Lattice Semiconductor Corporation · NASDAQ:LSCC
Lattice Semiconductor — Investor Day (May 2019)
85 slides from Lattice Semiconductor's investor day presentation, May 20, 2019
Slide 1: The Low Power Programmable Leader - 2019 Financial Analyst Day
Exhibit 99.1 The Low Power Programmable Leader 2019 FINANCIAL ANALYST DAY NEW YORK NASDAQ: LSCC 1 -Exhibit 99.1 The Low Power Programmable Leader 2019 FINANCIAL ANALYST DAY NEW YORK NASDAQ: LSCC 1 -
Slide 2: Safe Harbor
Safe Harbor This presentation contains forward-looking statements that involve estimates, assumptions, risks and uncertainties, including statements relating to our expectations about the growth of our end markets, our belief that we will launch new products over the next 12 months, that we will acc
Slide 3: Agenda
Agenda 1 Overview Jim Anderson 2 Markets Esam Elashmawi 3 Products Steve Douglass 4 Customers Mark Nelson 5 Financials Sherri Luther 6 Q & A All 7 Wrap Up Jim Anderson NASDAQ: LSCC 3 -Agenda 1 Overview Jim Anderson 2 Markets Esam Elashmawi 3 Products Steve Douglass 4 Customers Mark Nelson 5 Financia
Slide 4: Overview
Overview NASDAQ: LSCC 4 -Overview NASDAQ: LSCC 4 -
Slide 5: Overview - Jim Anderson, President & CEO
LATTICE 2019 FINANCIAL ANALYST DAY OVERVIEW JIM ANDERSON PRESIDENT & CEO The Low Power Programmable LeaderLATTICE 2019 FINANCIAL ANALYST DAY OVERVIEW JIM ANDERSON PRESIDENT & CEO The Low Power Programmable Leader
Slide 6: Lattice Opportunity
Lattice Opportunity GROWING HIGH-GROWTH BROAD CUSTOMER DIFFERENTIATED PROFIT END MARKETS APPLICATIONS RELATIONSHIPS TECHNOLOGY GROWTH Large Growing TAM Lowest Power Edge AI & Compute Position in Top OEMs Strong Business Model New Usage Models Smallest Size 5G Infrastructure Multi-generational Above
Slide 7: Changes to Position Lattice for Success
Changes to Position Lattice for Success STRONGER ROADMAP FOCUSED STRATEGY STABLE GROWTH Sustainable, Multi-year Faster Cadence; 100% Focus on FPGA Revenue Streams System Solutions REVITALIZED CULTURE FINANCIAL DISCIPLINE RE-ENERGIZED TEAM Consistent Profitability and New Leadership with Fast, Accoun
Slide 8: Our Mission
Our Mission The Low Power Programmable Leader NASDAQ: LSCC 8 -Our Mission The Low Power Programmable Leader NASDAQ: LSCC 8 -
Slide 9: Positioned in Growing End Markets
Positioned in Growing End Markets COMMUNICATIONS COMPUTE INDUSTRIAL AUTOMOTIVE CONSUMER Smart Home 5G Wireless Industrial IoT ADAS Servers Wearables Switches/Routers Factory Automation Infotainment Client Large $3B SAM with Multiple Secular Growth Drivers NASDAQ: LSCC 9 -Positioned in Growing End Ma
Slide 10: Lattice Product Portfolio
Lattice Product Portfolio BROAD FAMILY OF LOW POWER FPGAs GENERAL PURPOSE Addresses a broad range of applications across multiple markets FPGA FAMILIES TAILORED FOR SPECIFIC NEEDS VIDEO CONNECTIVITY ULTRA LOW POWER CONTROL & SECURITY Optimized for high World’s lowest power Optimized for platform spe
Slide 11: Differentiated Product Strategy
Differentiated Product Strategy OTHER FPGA COMPANIES Focused on Large, High Power Focused on Low Power, Devices for Data Center Compute Smaller Form Factors 10 mm 10 mm ~1 W (Small) 1.40 mm ~1 mW 1.45 mm (Smallest) 55 mm Addressing Applications Where Power Efficiency & Small Size are Important ~200
Slide 12: Solving Problems at the Edge
