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Lattice Semiconductor Corp  (NASDAQ:LSCC)
Q4 2018 Earnings Conference Call
Feb. 12, 2019, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day. My name is Jerica and I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter and Full Year 2018 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. (Operator Instructions)

It is now my pleasure to turn today's program over to David Pasquale of Global IR Partners. Sir the floor is yours.

David Pasquale -- Global IR Partners

Thank you, operator. Welcome everyone to Lattice Semiconductor's fourth quarter and full year 2018 results conference call. Joining us from the company are Mr. Jim Anderson, Lattice's President and CEO; and Mr. Sherri Luther, Lattice's Chief Financial Officer. Both executives will be available for Q&A after the prepared comments. If you have not yet received a copy of today's results release, please email Global IR Partners using lscc@globalirpartners.com or you can get a copy of the release off of the Investor Relations section of Lattice Semiconductor's website.

In addition to today's result, we would ask that you please note on your calendars that Lattice's management will be hosting Investor Meetings at Morgan Stanley's Technology Media and Telecom Conference in San Francisco on February 25th and at Susquehanna's Annual Technology Conference in New York City on March 12th. Please also note Lattice will be hosting our Analyst and Investor Day in New York City at NASDAQ's market site in Times Square on May 20th. If you would like to attend the May 20th Analyst and Investor Day please RSVP by emailing your contact information to lscc@globalirpartners.com.

Before we begin the formal remarks, I'll review the Safe Harbor statement. It is our intention that this call will comply with requirements of SEC Regulation FD. This call includes and constitutes the company's official guidance for the fiscal first quarter of 2019. 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.

The matters that we discuss today, other than historical information, include forward-looking statements relating to our future financial performance and other performance expectations. Investors are cautioned that forward-looking statements are neither promises nor guarantees. They involve risks and uncertainties that may cause actual results to differ materially from those projected in the forward-looking statements.

Some of those risks and uncertainties are detailed in our filings with the Securities and Exchange Commission, including our Form 10-K for the fiscal year ended December 30, 2017 and our quarterly reports on Form 10-Q. The company disclaims any obligation to publicly update or revise any such forward-looking statements to reflect events or circumstances that occur after this call.

Our prepared remarks will also be presented within the requirements of SEC Regulation G regarding Generally Accepted Accounting Principles or GAAP. Some financial information presented by us during the call will be provided on both, a GAAP and on a non-GAAP basis. 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.

Management uses non-GAAP measures to better assess operating performance and to establish operational goals. Non-GAAP information should not be viewed by investors as a substitute for data prepared in accordance with GAAP.

I would like to now turn the call over to Lattice's President and CEO, Mr. Jim Anderson. Please go ahead sir.

Jim Anderson -- President, Chief Executive Officer and Director

Thank you, David, and thank you, everyone for joining us on our call today. I've been on board for about five months now and I continue to be very excited about the potential of Lattice. We're well-positioned in large growing markets, we have a solid footprint across many of the world's leading OEMs and we have a differentiated product portfolio with new products coming to market later this year. And we now have a new management team in place to lead the company forward.

Despite the uncertainty in the current macroeconomic climate, I am pleased to report that Q4 of 2018 developed as planned with revenue, gross margin, and operating expenses in line with our expectations.

In Q4, we also expanded cash flow from operations by roughly $20 million sequentially and we made another $15 million discretionary debt payment as we continued to de-lever our balance sheet.

In terms of the full year, 2018 was an important transition year for us. We shut down non-performing businesses to focus on our profitable and growing programmable logic business. And we made solid financial progress in 2018 across a number of key areas.

We improved our profitability and raised our non-GAAP operating income from 9% of sales in 2017 to 17% of sales in 2018. And we tripled our non-GAAP EPS year-over-year as we continue to focus on driving profitability expansion.

We also significantly improved our cash flow in 2018 and used our cash to delever the balance sheet. In 2019 and beyond, we will continue our focus on driving profitable revenue growth and bottom-line results that builds greater value for our shareholders.

