of their systems. And for all those reasons, I think they see Lattice as the supplier of choice for small FPGAs over the long term. And that's why we believe we're well positioned to drive continued growth, expansion, and share gain in this segment. We also believe that the same customer excitement about our investment and our innovation spills over into the mid-range as well.

Longterm Sharon's on the lifetime of these products that they can rely on for the lifetime of their systems and push all of those reasons I think they see lattice as the supplier of choice.

Speaker Change: For small FPGA is over the long term horizon and that's why we believe we're well positioned to drive continued growth expansion and share gain in this segment. We also believe that that same.

Customer excitement about our investment our innovation.

Speaker Change: Spills over into mid range as well if you look at those customers those same customers most of our customers mainly use midrange and small FPGA. So that's the primary usage of that ppas with lattice. They have a supplier. That's now got midrange and small FPGA portfolio to offer them that's continuously.

James Anderson: If you look at those customers, those same customers, most of our customers mainly use mid-range and small FPGAs. That's the primary usage of FPGAs. And with Lattice, they have a supplier that's now got a mid-range and small FPGA portfolio to offer them that's continuously innovated and has a long-term strategy of dedicated investment in both hardware and software to meet their needs. And so I think they see us as the supplier of choice in both the mid-range.

Innovated and has a long term strategy of dedicated investment in both hardware and software to meet their needs and so I think the Acs as the supplier of choice in both midrange and small FPGA.

Speaker Change: Got it that's very helpful and then on <unk> I think.

Srinivas Reddy Pajjuri: Unknown Attendee. That's very helpful. And then on Avant, I think previously your expectation was that Avant would contribute about 10 to 15 percent, roughly speaking, of your revenue in the next two to three years. You know, I get a lot of questions about, you know, how we should think about the revenue ramp. And obviously, you know, Avant E seems to be contributing already. So maybe, you know, some pointers on how we should think about contributions this year and next year, even if they're rough numbers. I think that would be very helpful. Yeah, thanks. We, you know, we can.

Speaker Change: Previously in your expectation was that would contribute about 10% to 15% roughly speaking.

Speaker Change: Of your revenue in the next two to three years.

Speaker Change: I got a lot of questions about how we should think about the revenue ramp and obviously you know.

He seems to be contributing already so.

Speaker Change: Maybe some pointers on how we should think about contribution this year and next year, even if it's wrong members.

Speaker Change: Very helpful.

James Anderson: Yeah, thanks. We continue to be focused on the target that we provided in terms of bond revenue over the long term that we provided at that last Investor Day. I think that's the target that you're referencing. We're still very focused on that. And driving towards that target.

Yeah. Thanks, we continue to be focused on the target that we provided in terms of a bond revenue over the long term that we provided at that last Investor day, I think that's the target that you're referencing were still very focused on that and and driving towards that target.

James Anderson: We've given some markers for this year, just in terms of how to qualitatively think about a bond contributing this year; it's more of a contribution in the second half of this year. And then, of course, we expect bonds to grow and contribute more next year. And in the following years, I think as we get closer to, you know, the end of this year and into next year, we can provide maybe some more specifics on where we see a bond.

Speaker Change: We've given some markers for this year just in terms of how to qualitatively think about a bond contributing this year, it's more of a contribution in the second half of this year and then of course, we expect demand to grow and contribute more next year and in the following years I think as we get closer to the end of this year and into next year, we could provide.

Speaker Change: Maybe some more specifics on where we see a bond overtime.

Speaker Change: Got it excellent.

Operator: Thank you. Our next question comes from the line of Christopher Rolland with Susquehanna. Please proceed with your question.

Speaker Change: Yeah.

Speaker Change: Thanks.

Thank you. Our next question comes from the line of Christopher Rolland with Susquehanna. Please proceed with your question.

Christopher Adam Jackson Rolland: Hey guys, just a quick follow-up for Sherri. So Sherri, the tax rate has been stepping up. I believe that's the extinguishment of some NOLs, but correct me if I'm wrong. And where are we on NOLs and the tax rate moving forward? Yeah, thanks, Chris, for your question.

Christopher Adam Jackson Rolland: Hey, guys just a quick follow up for Sherry. So Sherry tax rate has been stepping up I believe that's the extinguishment of some Nols, but correct me, if I'm wrong and where are we on the Nols.

And tax rate moving forward. Thanks.

Sherri Luther: Yeah, thanks, Chris, for your question. So from a tax perspective, actually, Q4 is when we released our evaluation allowance. And so in our last quarterly earnings call, we talked about how to think about the effective tax rate for 2024, which is in the mid to high single digits. And that's how to think about that from an effective tax rate perspective. And for Q1, our effective tax rate was about seven and a half percent.

Sherry: Yeah. Thanks, Chris for your question, so from a tax perspective actually in Q4.

Sherry: When we released our valuation allowance and so in our last quarter's earnings call. We talked about how to think about the effective tax rate for 'twenty 'twenty four which is in the mid to high single digits and that's how they think about that for me I think the tax rate perspective, and for Q1, our effective tax rate was about seven 5%.

