Lattice Semiconductor (NASDAQ: LSCC) reported Q2 EPS of $0.10, $0.05 better than the analyst estimate of $0.05. Revenue for the quarter came in at $102.72 million versus the consensus estimate of $100.04 million.

Second Quarter 2018 Highlights:

• Company continues to execute on business strategy; delivers improved results with revenue at $102.7 million
• Gross Margin of 48.9% on a GAAP basis and 57.2% on a non-GAAP basis
• Gross Margin on a GAAP basis adversely impacted by impairment charges related to discontinuation of non-core millimeter wave business
• Net Loss of $0.16 per share on a GAAP basis and Net Income of $0.10 per share on a Non-GAAP Basis

Glen Hawk, Interim Chief Executive Officer, said, "We exceeded our expectations for the second quarter of 2018. We are delivering revenue growth and higher profitability on a non-GAAP basis by focusing on our core business and further improving operational efficiencies. As an example, after pursuing strategic opportunities, we discontinued our non-core millimeter wave business, which was unable to achieve profitability levels necessary to warrant further investment. We remain committed to increasing shareholder value and are well-positioned for the future as our control, connect and compute solutions are ideally suited for the emerging IoT markets, particularly in the industrial segment."

Max Downing, Chief Financial Officer, added, "The discontinuation of our millimeter wave business resulted in $24 million of primarily non-cash restructuring and impairment charges which impacted GAAP operating expenses and gross margin. Non-GAAP operating expenses for the second quarter were 12% lower, as compared to the first quarter of 2018, at $39.9 million, as we continue to execute improvements to our cost structure. Importantly, this does not yet reflect the expected $13 million annual operating expense reduction from the discontinuation of our millimeter wave business, which will start to benefit us in the third quarter. Our non-GAAP gross margin came in at the high end of our expectations at 57.2% reflecting the acceleration of server related sales and automotive and industrial applications. Another key takeaway from the quarter is that we made a $10 million discretionary payment against our corporate debt and continue to maintain a healthy balance of $106 million in cash and short-term investments."

Business Outlook - Third Quarter of 2018:

• Revenue for the third quarter of 2018 is expected to be between approximately $100 million and $103 million.
• Gross margin percentage for the third quarter of 2018 is expected to be approximately 57% plus or minus 2% on both a GAAP and non-GAAP basis.
• Total operating expenses for the third quarter of 2018 are expected to be between approximately $44 million and $47 million on a GAAP basis and between approximately $39 million and $41 million on a non-GAAP basis. Both GAAP and non-GAAP operating expenses will reflect the initial benefits of the millimeter wave discontinuance. These savings are expected to be offset primarily by $1.5 million in mask and associated project costs related to new product advancements.

GUIDANCE:

Lattice Semiconductor sees Q3 2018 revenue of $100-103 million, versus the consensus of $103.85 million.

For earnings history and earnings-related data on Lattice Semiconductor (LSCC) click here.