Let me now provide an overview of our business by end market. In the communications and compute, market revenue was roughly flat sequentially in Q4 and up about 9% for the full year of 2018. We benefited in 2018 from growth in our products that are used for manageability and security in servers.

We have a strong position across a number of different server benders. And we saw a good growth in 2018 as a current server platform generation began to ramp in data center in cloud applications.

We are also seeing strong customer interest in our early access program for our next-generation security solution. We believe our next-gen solution has a solid competitive advantage and that server and client security can be an important growth factor for us moving forward.

In the communications market, we are starting to see early demand related to the 5G wireless infrastructure build out. We expect the 5G build out to be a growth driver for us since we are well-positioned across many OEM 5G platforms.

However, although we are seeing initial demand from 5G, it's still in the early stages of the ramp and we continue to expect 5G to be a material contributor to our revenue in the second half of 2019 and into 2020.

Turning now to the industrial and automotive market, revenue was down sequentially in Q4 by 8% and up 17% for the full year 2018. As expected we experienced softness in Q4 in this segment, particularly in Asia which we believe is related to the uncertain macroeconomic climate and trade tensions.

For the full year the strong growth in the industrial and auto market was driven by increased automation in factories and increased electronic content in autos. In automotive, we are gaining traction with our CrossLink solution for video bridging for ADAS and infotainment systems. We are also seeing strong design win momentum in wide range of industrial automation applications such as autonomous robots and motor control.

Turning now to the consumer market. Revenue was down sequentially in Q4 by 21% and down 9% for the full year 2018. The Q3 to Q4 decline was due primarily to macroeconomic weakness, particularly, in Asia as well as product life cycle transitions.

Moving forward we are focused on serving the high-margin areas of the consumer market where our solutions can help designers competitively, differentiate their products with high value add features, such as voice recognition and face detection.

Our business has already moved away from the more volatile and low-margin handset market. And we intend to be more selective in this market segment as we focus on profitable revenue growth moving forward.

In summary, despite some uncertainty in our end markets, due to the current macroeconomic climate and trade tensions, we are positioned to benefit over the long-term from multiple catalysts in our business, including growth in servers used in data centers, growth in industrial and automotive applications, and the global 5G build out. We are excited about 2019 as we unlock additional value for the company and its shareholders.

Let me now transition from talking about our end markets to providing a couple other recent product highlights. We are very pleased that our Lattice sensAI solution stack was just named a hot 100 product of 2018 by EDM magazine. Lattice sensAI combines programmable hardware, neural network IP, software tools and reference designs to accelerate customer development of AI influence in a wide variety of Edge computing applications.

In 2018, we also launched Lattice Radiant, which is our next-generation FPGA design software. Ease-of-use is the key features of Radiant because that helps accelerate customer adoption as we expand our reach across the broad market with our low power solutions.

Finally, over the past months, we've also simplified the company's operating structure and added experience proven leaders to all critical business functions. In addition to the new R&D and marketing leaders that I discussed on our Q3 call, we recently added three new important leaders to our team.

Glenn O'Rourke joined Lattice in December from Xilinx to lead our global operations and supply chain team. Sherri Luther joined Lattice in January from Coherent as our Chief Financial Officer. And Mark Nelson joined Lattice in January from Intel's Programmable Solutions Group as our Head of Worldwide Sales. Our new leadership team is excited about the opportunities ahead for us to unlock the full potential of the company.

With that, I would now like to welcome our new CFO, Sherri Luther to the call. We are very pleased to have Sherri on our team. Sherri is a CPA with nearly 30 years of financial and operational expertise. Most recently she served as Corporate Vice President of Finance at Coherent. Sherri is a great addition to the Lattice team given her extensive financial and operational experience.

Let me now turn the call over to Sherri.