Solving Problems at the Edge AI & IoT AI Inferencing at the Edge VIDEO 10 mm Embedded Vision 10 mm ~1 W (Small) SECURITY Hardware Platform Security 1.40 mm ~1 mW 1.45 mm 5G INFRASTRUCTURE (Smallest) Control & Management AUTOMATION Precision Robotic Motor Control NASDAQ: LSCC 12 -Solving Problems at
Slide 13: Strong and Diversified Sales Channels
Strong and Diversified Sales Channels STRONG POSITION WITH LEADING OEMS DIVERSE CUSTOMER BASE VIA DISTRIBUTION Diversified Global Footprint with Opportunity to Expand NASDAQ: LSCC 13 -Strong and Diversified Sales Channels STRONG POSITION WITH LEADING OEMS DIVERSE CUSTOMER BASE VIA DISTRIBUTION Diver
Slide 14: Product Roadmap Investment
Product Roadmap Investment FOCUSED AND OPTIMIZED PORTFOLIO EXPANDING OUR SOLUTION STACK Q1’18 Q1’19 FUTURE Non FPGA More Solution Stacks Projects Low ROI TODAY Security Solution Stack Projects Security Solution Stack AI Solution Stack R&D AI Solution Stack BEFORE Spend Soft IP High ROI High ROI Soft
Slide 15: New Products Over the Next 12 Months
New Products Over the Next 12 Months CrossLinkPlus sensAI 2.0 MachXO3D Next Generation Enhanced New AI Robust Platform Next Generation Video Bridging Capabilities Security FPGA Platform Sampling in H2 2019 Launching Today Launching Today Sampling early 2020 NASDAQ: LSCC 15 -New Products Over the Nex
Slide 16: Revenue Growth by End Markets
Revenue Growth by End Markets Revenue Single Digit Growth Double Digit Growth SEGMENT DRIVERS 5G Infrastructure Deployments Servers in Cloud and Enterprise $386M $399M Client Compute Platforms Comms / 29% 31% Compute Industrial IoT Factory Automation Industrial 35% 39% / Auto Automotive Electronics
Slide 17: Gross Margin Expansion
Gross Margin Expansion EXPANSION STRATEGIES GROSS MARGIN Over 62% Pricing Optimization 58.6% 57.2% Product Cost Improvement 56.3% Mix Shift 50% 2017 2018 Q1’19 Target Non-GAAP Driving Multiple Strategies for Gross Margin Expansion NASDAQ: LSCC 17 -Gross Margin Expansion EXPANSION STRATEGIES GROSS MA
Slide 18: Target Long Term Model
Target Long Term Model GROSS MARGIN OPEX OPERATING REVENUE EXPANSION DISCIPLINE PROFIT GROWTH Low Double Digit Over 62% GM OpEx of 35% 25% to 30% NASDAQ: LSCC 18 -Target Long Term Model GROSS MARGIN OPEX OPERATING REVENUE EXPANSION DISCIPLINE PROFIT GROWTH Low Double Digit Over 62% GM OpEx of 35% 25
Slide 19: Positioned for Success
Positioned for Success GROWING HIGH-GROWTH BROAD CUSTOMER DIFFERENTIATED PROFIT END MARKETS APPLICATIONS RELATIONSHIPS TECHNOLOGY GROWTH NASDAQ: LSCC 19 -Positioned for Success GROWING HIGH-GROWTH BROAD CUSTOMER DIFFERENTIATED PROFIT END MARKETS APPLICATIONS RELATIONSHIPS TECHNOLOGY GROWTH NASDAQ: L
Slide 20: Lattice Executive Leadership Team
Lattice Executive Leadership Team Jim Anderson Esam Elashmawi Steve Douglass CEO Marketing & Strategy Research & Development Overview Markets Products Mark Nelson Sherri Luther Glenn O’Rourke Sales CFO Operations Customers Financials Q&A NASDAQ: LSCC 20 -Lattice Executive Leadership Team Jim Anderso
Slide 21: Lattice Executive Leadership Team
Lattice Executive Leadership Team Jim Anderson Esam Elashmawi Steve Douglass CEO Marketing & Strategy Research & Development Overview Markets Products Mark Nelson Sherri Luther Glenn O’Rourke Sales CFO Operations Customers Financials Q&A NASDAQ: LSCC 21 -Lattice Executive Leadership Team Jim Anderso
