LATTICE SEMICONDUCTOR CORP

Results of operations for the third quarter and first nine months of fiscal 2026 include AMI only from the July 27, 2026 Closing Date, which affects period-over-period comparisons.

Key elements of our Consolidated Statements of Operations, including as a percentage of revenue, are presented in the following table:

Revenue by End Market

During the first quarter of 2026, we aligned our end market structure to our larger strategic market focus areas. Within our FPGA segment, we sell our products globally to a broad base of customers in two primary end market groups: Compute and Communications, and Industrial and Embedded. AMI revenue reflects revenue recognized following the acquisition date and is presented as a separate end market beginning in the third quarter of 2026 as the AMI boot and firmware revenue model is distinctly different from the FPGA business, and it allows us to enhance comparability with prior disclosures. Across our end markets, our products are increasingly used for AI-related applications, including device usage in AI-optimized servers in data centers, AI-enabled PCs, and AI-enabled robotics and ADAS systems, among others. We also provide IP licensing and services to these end markets.

Within these end markets, there are multiple drivers, including:

The end market data we use is derived from data provided to us by our distributors and end customers. With a diverse base of customers who may manufacture end products spanning multiple end markets, the assignment of revenue to a specific end market requires the use of judgment. We also recognize certain revenue for which end customers and end markets are not yet known. We assign this revenue first to a specific end market using historical and anticipated usage of the specific products, if possible, and allocate the remainder to the end markets based on either historical usage for each product family or industry application data for certain product types.

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The following are examples of end market applications for the periods presented:

The composition of our revenue by end market is presented in the following table:

Note: Effective the first quarter of 2026, we began disaggregating our revenue by Compute and Communications, and Industrial and Embedded. Prior periods have been reclassified to match current period presentation.

Revenue from the Compute and Communications end market increased by 132% for the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025 and increased by 102% for the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025 primarily due to stronger demand in data center applications, including general-purpose and AI-specific servers, as well as wireline networking components.

Revenue from the Industrial and Embedded end market increased by 35% for the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025 and increased by 24% for the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025 primarily due to recovering end market demand particularly from industrial and aerospace customers.

Revenue from the AMI end market is primarily driven by the ongoing buildout of general purpose and AI server infrastructure, as hyperscalers, OEMs, and ODMs continue to expand their global data center footprints.

AI applications are pervasive across our end markets, so we do not consider AI applications as a distinct end market. We expect AI-related revenue to grow over the next few years based on the growing pipeline of AI-related design wins in a diverse set of applications across both of our end market groups.

Revenue by Geography

We have a diverse base of customers where distributors represent a significant portion of our total revenue. Our revenue by geographical market is based on theship-to location of our customers, which can vary from time to time. For the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025 and for the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025, revenue from Asia increased by 155% and 107%, respectively, primarily due to hyperscaler demand and the addition of AMI revenue, while revenue from the Americas increased by 87% and 8%, respectively, primarily due to the addition of AMI revenue partially offset by thenon-recurrence of certainone-time sales in the prior year period, and revenue from Europe increased by 9% and 28%, respectively, primarily due to broad market recovery in this region.

The composition of our revenue by geography is presented in the following table:

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Revenue from Customers

We sell our products to independent distributors and directly to customers. Distributors have historically accounted for a significant portion of our total revenue. Revenue attributable to distributors as a percentage of total revenue was 81% and 83% for the third quarter of fiscal 2026 and 2025, respectively, and 89% and 82% for the first nine months of fiscal 2026 and 2025, respectively.

Gross Margin

The composition of our Gross margin, including as a percentage of revenue, is presented in the following table:

Gross margin, as a percentage of revenue, decreased 50 basis points in the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025 and increased by 50 basis points for the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025. Lower gross margin in the third quarter of fiscal 2026 was primarily due to the amortization of intangible assets associated with our acquisition of AMI in the third quarter of fiscal 2026 and higher stock-based compensation expense, partially offset with changes in product volume and mix between the periods. Higher gross margin for the first nine months of fiscal 2026 resulted primarily from changes in product mix and volume between the periods, partially offset by the amortization of AMI-related intangible assets, which began in the third quarter of fiscal 2026, and higher stock-based compensation expense.