Sherri Luther -- Chief Financial Officer

Thank you, Jim. I am excited to join Lattice given the company's position and a high-value segment of the semiconductor industry and the impressive leadership team Jim has assembled. I look forward to working closely with all of our investors and analysts as we execute on our strategy.

Let me know give you a summary of our results. Results for the fourth quarter met our expectations. Revenue was $96 million, which was within our expectations and down by 5.4% from the third quarter revenue. For the full year, revenue was up 3.3% to $398.8 million from $385.9 million in 2017.

Gross margin on a GAAP basis was 56.6% compared to 57.5% in the third quarter. Our non-GAAP gross margin was 56.7%, which is down from 57.4% in the prior quarter, primarily due to product mix. We are working to return to sequential gross margin improvement in Q1 as we remain committed to expanding gross margin over the longer term.

For the full year 2018, gross margin was 55% on a GAAP basis and 57.2% on a non-GAAP basis compared to 56.1% and 56.3% respectively in 2017. Fourth quarter GAAP operating expenses were $56 million compared to $45.4 million in the third quarter. On a non-GAAP basis, operating expenses were $37.8 million compared to $38.4 million in the third quarter. Our GAAP net loss for the fourth quarter was $7.1 million or $0.05 per basic and diluted share compared to net income of $7 million or $0.05 in the third quarter.

The fourth quarter includes restructuring charges of $11.9 million compared to $90,000 in Q3. On a non-GAAP basis fourth quarter net income was $11.1 million or $0.09 per basic and $0.08 per diluted share, as compared to $13.8 million or $0.11 per basic and diluted share in the third quarter.

On a full year basis GAAP net loss reduced to $26.3 million or $0.21 per basic and diluted share compared to a net loss of $70.6 million or $0.58 per basic and diluted share in 2017. On a non-GAAP basis net income expanded for the full year 2018 to $43.4 million or $0.34 per basic and $0.33 per diluted share compared to $13.6 million or $0.11 per basic and diluted share in 2017.

During the fourth quarter, we generated $31 million in cash flow from operations, an increase of $20 million from the third quarter. For the full year 2018, we increased cash flow from operation to $51.5 million as compared to $38.5 million in 2017.

We have been actively working to delever our balance sheet and we made another $15 million discretionary debt payment in Q4 or a total of $40 million in discretionary principal payment during 2018. We expect to continue to reduce our corporate debt balance through discretionary payments.

Finally, we increased our balance of cash and short-term investments to approximately $128.7 million at the end of Q4 from to $117.5 million at the end of Q3. As we look forward we remain committed to increasing our profitability and cash flow and delevering our balance sheet.

Once again I am very pleased to be part of the Lattice team and excited about our future. This concludes my financial review. Let me now turn the call back to Jim for Lattice's outlook. Jim please go ahead.

Jim Anderson -- President, Chief Executive Officer and Director

Thank you, Sherri. Revenue for the first quarter of 2019 is expected to be between approximately $94 million and $98 million. Gross margin is expected to be approximately 57.5% plus or minus 2% on a non-GAAP basis. Total operating expenses for the first quarter are expected to be between $37 million and $39 million on a non-GAAP basis.

Operator we can now open the call for questions.

Questions and Answers:

Operator

(Operator Instructions) Our first question comes from the line of Charlie Anderson with Dougherty & Company.

Charlie Anderson -- Dougherty & Company -- Analyst

Yes. Thanks for taking my question and my congrats on a strong Q1 guide in light of the tough conditions that are out there for sure. So wanted to start Jim with sort of a big picture question that you've outlined, there's opportunities here at Lattice to enhance profitability. And then also drive a enhanced product portfolio and roadmap for your customers.

I wonder if you could maybe just update us on kind of roughly where you're at on those. And maybe some of the things we should think about happening in 2019, sort of along those lines and those endeavors? And then I've got a follow-up.