Slide 22: Markets - Esam Elashmawi
LATTICE 2019 FINANCIAL ANALYST DAY MARKETS ESAM ELASHMAWI MARKETING & STRATEGY The Low Power Programmable LeaderLATTICE 2019 FINANCIAL ANALYST DAY MARKETS ESAM ELASHMAWI MARKETING & STRATEGY The Low Power Programmable Leader
Slide 23: FPGA Value Proposition
FPGA Value Proposition Faster Time to Market Programmability and Tuning Personalization Supply Chain Flexibility Evolving Standards Parallel Processing NASDAQ: LSCC 23 -FPGA Value Proposition Faster Time to Market Programmability and Tuning Personalization Supply Chain Flexibility Evolving Standards
Slide 24: FPGA Market Overview
FPGA Market Overview FPGA MARKET FORECAST 2018 FPGA TAM 1.4X SMALL FPGA FPGA Growth LOW POWER 8% CAGR 1.2X $1.6B $4B Other 1.0X FPGAs Semi Growth (Non-memory) 4% CAGR 0.8X LARGE FPGA 2018 2019 2020 2021 2022 HIGH POWER Source: IHS Q1’19 NASDAQ: LSCC 24 -FPGA Market Overview FPGA MARKET FORECAST 2018
Slide 25: Lattice SAM Expansion
Lattice SAM Expansion LATTICE SAM DOUBLES TO $3B SAM 2022 SAM BY MARKETS NEW APPLICATIONS AI INDUSTRIAL & $0.8B AUTOMOTIVE SAM Security Embedded Vision 42% TRADITIONAL APPLICATIONS 28% 5G Infrastructure 30% Factory Automation $2.2B Server and Client $1.6B SAM SAM Automotive Prosumer COMMS & CONSUMER
Slide 26: 5G Industry Impact
5G Industry Impact COMMS & COMPUTE INDUSTRIAL & AUTO CONSUMER Change Our Connected Drive Infrastructure Drive Re-fresh of Experience Content Connected Devices NASDAQ: LSCC 26 -5G Industry Impact COMMS & COMPUTE INDUSTRIAL & AUTO CONSUMER Change Our Connected Drive Infrastructure Drive Re-fresh of Ex
Slide 27: Lattice Content In 5G
Lattice Content In 5G COMMS & COMPUTE INDUSTRIAL & AUTO CONSUMER 5G MACRO BBU/RRU 5G HETEROGENEOUS NETWORK 5x-10x more RRUs Remote Radio Unit (RRU) Metro Cell Other Functions Other FPGA Pico Cell (e.g. Datapath) Power Mgmt. Bridging Control Functions RRU BBU MDAS Baseband Unit Antennas (BBU) NASDAQ:
Slide 28: Content Increasing in 5G
Content Increasing in 5G COMMS & COMPUTE INDUSTRIAL & AUTO CONSUMER 4G EXAMPLE 5G EXAMPLE Remote Radio Unit Remote Radio Unit (RRU) (RRU) Other Functions Other FPGA (e.g. Datapath) Other Functions >1.3x Power Mgmt. Other FPGA $ Content per Base Station (e.g. Datapath) Bridging Control Functions Cont
Slide 29: Datacenter Market
Datacenter Market COMMS & COMPUTE INDUSTRIAL & AUTO CONSUMER CLOUD BIG DATA Age of Data and Hyperscaler Datacenter Driving Change Processing Build-out NASDAQ: LSCC 29 -Datacenter Market COMMS & COMPUTE INDUSTRIAL & AUTO CONSUMER CLOUD BIG DATA Age of Data and Hyperscaler Datacenter Driving Change Pr
Slide 30: Expanding Position In Servers
Expanding Position In Servers COMMS & COMPUTE INDUSTRIAL & AUTO CONSUMER PRIOR SERVER PLATFORM CURRENT SERVER PLATFORM NEXT GEN SERVER PLATFORM (Ramping Down) (Ramping Now) (In Design Now) Other FPGA, Accelerator Accelerator Accelerator GPUs, etc. Memory Memory Memory CPU CPU CPU Chipset Chipset Chi
Slide 31: Industrial & Automotive
Industrial & Automotive COMMS & COMPUTE INDUSTRIAL & AUTO CONSUMER Factory Machine Robotics Connected Autonomous Electrification Automation Vision NASDAQ: LSCC 31 -Industrial & Automotive COMMS & COMPUTE INDUSTRIAL & AUTO CONSUMER Factory Machine Robotics Connected Autonomous Electrification Automat
Slide 32: Content Increasing In Industrial