Sherry: So that's sort of the the VA has been released to the extent of about 57 million in Q4, and we still have some V. A on our books, but you can probably read and all that fun detailing you when our Q comes out but that gives you a little bit more color on the on the tax rate.

Sherri Luther: So, the VA has been released to the extent of about $57 million in Q4. We still have some VA on our books, but you can probably read about all that fun detail when our Q comes out, but that gives you a little bit more color on the tax rate.

Operator: Thank you. As we have time for one last question, the line comes from Rumid Rowe with Stiefel. Please proceed with your question.

Thanks.

Sherry: Okay.

Speaker Change: Thank you we have time for one last question.

Speaker Change: That's the line comes from real mid row.

Stifel: With Stifel. Please proceed with your question.

Ruben Roy: Hey, it's Ruben Roy. I also have a quick follow-up for Sherri, which I forgot to ask. Sherri, revenue is down quite a bit year over year, but the gross margins have held up. And I'm just wondering if you can comment on that. Obviously, you guys have been doing a great job on pricing optimization, et cetera, but any comments on gross margin and, I guess, how to think about gross margin in the second half as you get some revenue recovery and maybe a little bit of a mixed shift back towards Nexus and a little bit from the new Avant products would be helpful. Thank you.

Stifel: Hey, Ruben Roy.

Speaker Change: I also have a quick follow up for Sherri.

Stifel: Which I forgot to ask sorry.

And you are down quite a bit year over year, but the gross margins have held up and I'm. Just wondering if you can comment on that obviously you guys have been doing a great job on our pricing optimization et cetera, but any comments on gross margin and I guess, how to think about gross margin second half as you you get some revenue recovery and maybe a little bit of a mix shift back towards.

Stifel: Nexus and.

Stifel: A little bit from the new bond products would be helpful. Thank you.

Speaker Change: Sure. Thanks, Reuben So we're really pleased with 69% gross margin in Q1 and that was in line with with what are the mid point of our guidance, though it came in as expected and let me put out our guide for Q1, we talked about the fact that mix was really a driver.

Sherri Luther: So we're really pleased with the 69% gross margin in Q1 that was in line with the midpoint of our guide, and so it came in as expected. And when we put out our guide for Q1, we talked about the fact that mix was really a driver of that sequential decline.

On that sequential decline now for as we look ahead to Q2 and by 69% being at the mid point and again, even though revenue the revenue guide at the midpoint is lower in Q2 and mix. It can still be a factor there, but you know the range of a gross margin of 60% plus or minus one it is a range, but having said that I mean.

Sherri Luther: Now as we look ahead to Q2, with 69% being at the midpoint again, even though the revenue guide at the midpoint is lower in Q2, mix can still be a factor there, but the range of a gross margin of 60% plus or minus one is a range. But having said that, certainly, we've been focusing on our gross margin expansion strategy now that we're in our sixth year. And to date, we've improved our gross margin by about 1,200 basis points.

Certainly we've been focusing on our gross margin expansion strategy nowhere in our 60 year.

And to date, we've improved our gross margin by about 1200 basis points. So it continues to be an area of focus for US you can certainly expect to see fluctuations that can occur on a quarterly basis.

Sherri Luther: So it continues to be an area of focus for us. You can certainly expect to see fluctuations; they can occur on a quarterly basis. But as we put out our long-term model in 2023 and our investor day of gross margin in the low 70s, it continues to be a focus area for us. Thank you, Sherri.

Speaker Change: But you know as we put.

Speaker Change: Put out our long term model in 2023 at our Investor day of gross margin in the low seventies. They it continues to be a focus area for us.

Speaker Change: Perfect. Thank you Shari.

Sherri Luther: Perfect. Thank you, Sherri.

Speaker Change: Thank you.

James Anderson: Thank you. There are no further questions at this time. I'd like to pass the floor over to Jim Anderson for closing comments.

Speaker Change: Thank you there are no further questions at this time I'd like to pass the floor over to Jim Anderson for closing comments.

Operator: Yeah, thank you, operator. And thanks again, everybody for joining us on today's call as we navigate some of these near-term headwinds, absolutely remain focused on executing what is the biggest product portfolio expansion in the history of Lattice. We're very excited about that, and so are our customers, and looking forward to sharing more details about that on our next call. Operator, that concludes today's call. Thank you.

James Anderson: Thank you operator, and thanks again, everybody for joining us on today's call as we as we navigate some of these near term headwinds absolutely remain focus on executing what is the biggest product portfolio expansion in the history of Gladys we're very excited about that and so all of our customers and looking forward to.

Speaker Change: Sharing more details about that on our next call operator that concludes today's call.

Speaker Change: Thank you you may disconnect your lines at this time, thank you for your participation.

Operator: Thank you. You may disconnect your lines at this time. Thank you for your participation.

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