• Record quarterly revenue with growth of 28% compared to Q2 2021 and 7% compared to Q1 2022

• Gross Margin expands to 68.5% / 69.1% for Q2 2022 on a GAAP / Non-GAAP basis, compared to 61.3% / 62.1%, respectively, for Q2 2021

• Net Income improves to $0.32 / $0.42 per diluted share for Q2 2022 on a GAAP / Non-GAAP basis, compared to $0.15 / $0.25, respectively, for Q2 2021

* GAAP represents U.S. Generally Accepted Accounting Principles. Non-GAAP represents GAAP excluding the impact of certain activities which the Company's management excludes in analyzing the Company's operating results and in understanding trends in the Company's earnings. Additional information relating to these measures is included below in "Non-GAAP Financial Measures." For a reconciliation of GAAP to non-GAAP results, see accompanying tables "Reconciliation of U.S. GAAP to Non-GAAP Financial Measures."

Lattice Semiconductor Corporation (NASDAQ:LSCC), the low power programmable leader, announced financial results today for the fiscal second quarter ended July 2, 2022.

Jim Anderson, president and CEO, said, "We drove 28% year-over-year revenue growth in Q2 2022 with a year-over-year increase in net income of 104% on a GAAP basis and 68% on a non-GAAP basis. Growth was driven by our strategic segments of communications and computing, and industrial and automotive. We are well positioned in the right strategic markets with a rapidly expanding product portfolio and growing customer momentum."

Sherri Luther, CFO, said, "In Q2 2022, we achieved record operating profit of 29.0% on a GAAP basis and 38.1% on a non-GAAP basis with continued gross margin expansion of 720 basis points on a GAAP basis and 700 basis points on a non-GAAP basis compared to Q2 2021. We continued to drive strong cash flow generation, while executing our seventh consecutive quarter of share buybacks."

Selected Second Quarter 2022 Financial Results and Comparisons (in thousands, except per share data)

	GAAP Financial Results (unaudited)
	Q2 2022			Q1 2022			Q2 2021			Q/Q	Y/Y
Revenue	$	161,372		$	150,515		$	125,905		7.2%	28.2%
Gross Margin %		68.5	%		66.9	%		61.3	%	160 bps	720 bps
R&D Expense %		20.8	%		21.6	%		21.8	%	(80) bps	(100) bps
SG&A Expense %		18.0	%		19.1	%		20.3	%	(110) bps	(230) bps
Operating Expense	$	63,699		$	63,004		$	53,868		1.1%	18.3%
Operating Income	$	46,786		$	37,763		$	23,316		23.9%	100.7%
Net Income	$	44,532		$	36,078		$	21,838		23.4%	103.9%
Net Income per Share - Basic	$	0.32		$	0.26		$	0.16		$0.06	$ 0.16
Net Income per Share - Diluted	$	0.32		$	0.26		$	0.15		$0.06	$ 0.17

	*Non-GAAP Financial Results (unaudited)**
	Q2 2022			Q1 2022			Q2 2021			Q/Q	Y/Y
Revenue	$	161,372		$	150,515		$	125,905		7.2%	28.2%
Gross Margin %		69.1	%		67.7	%		62.1	%	140 bps	700 bps
R&D Expense %		17.8	%		18.2	%		18.4	%	(40) bps	(60) bps
SG&A Expense %		13.1	%		13.2	%		14.6	%	(10) bps	(150) bps
Operating Expense	$	49,943		$	47,243		$	41,528		5.7%	20.3%
Operating Income	$	61,553		$	54,645		$	36,651		12.6%	67.9%
Net Income	$	59,124		$	52,696		$	35,206		12.2%	67.9%
Net Income per Share - Basic	$	0.43		$	0.38		$	0.26		$ 0.05	$ 0.17
Net Income per Share - Diluted	$	0.42		$	0.37		$	0.25		$ 0.05	$ 0.17