Jim Anderson -- President, Chief Executive Officer and Director

Yes, sure. Thanks Charlie. Let me start with profitability. So certainly, we're very focused especially with now having the new team in place, very focused on profitability expansion moving forward. Couple of things that we're looking at is, first in gross margin we do -- we're looking at how to expand gross margin moving forward.

And we're looking at a couple of different places. We -- in Q4 we started what we are calling a strategic pricing optimization project to really look across all the different ways that we're pricing our products and making sure that we're kind of driving maximum value from our products. And so, we're expecting to begin to see a little bit of benefit of that actually in Q1 as we started that program in Q4.

And then also, in gross margin, we're also looking at the product cost side of the equation. And so, we also kicked off some efforts in Q4 on product cost improvement. And we expect to start to see a little bit of benefit of that in Q1 as well. So it's kind of on gross margin. And then on OpEx, it's just been very disciplined about OpEx and how we're deploying our spending.

On R&D we believe that we're at about the right level from a percentile basis with R&D at kind of a target around 20% of sales. But within that envelope, we're really trying to optimize and make sure that we've got our R&D focused on the highest ROI programs. And so we did some work in Q4 to make sure we're focused on the highest ROI programs.

And then, in SG&A, SG&A is an area where we need to reduce spending over time. And that will take some time. But our target is really to get SG&A more toward the mid-teens over time. And so, those are some things that we're doing in both gross margin and OpEx to kind of drive profitability moving forward.

And then on the product portfolio, very focused in building out our product roadmap. And making sure that we've got really good plans in place for the R&D team moving forward, to really deliver products on a more regular cadence and really drive the innovation treadmill.

But again, deliver those products on a much more reliable and regular cadence that we have in the past. And I think, we're doing that in partnership with our big customers, making sure that we understand exactly what they need. Again, really tuning the roadmap to our customers and making sure we have a good D rate. So that's a little bit of color on both those, what we're focused on for 2019.

Charlie Anderson -- Dougherty & Company -- Analyst

Excellent. Much appreciate the commentary, Jim. Just a quick housekeeping question. The licensing and services line was a decent portion of mix, relative to usual, I guess, in Q4 may be just what was behind that? And then, given that that's historically a higher margin line, I'm just sort of curious what it's influence on gross margin was, seeing that was a higher portion of the mix? Thanks.

Jim Anderson -- President, Chief Executive Officer and Director

Yes. What we saw in Q4 is you saw a little bit of an uptick in licensing and IP revenue. We expect that moving into Q1 that that will settle back into its more normal run rate. Licensing and services has typically less than 5% of our revenue sort of in the 3% to 4% range. And we expect it to kind of tip back down to Q1 to that kind of run rate.

With respect to gross margin in Q4, if you look at where we had guided gross margin for Q4, in terms of our midpoint, we had guided gross margin down for Q3 to Q4. We were expecting some product mix negative impact from Q3 to Q4 and we saw that happen.

Now going forward to Q1 we are, from a midpoint gross margin perspective, guiding gross margin up. And that's from a number -- there's sort of a number of different factors there. We do expect the mix to kind of improve back and from Q4 to Q1. So we expect some mix improvement.

We also, again, as I mentioned earlier, expect to start to some see some benefit from our pricing optimization. Those will start to be small in Q1, but we expect to see some benefit from that. And then also, benefits from our cost optimization program that we kicked off in Q4. I hope that's a little bit more color for you Charlie.

Charlie Anderson -- Dougherty & Company -- Analyst

Yeah. Excellent. Great. Thank you, guys, so much.

Jim Anderson -- President, Chief Executive Officer and Director

Yeah. Thanks Charlie.

Operator

And your next question comes from the line of Mark Lipacis with Jefferies.

Mark Lipacis -- Jefferies -- Analyst

Hi. Thanks for taking my question. On the data center side, what we're hearing from companies who sell processers into the data centers is the outlook seems to be fairly -- it seems to be lower based on this idea that the has been a kind of a bit of over-investment in the data center and the cloud players need to absorb some capacity. It seems like your data center business was stronger. And I was hoping, you could help reconcile, what we're hearing from the rest of the players with what you guys are seeing? Thanks.