Operating Expenses

Research and Development Expense

The composition of our Research and development expense, including as a percentage of revenue, is presented in the following table:

Research and development expense includes headcount-related costs, including cash- and stock-based compensation and benefits, R&D equipment expenses, engineering wafers, licenses, and outside engineering services. These expenditures are for the design of new products, IP cores, processes, packaging, and software solutions. The increase in Research and development expense for the third quarter and first nine months of fiscal 2026 compared to the third quarter and first nine months of fiscal 2025 was primarily due to higher stock-based and cash-based compensation expense, along with higher depreciation and amortization on semiconductor equipment and licensed software tools, and higher expenses for mask sets and prototypes. The addition of AMI accounts for $15.8 million of the increase in research and development expense, or a 32% change in the three-month comparison and a 12% change in the nine-month comparison. We believe that investing in research and development is important to delivering innovative products to our customers. We expect research and development expense to increase in the future, but to decline as a percentage of revenue.

Selling, General, and Administrative Expense

The composition of our Selling, general, and administrative expense, including as a percentage of revenue, is presented in the following table:

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Selling, general, and administrative expense includes headcount-related costs, including cash- and stock-based compensation and benefits, related to selling, general, and administrative employees, commissions, depreciation, professional and outside services, trade show, and travel expenses. The increase in Selling, general, and administrative expense for the third quarter and first nine months of fiscal 2026 compared to the third quarter and first nine months of fiscal 2025 was primarily due to higher stock-based and cash-based compensation expense. The addition of AMI accounts for $10.5 million of the increase in selling, general, and administrative expense, or a 25% change in the three-month comparison and a 10% change in the nine-month comparison. We expect selling, general, and administrative expense to increase in the future, but to decline as a percentage of revenue.

Amortization of Acquired Intangible Assets

The composition of our Amortization of acquired intangible assets, including as a percentage of revenue, is presented in the following table:

The increase in Amortization of acquired intangible assets for the third quarter and first nine months of fiscal 2026 compared to the third quarter and first nine months of fiscal 2025 was primarily due to the acquisition of AMI intangible assets in the third quarter of fiscal 2026.

Restructuring and Other

The composition of our Restructuring and other activity, including as a percentage of revenue, is presented in the following table:

Restructuring and other is generally comprised of expenses resulting from workforce reductions, cancellation of contracts, and consolidation of our facilities. Details of our restructuring plans and expenses accrued under them are discussed in “Note 12 – Restructuring” to our Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. Restructuring and other costs decreased in the third quarter and first nine months of fiscal 2026 compared to the third quarter and first nine months of fiscal 2025 as we completed the actions planned under the Q3 2024 Plan.

Acquisition Related

The composition of our Acquisition related activity, including as a percentage of revenue, is presented in the following table:

Acquisition related activity includes professional fees and other expenses directly related to acquisitions. For fiscal 2026, Acquisition related expenses were entirely attributable to the AMI Acquisition which we completed in July 2026 and were comprised of professional fees for legal, accounting, and other outside advisory services, and for representations and warranty insurance premiums.

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Interest (Expense) Income, net

The composition of our Interest (expense) income, net, including as a percentage of revenue, is presented in the following table:

Changes in Interest (expense) income for the third quarter and first nine months of fiscal 2026 compared to the third quarter and first nine months of fiscal 2025 were primarily due to interest expenses in the current year periods resulting from the issuance of debt to partially fund the AMI Acquisition as compared to interest income in the prior year periods on cash and cash equivalents. The interest expense related to this debt is comprised of contractual interest on the outstanding principal balance and the amortization of debt issuance costs. Interest expense for the first nine months of fiscal 2026 also includes amortization of debt issuance costs related to the short-term bridge facility from the second quarter of fiscal 2026. See “Note 6 – Long-Term Debt” to our Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information on our debt facility.

Other (Expense) Income, net

The composition of our Other (expense) income, net, including as a percentage of revenue, is presented in the following table:

Changes in Other (expense) income for the third quarter and first nine months of fiscal 2026 compared to the third quarter and first nine months of fiscal 2025 were primarily due to thewrite-off of unamortized debt issuance costs. In the third quarter of fiscal 2026, we wrote off $0.4 million of unamortized debt issuance costs associated with the 2026 Credit Agreement upon discretionary payments made on our long-term debt. The write-offs in the first nine months of fiscal 2026 included this amount as well as $4.7 million of unamortized debt issuance costs related to the bridge facility and $0.2 million of unamortized debt issuance cost associated with the 2022 Credit Agreement upon there-financing of our long-term debt.