Second Quarter 2022 Highlights

	•	Record Revenue: Revenue increased 28% in Q2 2022 compared to Q2 2021 and 7% compared to Q1 2022, with the sixth consecutive quarter of double-digit growth year-over-year.
	•	Profit Expansion: Gross margin expanded 720 basis points on a GAAP basis and 700 basis points on a non-GAAP basis compared to Q2 2021, with net income per diluted share increasing 113% on a GAAP basis and 68% on a non-GAAP basis compared to Q2 2021.
	•	Continued Portfolio Expansion: Lattice introduced MachXO5-NX, the fifth device family built on the award-winning Lattice Nexus™ platform, which enhances system monitoring and control in the industrial, automotive, server and communications markets, with class-leading power efficiency and reliability.
	•	Software Portfolio Expansion: Lattice launched its fifth software solution stack, the ORAN™ Solution Stack, which enables 5G ORAN deployment by providing solutions for robust security, flexible fronthaul synchronization, and low power hardware acceleration.
	•	Lattice Receives Multiple Industry Awards: Lattice was named a 2022 Fortress Cyber Security Awards winner by the Business Intelligence Group, was awarded a Global Infosec Award by Cyber Defense Magazine, and won a Gold Vendor Award from VDC Research. Additionally, Lattice was named a Best-in-Show Award Winner at Embedded World 2022 exhibition and conference for the Lattice CertusPro™-NX FPGA family.
	•	Lattice Added to Russell 1000® Index: Lattice moved up to the large-cap Russell 1000® Index from the Russell 2000® Index, reflecting the Company's tremendous progress.

Business Outlook - Third Quarter of 2022:

	•	Revenue for the third quarter of 2022 is expected to be between $161 million and $171 million.
	•	Gross margin percentage for the third quarter of 2022 is expected to be 69% plus or minus 1% on a non-GAAP basis.
	•	Total operating expenses for the third quarter of 2022 are expected to be between $50 million and $52 million on a non-GAAP basis.

Non-GAAP Financial Measures: In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings release makes reference to non-GAAP financial measures. With respect to the outlook for the third quarter of 2022, certain items that affect GAAP measurement of financial measures are out of the Company's control and/or cannot be reasonably predicted. Consequently, the Company is unable to provide a reasonable estimate of GAAP measurement for guidance or a corresponding reconciliation to GAAP for the quarter. Additional information regarding the reasons the Company uses non-GAAP measures, a reconciliation of these measures to the most directly comparable GAAP measures, and other information relating to these measures are included below, following the GAAP financial information.

Investor Conference Call / Webcast Details:

Lattice Semiconductor will review the Company's financial results for the fiscal second quarter 2022, and business outlook on Monday, August 1 at 5:00 p.m. Eastern Time. The dial-in number for the live audio call is 1-877-407-3982 or 1-201-493-6780 with conference identification number 13730685. A live webcast of the conference call will also be available on the investor relations section of www.latticesemi.com. The Company's financial guidance will be limited to the comments on its public quarterly earnings call and the public business outlook statements contained in this press release.

Forward-Looking Statements Notice:

The foregoing paragraphs contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that involve estimates, assumptions, risks and uncertainties. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. Such forward-looking statements include, but are not limited to, statements relating to our strategic market position; our product portfolio expansion; growing customer momentum; and the statements under the heading "Business Outlook - Third Quarter of 2022." Other forward-looking statements may be indicated by words such as "will," "could," "should," "would," "may," "expect," "plan," "project," "anticipate," "intend," "forecast," "future," "believe," "estimate," "predict," "propose," "potential," "continue" or the negative of these terms or other comparable terminology.

Estimates of future revenue are inherently uncertain due to such factors such as global economic conditions which may affect customer demand, pricing pressures, competitive actions, and international trade disputes and sanctions. In addition, the COVID-19 pandemic continues to impact the overall economy and, as a result of the foregoing, may negatively impact our operating results for future periods. Actual gross margin percentage and operating expenses could vary from the estimates on the basis of, among other things, changes in revenue levels, changes in product pricing and mix, changes in wafer, assembly, test and other costs, variations in manufacturing yields, the failure to sustain operational improvements, and the actual amount of compensation charges due to stock price changes. Actual results may differ materially from our expectations and are subject to risks and uncertainties that relate more broadly to our overall business, including those described in Item 1A in Lattice's most recent Annual Report on Form 10-K and as may be supplemented from time-to-time in Lattice's other filings with the Securities and Exchange Commission, all of which are expressly incorporated herein by reference.