Jim Anderson -- President, Chief Executive Officer and Director

Yeah, thanks Mark. For us, what we saw in 2018 and into 2019 is we have a very strong position in the new platform generation that started ramping in 2018 and that will continue to ramp in 2019. Now that position is much stronger than the prior generation. So sort of regardless of the particular market dynamics, we're benefiting from a much better position in this generation of servers. And like I said that, ramp started in 2018. And we expect that to continue into 2019. And so that's one of the growth factor that we expect for ourselves in 2019 and beyond as well.

Mark Lipacis -- Jefferies -- Analyst

That's helpful. Thank you. And the follow-up, if I may on the 5G opportunity. I believe you suggested it could ramp in the second half of the year. Could you give us a sense of to the extent that this is a -- it's a macro base station play for you or a micro base station? How should we think about the kind of sockets? Or how you're going to ramp into those different sub-segments of 5G? Thank you.

Jim Anderson -- President, Chief Executive Officer and Director

Yeah, thanks Mark. Yeah so on 5G. First of all, we do have position in both the macro base stations as well as the smaller cells so we have position in both. For instance in a macro base station, where we're positioned as primarily in the Radiohead that's at top of the mass and we're in the control path of the Radiohead for instance. And we're beginning to see very early demand as I mentioned earlier in my prepared remarks. Early demand on 5G that's still small at this point. And we believe that will start to materially contribute to our revenue in the second half of this year -- in the second half of 2019 and into 2020.

Mark Lipacis -- Jefferies -- Analyst

Thank you.

Jim Anderson -- President, Chief Executive Officer and Director

Thanks Mark.

Operator

(Operator Instructions) Your next question comes from the line of Tristan Gerra with Baird.

Maggie Sims -- R.W. Baird -- Analyst

Hi. This is Maggie Sims on for Tristan. Thank you for taking my question. Could you talk about the level of inventory days that Lattice products had distributors in the quarter?

Jim Anderson -- President, Chief Executive Officer and Director

Yeah, sure thanks Maggie. So in Q4 where we ended the year in the Q4 was distributor inventory levels very much within the normal levels that we expect for this type of business and have historically seen. So, inventory well within the normal range and from Q3 to Q4 perspective inventory really didn't change much. We saw inventory levels really flat from Q3 to Q4. And again that's inventory at our distributors.

Maggie Sims -- R.W. Baird -- Analyst

Okay. Thank you. And then last quarter, you had talked about softness in the industrial and consumer markets particularly in Asia. Is that weakness still ongoing? And do you have any visibility into those markets and geographies?

Jim Anderson -- President, Chief Executive Officer and Director

Yeah. So in Q4 we saw softness in industrial and automotive as well as the consumer markets. And again that was generally localized to the Asia market and there was a little bit of softness in Europe as well what we saw in Q4. We're seeing a continuation of that softness into Q1 and so now from a Q4 to Q1 perspective we are seeing a micro market climate that's pretty consistent from one quarter to the next. And so we're seeing that kind of same softness in Q1 as well.

Maggie Sims -- R.W. Baird -- Analyst

Okay. Thank you so much.

Operator

Your next question comes from the line of Christopher Rolland with Susquehanna International Group.

Christopher Rolland -- Susquehanna International Group -- Analyst

Hi, guys, congrats on navigating a tough quarter in semis and Sherri welcome aboard.

Sherri Luther -- Chief Financial Officer

Thank you, Chris.

Christopher Rolland -- Susquehanna International Group -- Analyst

Sherri, my first question I guess is for you. So I think there were some articles or rumors going around. Is it true that you guys are moving out of the Portland offices? And consolidating in Hillsboro? And I would imagine that Hillsboro has cheaper lease space. I think that was maybe originally the sales leased back that you guys did. Is there some OpEx savings that you can share with us from that move?