Content Increasing In Industrial COMMS & COMPUTE INDUSTRIAL & AUTO CONSUMER Programmable Logic Controller Industrial Networking Predictive Maintenance Motor Control Package Detection Functional Safety Machine Vision Collision Avoidance Sensor Bridging Current revenue drivers Future revenue drivers N
Slide 33: Content Increasing In Automotive
Content Increasing In Automotive COMMS & COMPUTE INDUSTRIAL & AUTO CONSUMER EV CAR Motor Control IGBT Protection ADAS E-MIRROR Image Sensor Bridging INFOTAINMENT De-Fog and Aggregation Driver Monitoring Audio Bridging ISP Radar Sensor Bridging Display Bridging 360° Surround View and Aggregation Curr
Slide 34: Consumer
Consumer COMMS & COMPUTE INDUSTRIAL & AUTO CONSUMER Prosumer Smart Home Wearables NASDAQ: LSCC 34 -Consumer COMMS & COMPUTE INDUSTRIAL & AUTO CONSUMER Prosumer Smart Home Wearables NASDAQ: LSCC 34 -
Slide 35: Consumer
Consumer COMMS & COMPUTE INDUSTRIAL & AUTO CONSUMER Drones Residential Security Smart Light High end Projectors Smart Thermostat AR / VR Smart Appliances Sound Bars Smart Speakers Current revenue drivers Future revenue drivers NASDAQ: LSCC 35 -Consumer COMMS & COMPUTE INDUSTRIAL & AUTO CONSUMER Dron
Slide 36: The Low Power Programmable Leader: $3B SAM
The Low Power Programmable Leader $3B LATTICE SAM IN 2022 GROWTH POTENTIAL INDUSTRIAL & $3B SAM Opportunity AUTOMOTIVE 42% END MARKETS Fast Growing Applications 28% 30% VALUED SOLUTIONS FPGA Proliferation COMMS & CONSUMER COMPUTE NASDAQ: LSCC 36 -The Low Power Programmable Leader $3B LATTICE SAM IN
Slide 37: Lattice Executive Leadership Team
Lattice Executive Leadership Team Jim Anderson Esam Elashmawi Steve Douglass CEO Marketing & Strategy Research & Development Overview Markets Products Mark Nelson Sherri Luther Glenn O’Rourke Sales CFO Operations Customers Financials Q&A NASDAQ: LSCC 37 -Lattice Executive Leadership Team Jim Anderso
Slide 38: Products - Steve Douglass
LATTICE 2019 FINANCIAL ANALYST DAY PRODUCTS STEVE DOUGLASS RESEARCH & DEVELOPMENT The Low Power Programmable LeaderLATTICE 2019 FINANCIAL ANALYST DAY PRODUCTS STEVE DOUGLASS RESEARCH & DEVELOPMENT The Low Power Programmable Leader
Slide 39: R&D Strategy
R&D Strategy STRENGTHS CHALLENGES STRATEGY Talented, Dedicated Team Focus on FPGA Too Many Projects Customer Driven Roadmap Multiple FPGA Architectures Platform Based Design Differentiated Products Growing System Complexity Expand System Solutions NASDAQ: LSCC 39 -R&D Strategy STRENGTHS CHALLENGES S
Slide 40: Focus on FPGA
Focus on FPGA FOCUSED AND OPTIMIZED PORTFOLIO Q1’18 Q1’19 Canceled Non FPGA & Low ROI Projects Non FPGA Projects Low ROI Projects Concentrated Investment in FPGA Projects R&D Spend High ROI High ROI FPGA FPGA Accelerated Investment in Software Projects Projects R&D Spend Within Model (20% of revenue
Slide 41: Platform Based Design
Platform Based Design PRIOR METHOD Product 3 Product 1 Product 2 Lack of Reuse and Scale NEW METHOD PLATFORM 1 PLATFORM 2 Product 2A Product 1A Maximizes Design Reuse Lower Development Cost Product 2B Product 1B Faster Time to Market Product 2C Product 1C NASDAQ: LSCC 41 -Platform Based Design PRIOR
Slide 42: Expand System Solutions
Expand System Solutions FUTURE More Solution Stacks TODAY Security Solution Stack Security Solution Stack AI Solution Stack AI Solution Stack BEFORE Soft IP Soft IP Soft IP Lattice Radiant SW Lattice Radiant SW Lattice Diamond SW Bringing Additional Value to Our Customers NASDAQ: LSCC 42 -Expand Sys