Income Tax Expense (Benefit)

The composition of our Income tax expense (benefit) is presented in the following table:

The higher income tax expense for the third quarter and first nine months of fiscal 2026 compared to the third quarter and first nine months of fiscal 2025 was primarily due to increased worldwide income, partially offset by the impact of stock-based compensation combined with federal tax credits.

Adjusted EBITDA

Adjusted EBITDA is anon-GAAP financial measure that we define as net income before net interest income (expense), income tax expense, depreciation and amortization, stock-based compensation, and other items that are considered unusual or not representative of underlying trends of our business, including but not limited to: legal expenses outside the ordinary course of business, transformation charges incurred in connection with ourmulti-year strategic initiative to realign our organizational structure and modernize our technology platforms, restructuring, and other charges, if applicable for the periods presented.

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We believe that the exclusion of the items eliminated in calculating Adjusted EBITDA provides useful measures forperiod-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA provides useful information in understanding and evaluating our operating results in the same manner as our management and our Board of Directors. Adjusted EBITDA should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. Other companies, including companies in our industry, may calculate similarly-titlednon-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of Adjusted EBITDA as a tool for comparison.

There are a number of limitations related to the use of Adjusted EBITDA rather than net income, which is the most directly comparable financial measure calculated in accordance with GAAP. Some of the limitations of Adjusted EBITDA include (i) Adjusted EBITDA does not properly reflect capital commitments to be paid in the future, and (ii) although depreciation and amortization arenon-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these potential capital expenditures. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these expenses or any unusual ornon-recurring items, as in the future we may incur expenses similar to the adjustments in this presentation. Evaluation of our performance should consider Adjusted EBITDA alongside other financial performance measures, including our net income and other GAAP results.

A reconciliation of Net income to Adjusted EBITDA, including as a percentage of revenue, is presented in the following table:

Adjusted EBITDA increased for the third quarter and first nine months of fiscal 2026 compared to the third quarter and first nine months of fiscal 2025 primarily as a result of higher revenue, partially offset by higher headcount-related expenses and higher expenses for mask sets and prototypes, and the addition of AMI.

Liquidity and Capital Resources

The following sections discuss material changes in our financial condition from the end of fiscal 2025, including the effects of changes in our Consolidated Balance Sheets, and the effects of our credit arrangements and contractual obligations on our liquidity and capital resources. There continues to be uncertainty around the extent of market volatility, the impact of tariffs, inflationary pressures, interest rate changes, recessionary concerns, uncertainty in the financial and banking industry, and geopolitical tension, which may impact our liquidity and working capital needs in future periods.

We have historically financed our operating and capital resource requirements through cash flows from operations and from the issuance of long-term debt to fund acquisitions. Cash provided by or used in operating activities will fluctuate from period to period due to fluctuations in operating results, the timing and collection of accounts receivable, and required inventory levels, among other things.

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We believe that our financial resources, including current cash and cash equivalents, cash flow from operating activities, and our credit facilities, will be sufficient to meet our liquidity and working capital needs, including the cash and covenant requirements under the term loans, through at least the next 12 months. On June 30, 2026, we entered into our 2026 Credit Agreement, as described in “Note 6 – Long-Term Debt” under Part I, Item 1 of this report. As of October 3, 2026, we did not have significant long-term commitments for capital expenditures. For further information on our cash commitments for operating lease liabilities, see “Note 8 – Leases” under Part I, Item 1 of this report.

In the future, we may continue to consider acquisition opportunities to further extend our product or technology portfolios and further expand our product offerings. In connection with funding capital expenditures, acquisitions, securing additional wafer supply, increasing our working capital, or other purposes, we may seek to obtain equity or additional debt financing. We may also seek to obtain equity or additional debt financing if we experience downturns or cyclical fluctuations in our business that are more severe or longer than we anticipated when determining our current working capital needs.