Sherri Luther -- Chief Financial Officer

Yeah. So thanks for the question, Christopher. From an OpEx perspective, our Q1 guidance is in the range of $37 million to $39 million. At the midpoint of that guidance it's roughly flat from a midpoint perspective from Q4. We are remaining very diligent and disciplined in our approach to OpEx. But the example that you mentioned there is exactly one of the things that we're looking at to try to bring out operational efficiencies in the company.

In fact, in Q4 we consolidated from the second floor down to the first floor in our San Jose site here creating operational efficiencies. And in Q1, the item that you mentioned is what we're doing where we are consolidating from two sites that Portland and Hillsboro location into Hillsboro. And so that will create operational efficiencies as well. So you'll see that in Q1. And those are just a couple of examples of the things that we're trying to look at to reduce operating expenses and to really be more disciplined in our approach.

Christopher Rolland -- Susquehanna International Group -- Analyst

Great. And then Jim you talked about some pricing optimization. Some of our channel checks with distributors talked about this as well. For them they view it as price hikes, probably within the 10% to 15% range for them. I guess talk about how broad these price hikes are? And whether it's across all industries and all verticals and even direct as well?

Jim Anderson -- President, Chief Executive Officer and Director

Yeah, Chris, it's a part of a program that we kicked off in Q4. And I would say it's not just about price hikes. But it's really about making sure that our products are priced appropriately for the right level of value that they are delivering to their solution across our full range of distributions.

We are working with our distributors on that and it's -- it could be things like higher prices for older products, but it could also be -- another factor is, for instance, volume-based pricing for our customers or just a reduction in the rate of pricing declines that we may have historically had in the past. So it's a variety of different initiatives as part of that overall strategy. And as I said we started to execute that in Q4. We'll start to see just the early benefits of that in Q1.

Christopher Rolland -- Susquehanna International Group -- Analyst

Great. Thanks, guys. I'll get back in queue for a follow-up.

Jim Anderson -- President, Chief Executive Officer and Director

Okay. Thanks, Chris.

Operator

(Operator Instructions) Your next question comes from line of Richard Shannon with Craig-Hallum.

Richard Shannon -- Craig-Hallum -- Analyst

Hi, Jim and Sherri thanks for taking my questions, and Sherri look forward to working with you. Just a couple of questions. First one following up on the early question on gross margin. Jim, maybe if you can give us a little bit more understanding of the mix shift, obviously, consumer down and licensing up would have normally driven the gross margin higher it was just slightly below the midpoint. And I think you mentioning some mix within the bucket. So maybe, if you can help us understand a little bit better, how normal is that? Is this more of a snap back to what you considered to be kind of a stable level? Or help us understand that better please.

Jim Anderson -- President, Chief Executive Officer and Director

Yes, thanks Richard. So in Q4, our industrial and automotive was down from Q3 to Q4. Industrial and automotive is our highest margin segment. So when that part of our revenue declines, that -- that's very decretive to our margin. And so that was a factor in terms of the mix by segment.

And then even within the segments, we saw a mix toward lower margin products within some of the segments. Now we're expecting some of that to snap back in Q1. And so when you look at our Q1 gross margin guidance from a midpoint perspective being sequentially higher, it's partially mix, and then also what I mentioned earlier around some improvement in product cost and some improvement from our pricing initiatives.

Richard Shannon -- Craig-Hallum -- Analyst

Okay. To follow on that Jim I was trying to do some modeling real quick here. And just trying to guess on what you're implied guidance for the product gross margin and I was getting something on lines of 100 to 120 basis point improvement. Is that about what's implied in there?

Jim Anderson -- President, Chief Executive Officer and Director

That's probably better for a Sherri question, I think. But I'll let Sherri answer that. But we are seeing good improvement in the product margin right? And again that's due to the mix the product cost and the pricing initiative. Sherri, do you want to add anything to that?