Slide 43: New Products Over the Next 12 Months
New Products Over the Next 12 Months sensAI 2.0 MachXO3D CrossLinkPlus Next Generation Enhanced New AI Robust Platform Next Generation Video Bridging Capabilities Security FPGA Platform Launching Today Launching Today Sampling in H2 2019 Sampling early 2020 NASDAQ: LSCC 43 -New Products Over the Nex
Slide 44: Accelerating AI at the Edge
Accelerating AI at the Edge NASDAQ: LSCC 44 -Accelerating AI at the Edge NASDAQ: LSCC 44 -
Slide 45: Lattice sensAI 2.0: Low Power Inferencing
Lattice sensAI 2.0: Low Power Inferencing sensAI 2.0 High Performance Inferencing Under 1W Lowest power, smallest form factor solutions 10X faster real time image processing Expanded Machine Learning Capability Quantized training for faster development time Adding Keras framework support for broader
Slide 46: sensAI 2.0 Customer Example: IoT Security Camera
sensAI 2.0 Customer Example: IoT Security Camera ALWAYS-ON HUMAN PRESENCE DETECTION PERFORMANCE 5 fps 5x FASTER 1 fps MCU POWER Lattice iCE40 UltraPlus Data Sensors SRAM Sensor 14x (weights / activations) Interface LOWER 100mW Results Neural Network Accelerators MCU 7mW MCU NASDAQ: LSCC 46 - LAUNCHI
Slide 47: Introducing MachXO3D
Introducing MachXO3D NASDAQ: LSCC 47 -Introducing MachXO3D NASDAQ: LSCC 47 -
Slide 48: Lattice MachXO3D
Lattice MachXO3D MachXO3D Secure Hardware Root of Trust capability First on, last off for maximum security Designed for NIST Compliance Protect, Detect AND Recover Secures multiple firmware images Robust Platform Security Customer Samples Delivered Top server OEMs and Hyperscalers Launching Today NA
Slide 49: MachXO3D Customer Example: Hyperscaler Server
MachXO3D Customer Example: Hyperscaler Server REDUCES POWER AND SYSTEM COST FPGA CPU / FPGA CPU / BMC BMC Accelerator PCH Accelerator PCH SWITCH SWITCH SWITCH SWITCH SWITCH SWITCH SPI SPI SPI SPI SPI SPI Memory Memory Memory Memory Memory Memory PROTECT & CONTROL PLD Integrated into a single device
Slide 50: Lattice CrossLinkPlus
Lattice CrossLinkPlus CrossLinkPlus Optimized for Video and Display Aggregate up to five image sensor streams Dedicated MIPI interface for HD capability Instant-On Capability Less than 10 ms boot-up time Enhanced Video Bridging Strong Customer Engagement Q2 2019 Camera and Display applications Sampl
Slide 51: CrossLinkPlus Customer Example: Display Application
CrossLinkPlus Customer Example: Display Application CUSTOM ASIC REQUIRED FOR EACH LATTICE SINGLE DEVICE SOLUTION DISPLAY TYPE DISPLAY 4 DISPLAY 4 DISPLAY 1 DISPLAY 3 DISPLAY 1 DISPLAY 3 DISPLAY 2 DISPLAY 2 ASIC 1 ASIC 2 ASIC 3 ASIC 4 Application Application Application Application Application Applic
Slide 52: Next Generation FPGA Platform
Next Generation FPGA Platform Next Generation FASTER CONNECTIVITY HIGH MIPI SPEED IO Doubled MIPI performance 2x faster DDR3 OPTIMIZED FOR AI Multiple Product INFERENCING Enhanced Families From MEMORY DSP SECURITY One Platform DSP Capability Next Generation 8x More On-Chip Memory FPGA Platform NEW F
Slide 53: Next Generation FPGA Platform
Next Generation FPGA Platform Faster Connectivity Double the video bandwidth HIGH 50% faster system interfaces MIPI SPEED IO Optimized for AI Inferencing Enhanced DSP capability MEMORY DSP SECURITY UP to 5X more on-chip memory NEW FPGA ARCHITECTURE POWER EFFICIENT 28nm FDSOI Advanced Hardware Securi