Cash and cash equivalents

As of October 3, 2026, we had Cash and cash equivalents of $128.3 million, of which $82.4 million was held by our foreign subsidiaries. We manage our global cash requirements considering, among other things, (i) available funds among our subsidiaries through which we conduct business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances. The repatriation ofnon-US earnings may require us to withhold and pay foreign income tax on dividends. This should not result in our recording significant additional tax expense as we have accrued expense based on current withholding rates. As of October 3, 2026, we could access all cash held by our foreign subsidiaries without incurring significant additional expense.

The net decrease in Cash and cash equivalents of $5.6 million between January 3, 2026 and October 3, 2026 was primarily driven by cash flows from the following activities:

Operating activities — Cash provided by operating activities results from net income adjusted for certainnon-cash items and changes in assets and liabilities. Cash provided by operating activities for the first nine months of fiscal 2026 was $233.6 million compared to $117.5 million for the first nine months of fiscal 2025. This increase of $116.1 million was primarily driven by $109.3 million more cash provided by net income adjusted fornon-cash items, coupled with $6.8 million of net changes in working capital.

Investing activities — Investing cash flows consist primarily of the AMI Acquisition in the third quarter of fiscal 2026, transactions related to capital expenditures, payments for software and intellectual property licenses, and purchases of other investments. Net cash used by investing activities in the first nine months of fiscal 2026 was $1,042.7 million compared to $41.1 million in the first nine months of fiscal 2025. This increase of $1,001.6 million results primarily from the $971.3 million of net cash paid for AMI. Capital expenditures and cash paid for software and intellectual property licenses increased by $29.0 million in the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025 as we invest in equipment and tools to support the growth of the business.

Financing activities — Financing cash flows consist primarily of activity related to our long-term debt, tax payments related to the net share settlement of restricted stock units, proceeds from the acquisition of common stock under our employee stock purchase plan, and repurchases of common stock. Financing activities provided net cash of $803.3 million in the first nine months of fiscal 2026 compared to using net cash of $95.3 million in the first nine months of fiscal 2025. This increase of $898.6 million was due to the following activities: (i) during the first nine months of fiscal 2026, we borrowed $925 million under the term loans pursuant to the 2026 Credit Agreement, the proceeds of which were used in the AMI Acquisition, we paid $12.3 million in issuance costs related to new long-term debt under the bridge facility and the 2026 Credit Agreement, and we made discretionary prepayments totaling $50.0 million on the outstanding principal balance under the 2026 Credit Agreement; (ii) payments for tax withholdings on vesting of RSUs partially offset by purchases under the employee stock purchase plan used net cash flows of $44.4 million in the first nine months of fiscal 2026, an increase of $35.0 million from the net $9.4 million used in the first nine months of fiscal 2025; and (iii) during the first nine months of fiscal 2026, we repurchased 0.2 million shares of common stock for $15.0 million, a decrease of $70.9 million compared to the first nine months of fiscal 2025, where we repurchased 1.5 million shares of common stock for $85.9 million.

Accounts receivable, net

Accounts receivable, net as of October 3, 2026 increased by $60.4 million, or 59%, compared to January 3, 2026. This increase was primarily due to the acquisition of $48.3 million of net accounts receivable in the AMI Acquisition, coupled with increased revenue and order scheduling through the quarter. We calculate Days sales outstanding on the basis of a 365-day year as Accounts receivable, net at the end of the quarter divided by sales during the quarter annualized and then multiplied by 365.

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Inventories

Inventories as of October 3, 2026 increased by $31.4 million, or 35%, compared to January 3, 2026 as we build inventory to meet expected continued demand growth.

The Days of inventory on hand ratio compares the inventory balance at the end of a quarter to the cost of revenue in that quarter. We calculate Days of inventory on hand on the basis of a 365-day year as Inventories at the end of the quarter divided by Cost of revenue during the quarter annualized and then multiplied by 365.

Credit Arrangements

As of October 3, 2026, we had no used or unused credit arrangements beyond the facilities described in the 2026 Credit Agreement. The details of this arrangement are described in “Note 6 – Long-Term Debt” in the Notes to Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

Share Repurchase Program

See Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds,” of this Quarterly Report on Form 10-Q for more information about the share repurchase program.

New Accounting Pronouncements

The information contained under the heading “New Accounting Pronouncements” in Note 1 – Basis of Presentation to our Consolidated Financial Statements in Part I, Item 1 of this report is incorporated by reference into this Part I, Item 2.