Further economic and market disruptions from COVID-19, future impacts of the military conflict between Ukraine and Russia, and demand changes in secular growth markets may increase or change the severity of our other risks reported in Item 1A in Lattice's most recent Annual Report on Form 10-K. Lattice believes these and other risks and uncertainties could cause actual results to differ materially from the forward-looking statements. New risk factors emerge from time to time and it is not possible for Lattice's management to predict all risk factors. You should not unduly rely on forward-looking statements because actual results could differ materially from those expressed in any forward-looking statements. In addition, any forward-looking statement applies only as of the date on which it is made. The Company does not intend to update or revise any forward-looking statements, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Non-GAAP Financial Measures:

Included within this press release and the accompanying tables and notes are certain non-GAAP financial measures that supplement the Company's consolidated financial information prepared in accordance with U.S. GAAP. The non-GAAP measures presented exclude charges and adjustments primarily related to stock-based compensation and related tax effects, amortization of acquired intangible assets, restructuring plans and other charges, and the estimated tax effect of these items. These charges and adjustments are a result of periodic or non-core operating activities of the Company. The Company describes these non-GAAP financial measures and reconciles them to the most directly comparable GAAP measures in the tables and notes attached to this press release.

The Company's management believes that these non-GAAP financial measures provide an additional and useful way of viewing aspects of our performance that, when viewed in conjunction with our GAAP results, provide a more comprehensive understanding of the various factors and trends affecting our ongoing financial performance and operating results than GAAP measures alone. Management also uses these non-GAAP measures for strategic and business decision-making, internal budgeting, forecasting, and resource allocation processes and believes that investors should have access to similar data.

These non-GAAP measures are included solely for informational and comparative purposes and are not meant as a substitute for GAAP and should be considered together with the consolidated financial information located in the tables attached to this press release.

About Lattice Semiconductor Corporation:

Lattice Semiconductor (NASDAQ:LSCC) is the low power programmable leader. We solve customer problems across the network, from the Edge to the Cloud, in the growing communications, computing, industrial, automotive and consumer markets. Our technology, long-standing relationships, and commitment to world-class support let our customers quickly and easily unleash their innovation to create a smart, secure, and connected world.

For more information about Lattice, please visit www.latticesemi.com. You can also follow us via LinkedIn, Twitter, Facebook, YouTube, WeChat, Weibo or Youku.

Lattice Semiconductor Corporation Consolidated Statements of Operations (in thousands, except per share data) (unaudited)

	Three Months Ended									Six Months Ended
	July 2,			April 2,			July 3,			July 2,			July 3,
	2022			2022			2021			2022			2021
Revenue	$	161,372		$	150,515		$	125,905		$	311,887		$	241,621
Cost of sales		50,887			49,748			48,721			100,635			93,851
Gross margin		110,485			100,767			77,184			211,252			147,770
Operating expenses:
Research and development		33,613			32,555			27,454			66,168			51,520
Selling, general, and administrative		29,024			28,771			25,607			57,795			50,699
Amortization of acquired intangible assets		870			1,169			603			2,039			1,206
Restructuring		136			54			204			190			380
Acquisition related charges		56			455			—			511			—
Total operating expenses		63,699			63,004			53,868			126,703			103,805
Income from operations		46,786			37,763			23,316			84,549			43,965
Interest expense		(891	)		(708	)		(702	)		(1,599	)		(1,420	)
Other (expense) income, net		(243	)		(22	)		(135	)		(265	)		(297	)
Income before income taxes		45,652			37,033			22,479			82,685			42,248
Income tax expense (benefit)		1,120			955			641			2,075			1,597
Net income	$	44,532		$	36,078		$	21,838		$	80,610		$	40,651

Net income per share:
Basic	$	0.32		$	0.26		$	0.16		$	0.59		$	0.30
Diluted	$	0.32		$	0.26		$	0.15		$	0.57		$	0.29

Shares used in per share calculations:
Basic		137,424			137,500			136,388			137,462			136,394
Diluted		140,170			141,281			141,491			140,657			141,637