Slide 54: Architecture Optimized for Power Efficiency
Architecture Optimized for Power Efficiency OTHER FPGA COMPANIES 10 mm 10 mm LUT6 M M M M M M M M M M M M M M M M LUT4 M M M M M M M M M M M M M M M M M M M M M M M M M M M M M M M M 55 mm M M M M M M M M M M M M M M M M M M M M M M M M M M M M M M M M Faster Performance, 2X Larger Area Half the Pow
Slide 55: Expanding Low Power Leadership
..... ..... Expanding Low Power Leadership HALF THE POWER AT THE SAME FDSOI PERFORMANCE Fully Depleted Channel (Low Leakage) 50% Lower power Ultra-thin Buried Oxide Insulator Bulk FDSOI Built on Innovative FDSOI Technology NASDAQ: LSCC 55 - SAMPLING 2020 Relative Power..... ..... Expanding Low Power
Slide 56: Accelerating Innovation
Accelerating Innovation Focus on FPGA HIGH MIPI SPEED IO MEMORY DSP SECURITY Platform Based Design NEW FPGA ARCHITECTURE POWER EFFICIENT 28nm FDSOI Expand System Level Solutions NASDAQ: LSCC 56 -Accelerating Innovation Focus on FPGA HIGH MIPI SPEED IO MEMORY DSP SECURITY Platform Based Design NEW FP
Slide 57: Lattice Executive Leadership Team
Lattice Executive Leadership Team Jim Anderson Esam Elashmawi Steve Douglass CEO Marketing & Strategy Research & Development Overview Markets Products Mark Nelson Sherri Luther Glenn O’Rourke Sales CFO Operations Customers Financials Q&A NASDAQ: LSCC 57 -Lattice Executive Leadership Team Jim Anderso
Slide 58: Customers - Mark Nelson
LATTICE 2019 FINANCIAL ANALYST DAY CUSTOMERS MARK NELSON SALES The Low Power Programmable LeaderLATTICE 2019 FINANCIAL ANALYST DAY CUSTOMERS MARK NELSON SALES The Low Power Programmable Leader
Slide 59: Voice of Our Customers
Voice of Our Customers “We have known the Lattice “I want to give Lattice more “Your competitors are only FAE for years and we trust business…. We would like focused on data center compute him.” to influence your roadmap.” acceleration…we need FPGAs for our business.” System Architect, Prosumer Prod
Slide 60: Enhanced Customer Engagement Strategy
Enhanced Customer Engagement Strategy SALES OPPORTUNITY ENABLING VALUE MODEL PIPELINE SCALE CREATION NASDAQ: LSCC 60 -Enhanced Customer Engagement Strategy SALES OPPORTUNITY ENABLING VALUE MODEL PIPELINE SCALE CREATION NASDAQ: LSCC 60 -
Slide 61: Restructured Sales Team
Restructured Sales Team Business Business Unit 1 Unit 2 Sales 1 Sales 2 Fragmented sales force Unified regional sales team Complex compensation structure Simple compensation structure Siloed knowledgeable talent Collaborative and disciplined NASDAQ: LSCC 61 -Restructured Sales Team Business Business
Slide 62: New Focused Coverage Model
New Focused Coverage Model LATTICE $3B SAM BREAKDOWN IMPROVED COVERAGE MODEL TOP 20 CUSTOMERS Focused coverage 50% NEXT 200 CUSTOMERS 30% Leverage partners BROAD BASE CUSTOMERS 20% Scale with distribution NASDAQ: LSCC 62 -New Focused Coverage Model LATTICE $3B SAM BREAKDOWN IMPROVED COVERAGE MODEL T
Slide 63: Strengthening the Pipeline
Strengthening the Pipeline DESIGN DESIGN DESIGN Increase focus on large OPPORTUNITY WIN IN customers Shipping Drive mix towards multi-year Committed to Lattice solution revenue streams New Design Enable SAM expansion with new Segment Pipeline applications Industrial & Auto 40% Comms & Compute 40% Co