Sherri Luther -- Chief Financial Officer

Yes I'll just add that the sales margin improvement on a non-GAAP basis quarter-over-quarter is in the neighborhood of 60 basis points.

Richard Shannon -- Craig-Hallum -- Analyst

60 basis points, OK. Maybe just one last follow-up -- one last question for me. Just kind of in general on the bookings patterns. I think both in your prepared comments question suppose there was one other question talking about that. I just want to crystallize that you know what thoughts here in terms of the booking trends you've seen so far this quarter?

And then obviously we're getting close if not pass Chinese New Year and typically visibility gets a little better after that. So Jim, if you can give us a view on ordering patterns coming out of distribution and large customers in Asia would be great please?

Jim Anderson -- President, Chief Executive Officer and Director

Yes sure. What I would say is overall bookings are well within the normal historical pattern. So we view it as a very normal quarter to-date in terms of both billings and bookings and so well within the normal range.

Richard Shannon -- Craig-Hallum -- Analyst

Okay. That is all the questions for me, thank you.

Jim Anderson -- President, Chief Executive Officer and Director

Thanks Richard.

Operator

(Operator Instructions) Your next question comes from line of Christopher Rolland with Susquehanna International Group.

Christopher Rolland -- Susquehanna International Group -- Analyst

Hey guys, just two quick follow-ups. I guess on 5G which vendors are you guys best aligned with? Is it the Korean guys, European guys, the Chinese guys? And then Lattice didn't really benefit on the 4G com cycle very much. So do you guys have a high degree of confidence that's it's going to be different in 5G for this Lattice?

Jim Anderson -- President, Chief Executive Officer and Director

Yes, thanks Chris. So first on the vendors we are-we have good position across multiple vendors. I can't name out the specific vendor, but really nice position. And if you look at our 5G position across vendors and across OEM platforms relative to 4G we had a nice expansion in our position from 4G to 5G. So that's why we see 5G as a nice growth vector for us here over the next few years.

Christopher Rolland -- Susquehanna International Group -- Analyst

Okay great. And then finally for segment guidance. Can you give us any additional color or any color on the directional move for the segment -- each segment?

Jim Anderson -- President, Chief Executive Officer and Director

Yes sure. A little bit qualitative color for Q1 is from a segment perspective, we expect the communications and compute to be sequentially up from Q4 to Q1. Licensing and IP as I already mentioned earlier will be down from Q4 to Q1. And then the other segments consumer and industrial automotive are roughly flat sequentially.

Christopher Rolland -- Susquehanna International Group -- Analyst

Thanks so much guys. Congrats again on a great quarter.

Jim Anderson -- President, Chief Executive Officer and Director

Thanks Chris.

Sherri Luther -- Chief Financial Officer

Thank you.

Operator

I would now like to turn the call over to Lattice Semiconductor's CEO Jim Anderson for closing remarks.

Jim Anderson -- President, Chief Executive Officer and Director

I will just wrap up I want to say thanks everybody for joining us on our call today. We really appreciate you spending time with us today. So, just to summarize our new leadership team is now in place and very focused on executing our strategy to grow Lattice's position in the multibillion-dollar programmable logic market. And we remain focused on increasing our profitability, expanding cash flow, and getting some really great product out to market this year. We appreciate your continued support and encourage you to reach out with any follow-up question.

Operator, that concludes today's call.

Operator

This concludes today's conference call. You may now disconnect.

Duration: 34 minutes

Call participants:

David Pasquale -- Global IR Partners

Jim Anderson -- President, Chief Executive Officer and Director

Sherri Luther -- Chief Financial Officer

Charlie Anderson -- Dougherty & Company -- Analyst

Mark Lipacis -- Jefferies -- Analyst

Maggie Sims -- R.W. Baird -- Analyst

Christopher Rolland -- Susquehanna International Group -- Analyst

Richard Shannon -- Craig-Hallum -- Analyst

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