Lattice Semiconductor Corporation Condensed Consolidated Balance Sheets (in thousands) (unaudited)

	July 2,		January 1,
	2022		2022
Assets
Current assets:
Cash and cash equivalents	$	117,882	$	131,570
Accounts receivable, net		93,380		79,859
Inventories, net		77,478		67,594
Other current assets		25,720		22,328
Total current assets		314,460		301,351

Property and equipment, net		42,741		38,094
Operating lease right-of-use assets		20,407		23,818
Intangible assets, net		27,218		29,782
Goodwill		315,358		315,358
Other long-term assets		16,944		18,091
	$	737,128	$	726,494

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	39,336	$	34,597
Accrued expenses		29,082		26,444
Accrued payroll obligations		20,798		27,967
Current portion of long-term debt		17,192		17,173
Total current liabilities		106,408		106,181

Long-term debt, net of current portion		132,159		140,760
Long-term operating lease liabilities, net of current portion		15,917		19,248
Other long-term liabilities		46,723		48,672
Total liabilities		301,207		314,861

Stockholders' equity		435,921		411,633
	$	737,128	$	726,494

Lattice Semiconductor Corporation Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited)

	Six Months Ended
	July 2,			July 3,
	2022			2021
Cash flows from operating activities:
Net income	$	80,610		$	40,651
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Stock-based compensation expense		27,249			22,374
Depreciation and amortization		14,272			11,759
Other non-cash adjustments		3,445			3,383
Net changes in assets and liabilities		(32,658	)		(7,463	)
Net cash provided by (used in) operating activities		92,918			70,704
Cash flows from investing activities:
Capital expenditures		(8,917	)		(4,413	)
Other investing activities		(5,368	)		(6,377	)
Net cash provided by (used in) investing activities		(14,285	)		(10,790	)
Cash flows from financing activities:
Repayment of long-term debt		(8,750	)		(4,375	)
Repurchase of common stock		(50,161	)		(40,113	)
Net cash flows related to stock compensation exercises		(32,182	)		(9,975	)
Net cash provided by (used in) financing activities		(91,093	)		(54,463	)
Effect of exchange rate change on cash		(1,228	)		(49	)
Net increase (decrease) in cash and cash equivalents		(13,688	)		5,402
Beginning cash and cash equivalents		131,570			182,332
Ending cash and cash equivalents	$	117,882		$	187,734

Supplemental disclosure of cash flow information and non-cash investing and financing activities:
Interest paid	$	1,337		$	1,180
Income taxes paid, net of refunds	$	2,355		$	1,805

Lattice Semiconductor Corporation Supplemental Historical Financial Information (unaudited)

	Three Months Ended
	July 2,			April 2,			July 3,
	2022			2022			2021
Balance Sheet Information
A/R Days Revenue Outstanding (DSO)		53			50			52
Inventory Days (DIO)		139			132			123

Revenue% (by Geography)
Asia		73	%		72	%		77	%
Americas		14	%		15	%		14	%
Europe (incl. Africa)		13	%		13	%		9	%

Revenue% (by End Market)
Communications and Computing		44	%		42	%		42	%
Industrial and Automotive		46	%		46	%		45	%
Consumer		8	%		10	%		10	%
Licensing and Services		2	%		2	%		3	%

Revenue% (by Channel)
Distribution		89	%		90	%		88	%
Direct		11	%		10	%		12	%

Lattice Semiconductor Corporation Reconciliation of U.S. GAAP to Non-GAAP Financial Measures (in thousands, except per share data) (unaudited)

	Three Months Ended
	July 2,		April 2,		July 3,
	2022		2022		2021
*Gross Margin Reconciliation*
GAAP Gross margin	$	110,485	$	100,767	$	77,184
Stock-based compensation - gross margin (1)		1,011		1,121		995
Non-GAAP Gross margin	$	111,496	$	101,888	$	78,179

*Gross Margin % Reconciliation*
GAAP Gross margin %	68.5	%	66.9	%	61.3	%
Cumulative effect of non-GAAP Gross Margin adjustments	0.6	%	0.8	%	0.8	%
Non-GAAP Gross margin %	69.1	%	67.7	%	62.1	%