Slide 64: Enabling Scale
Enabling Scale DEMO BOARDS REFERENCE DESIGNS JOINT MARKETING (e.g. Vehicle Classification) (e.g. Package Detection) PROGRAMS DDR SPI Memory Memory SPI to DDR Loader NN Accelerators IPS 8 Engines Engine Counting & Overlay Engine ECP5- 85 Accelerating Time to Market for Broad Set of Customers NASDAQ:
Slide 65: New Value Creation Opportunities
New Value Creation Opportunities EARLY ARCHITECTURAL DRIVING GREATER VALUE BASED ENGAGEMENT WITH SOFTWARE CONTENT INTO SELLING CUSTOMERS SOLUTIONS Market segment pricing Differentiated products System level approach Advanced pricing analytics Outstanding support Solution selling NASDAQ: LSCC 65 -New
Slide 66: Enhanced Customer Engagement Strategy
Enhanced Customer Engagement Strategy COVERAGE OPPORTUNITY ENABLING VALUE MODEL PIPELINE SCALE CREATION Healthy Solutions Early Large SAM Pipeline & Partners Engagement Customers NASDAQ: LSCC 66 -Enhanced Customer Engagement Strategy COVERAGE OPPORTUNITY ENABLING VALUE MODEL PIPELINE SCALE CREATION
Slide 67: Lattice Executive Leadership Team
Lattice Executive Leadership Team Jim Anderson Esam Elashmawi Steve Douglass CEO Marketing & Strategy Research & Development Overview Markets Products Mark Nelson Sherri Luther Glenn O’Rourke Sales CFO Operations Customers Financials Q&A NASDAQ: LSCC 67 -Lattice Executive Leadership Team Jim Anderso
Slide 68: Financials - Sherri Luther
LATTICE 2019 FINANCIAL ANALYST DAY FINANCIALS SHERRI LUTHER CFO The Low Power Programmable LeaderLATTICE 2019 FINANCIAL ANALYST DAY FINANCIALS SHERRI LUTHER CFO The Low Power Programmable Leader
Slide 69: Financial Priorities
Financial Priorities PROFIT REVENUE GROSS MARGIN EXPANSION GROWTH EXPANSION OPEX CASH BALANCE DISCIPLINE GENERATION SHEET STRENGTH NASDAQ: LSCC 69 -Financial Priorities PROFIT REVENUE GROSS MARGIN EXPANSION GROWTH EXPANSION OPEX CASH BALANCE DISCIPLINE GENERATION SHEET STRENGTH NASDAQ: LSCC 69 -
Slide 70: 2018 Accomplishments
2018 Accomplishments REVENUE ($M) GROSS MARGIN EARNING PER SHARE $399 3% 57.2% $0.33 $386 +90 bps 3X 56.3% $0.11 2017 2018 2017 2018 2017 2018 OPEX FREE CASH FLOW ($M) DEBT LEVERAGE RATIO 47.2% $43 5.2X +68% -670 bps $26 3X 40.5% 2017 2018 2017 2018 2017 2018 NASDAQ: LSCC 70 - Note: Non-GAAP, Free C
Slide 71: Revenue Growth by End Markets
Revenue Growth by End Markets Revenue Single Digit Growth Double Digit Growth SEGMENT DRIVERS 5G Infrastructure Deployments Servers in Cloud and Enterprise $386M $399M Client Compute Platforms Comms / 29% 31% Compute Industrial IoT Factory Automation Industrial 35% 39% / Auto Automotive Electronics
Slide 72: Gross Margin Expansion
Gross Margin Expansion EXPANSION STRATEGIES GROSS MARGIN Over 62% Pricing Optimization 58.6% 57.2% Product Cost Improvement 56.3% Mix Shift 50% 2017 2018 Q1’19 Target Non-GAAP Driving Multiple Strategies for Gross Margin Expansion NASDAQ: LSCC 72 -Gross Margin Expansion EXPANSION STRATEGIES GROSS MA
Slide 73: Gross Margin Expansion Strategies
Gross Margin Expansion Strategies GROSS MARGIN BRIDGE EXPANSION STRATEGIES PRICE • New advanced pricing analytics and price management tools Over 62% • Quote to consumption management Mix • New products with new capabilities bring higher ASPs Cost Price COST 57.2% • Operational improvements in effic
Slide 74: OpEx Strategy
OpEx Strategy OPERATING EXPENSES ($M) EXPENSE MANAGEMENT 47% SG&A 41% • Site consolidation 39% • IT and Infrastructure efficiency 35% 22% SG&A • Greater leverage of low cost geos • Operational leverage as revenue grows 21% 20% 15% R&D • Continue portfolio optimization for better ROI 25% R&D 20% 20%
Slide 75: Capital Structure
Capital Structure DEBT BALANCE & LEVERAGE RATIO CASH ALLOCATION 5.2 Maintain cash balance above $100M Excess cash used to pay down debt 3.0 Drive leverage ratio below 2.0 Consider other options for cash after leverage ($M) ratio is met < 2.0 $301 $57 $260 $88 Additional $25M discretionary debt payme
Slide 76: Debt Refinance
Debt Refinance DEBT INTEREST RATE DEBT REFINANCE DETAILS L+425 Reduced interest rate and improved terms L+175 Interest rate dropped by 250 bps; Further step downs as leverage declines OLD CURRENT Extended maturity by 3 years to May 2024 BALLOON PAYMENT SCHEDULE Greater flexibility allowing stock buy
Slide 77: Financial Target Model
Financial Target Model 2018 Q1‘19 Target Model (3 – 4 Yrs.) Revenue Growth (YoY) +3% Flat Low Double Digits Gross Margin* 57.2% 58.6% Over 62% OpEx* 41% 39% 35% Operating Income* 17% 20% 25% - 30% *Non-GAAP NASDAQ: LSCC 77 -Financial Target Model 2018 Q1‘19 Target Model (3 – 4 Yrs.) Revenue Growth (
Slide 78: Financial Priorities
Financial Priorities PROFIT EXPANSION REVENUE GROSS MARGIN 25% to 30% GROWTH EXPANSION OpInc Low Double Digit Over 62% OPEX CASH DISCIPLINE GENERATION BALANCE SHEET 35% Pay Down Debt STRENGTH Leverage <2.0 NASDAQ: LSCC 78 -Financial Priorities PROFIT EXPANSION REVENUE GROSS MARGIN 25% to 30% GROWTH
Slide 79: Q&A
Q&A NASDAQ: LSCC 79 -Q&A NASDAQ: LSCC 79 -
Slide 80: Wrap Up
Wrap Up MARKETS PRODUCTS INDUSTRIAL & AUTOMOTIVE HIGH MIPI 42% SPEED IO 28% MEMORY DSP SECURITY 30% CONSUMER NEW FPGA ARCHITECTURE COMMS & POWER EFFICIENT 28nm FDSOI COMPUTE $3B LATTICE SAM IN 2022 ACCELERATING INNOVATION CUSTOMERS FINANCIALS PROFIT EXPANSION REVENUE GROSS MARGIN 25% to 30% GROWTH E
Slide 81: The Low Power Programmable Leader
The Low Power Programmable Leader 2019 FINANCIAL ANALYST DAY NEW YORK NASDAQ: LSCC 81 -The Low Power Programmable Leader 2019 FINANCIAL ANALYST DAY NEW YORK NASDAQ: LSCC 81 -
Slide 82: Appendix
Appendix NASDAQ: LSCC 82 -Appendix NASDAQ: LSCC 82 -
Slide 83: Operating Expenses Reconciliation
Operating Expenses Reconciliation (Thousands except percentages) Q1 2019 2018 2017 GAAP Operating expenses $ 45,176 $ 222,559 $ 264,199 % of Revenue 46.1% 55.8% 68.5% Amortization of acquired intangible assets (3,389) (17,690) (31,340) Restructuring charges (1,341) (17,349) (7,196) Acquisition relat
Slide 84: Gross Margin Reconciliation
Gross Margin Reconciliation (Thousands except percentages) Q1 2019 2018 2017 GAAP Gross Margin $ 57,652 $ 219,439 $ 216,579 GAAP Gross Margin % 58.8% 55.0% 56.1% Inventory adjustment related to restructured (338) 7,829 - operations Stock-based compensation expense 202 940 788 Non-GAAP Gross Margin $
Slide 85: Earnings Per Share Reconciliation
Earnings Per Share Reconciliation Q1 2019 2018 2017 GAAP net loss per share - diluted 0.05 (0.21) (0.58) Inventory adjs related to restructured operations (0.00) 0.06 - Amortization of acquired intangible assets 0.03 0.14 0.25 Restructuring charges 0.00 0.13 0.06 Acquisition related charges - 0.01 0