*Research and Development Expense % (R&D Expense %) Reconciliation*
GAAP R&D Expense %	20.8	%	21.6	%	21.8	%
Stock-based compensation - R&D (1)	(3.0	)%	(3.4	)%	(3.4	)%
Non-GAAP R&D Expense %	17.8	%	18.2	%	18.4	%

*Selling, General, and Administrative Expense % (SG&A Expense %) Reconciliation*
GAAP SG&A Expense %	18.0	%	19.1	%	20.3	%
Stock-based compensation - SG&A (1)	(4.9	)%	(5.9	)%	(5.7	)%
Non-GAAP SG&A Expense %	13.1	%	13.2	%	14.6	%

*Operating Expenses Reconciliation*
GAAP Operating expenses	$	63,699		$	63,004		$	53,868
Stock-based compensation - operations (1)		(12,694	)		(14,083	)		(11,533	)
Amortization of acquired intangible assets		(870	)		(1,169	)		(603	)
Restructuring and other charges		(192	)		(509	)		(204	)
Non-GAAP Operating expenses	$	49,943		$	47,243		$	41,528

*Income from Operations Reconciliation*
GAAP Income from operations	$	46,786	$	37,763	$	23,316
Stock-based compensation - gross margin (1)		1,011		1,121		995
Stock-based compensation - operations (1)		12,694		14,083		11,533
Amortization of acquired intangible assets		870		1,169		603
Restructuring and other charges		192		509		204
Non-GAAP Income from operations	$	61,553	$	54,645	$	36,651

*Income from Operations % Reconciliation*
GAAP Income from operations %	29.0	%	25.1	%	18.5	%
Cumulative effect of non-GAAP Gross Margin and Operating adjustments	9.1	%	11.2	%	10.6	%
Non-GAAP Income from operations %	38.1	%	36.3	%	29.1	%

(1)

The non-GAAP adjustments for Stock-based compensation include related tax expenses.

Lattice Semiconductor Corporation Reconciliation of U.S. GAAP to Non-GAAP Financial Measures (in thousands, except per share data) (unaudited)

	Three Months Ended
	July 2,		April 2,		July 3,
	2022		2022		2021
*Income Tax Expense (Benefit) Reconciliation*
GAAP Income tax expense (benefit)	$	1,120	$	955	$	641
Estimated tax effect of non-GAAP adjustments (2)		175		264		(33	)
Non-GAAP Income tax expense (benefit)	$	1,295	$	1,219	$	608

*Net Income Reconciliation*
GAAP Net income	$	44,532		$	36,078		$	21,838
Stock-based compensation - gross margin (1)		1,011			1,121			995
Stock-based compensation - operations (1)		12,694			14,083			11,533
Amortization of acquired intangible assets		870			1,169			603
Restructuring and other charges		192			509			204
Estimated tax effect of non-GAAP adjustments (2)		(175	)		(264	)		33
Non-GAAP Net income	$	59,124		$	52,696		$	35,206

*Net Income Per Share Reconciliation*
GAAP Net income per share - basic	$	0.32	$	0.26	$	0.16
Cumulative effect of Non-GAAP adjustments		0.11		0.12		0.10
Non-GAAP Net income per share - basic	$	0.43	$	0.38	$	0.26

GAAP Net income per share - diluted	$	0.32	$	0.26	$	0.15
Cumulative effect of Non-GAAP adjustments		0.10		0.11		0.10
Non-GAAP Net income per share - diluted	$	0.42	$	0.37	$	0.25

Shares used in per share calculations:
Basic		137,424		137,500		136,388
Diluted		140,170		141,281		141,491

(1)		The non-GAAP adjustments for Stock-based compensation include related tax expenses.
(2)		We calculate non-GAAP tax expense by applying our tax provision model to year-to-date and projected income after adjusting for non-GAAP items. The difference between calculated values for GAAP and non-GAAP tax expense has been included as the "Estimated tax effect of non-GAAP adjustments."

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Lattice Semiconductor Reports Second Quarter 2022 Results