Lattice Semiconductor Reports Record 2Q26 Revenue, Up 62% YOY

Lattice Semiconductor Reports Record 2Q26 Revenue, Up 62% YOY HILLSBORO, Ore.--( BUSINESS WIRE)--Lattice Semiconductor Corporation (Nasdaq: LSCC), the low power programmable leader, announced financial results today for the fiscal second quarter ended July 4, 2026.

Revenue for the second quarter of 2026 was $201.1 million, with GAAP gross margin of 70.3%, and GAAP net income of $0.14 per diluted share. On a non-GAAP basis, gross margin was 71.7%, with net income per diluted share of $0.53. GAAP net income and GAAP net income margin for the second quarter of 2026 were $19.4 million and 9.6%, respectively, with adjusted EBITDA of $86.4 million, which is a 43.0% adjusted EBITDA margin for the second quarter of 2026. GAAP net cash flow from operating activities and operating cash flow margin for the second quarter of 2026 were $88.3 million and 43.9%, respectively, which corresponds to non-GAAP free cash flow and free cash flow margin of $81.3 million and 40.4%, respectively.

Ford Tamer, Chief Executive Officer, said, "We delivered an exceptional second quarter, achieving record revenue of $201 million and non-GAAP EPS of $0.53, up 62% and more than 120% year-over-year, respectively. Both metrics exceeded the high end of our guidance. The combination of strong customer demand, accelerating backlog and sustained design win momentum gives us increased confidence in continued market share gains and profitable growth. This is reflected in our third-quarter outlook of $220 million at the midpoint or 65% year-over-year revenue growth in our FPGA business, and $255 million at the midpoint with two months of AMI revenue included. This gets us to a $1 billion revenue run rate, ahead of expectations. With the acquisition close now behind us, we are pleased to welcome the talented AMI team to Lattice, and look forward to building the most complete secure management and control platform to benefit our customers."

Lorenzo Flores, Chief Financial Officer, said, "Our second quarter results demonstrate the operating leverage and earnings power of the Lattice business model, as accelerating revenue growth translated into even stronger profitability and cash flow. We continue to invest strategically to advance our leadership in small- and mid-range FPGAs and broaden the reach of our highly differentiated companion chip strategy. We are seeing growth across our end markets, expanding our customer reach, and believe Lattice is well positioned to drive sustained growth, continued margin strength, and generate increasing free cash flow, and shareholder value."

Selected Second Quarter 2026 Financial Results and Comparisons (in thousands, except per share data)

GAAP Financial Results (unaudited)

Q2 2026

Q1 2026

Q2 2025

Q/Q

Y/Y

Revenue

201,079

170,897

123,971

17.7%

62.2%

Gross Margin %

70.3

68.8

68.4

150 bps

190 bps

R&D Expense %

31.9

29.7

35.1

220 bps

(320) bps

SG&A Expense %

25.0

23.5

28.1

150 bps

(310) bps

Operating Expenses

118,979

91,564

80,045

29.9%

48.6%

Income from Operations

22,353

26,068

4,706

(14.3)%

375.0%

Net Income (loss)

19,359

21,817

2,913

(11.3)%

564.6%

Net Income (loss) per Share - Basic

0.14

0.16

0.02

$(0.02)

$0.12

Net Income (loss) per Share - Diluted

0.14

0.16

0.02

$(0.02)

$0.12

Net Income (loss) Margin

9.6

12.8

2.3

(320) bps

730 bps

Operating Cash Flow Margin

43.9

29.4

31.1

1450 bps

1280 bps

Non-GAAP* Financial Results (unaudited)

Q2 2026

Q1 2026

Q2 2025

Q/Q

Y/Y

Revenue (GAAP)

201,079

170,897

123,971

17.7%

62.2%

Gross Margin %

71.7

70.0

69.3

170 bps

240 bps

R&D Expense %

21.3

21.8

25.1

(50) bps

(380) bps

SG&A Expense %

12.1

13.9

16.8

(180) bps

(470) bps

Operating Expenses

67,110

60,839

51,834

10.3%

29.5%

Income from Operations

77,102

58,715

34,084

31.3%

126.2%

Net Income

74,410

56,970

32,597

30.6%

128.3%

Net Income per Share - Basic

0.54

0.42

0.24

$0.12

$0.30

Net Income per Share - Diluted

0.53

0.41

0.24

$0.12

$0.29

Adjusted EBITDA Margin

43.0

39.6

34.1

340 bps

890 bps

Free Cash Flow Margin

40.4

23.2

25.2

1720 bps

1520 bps

* 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."

Second Quarter 2026 Highlights:

Lattice Closes AMI Acquisition: Creates Most Complete Secure Management and Control Platform for Data Center AI and Physical AI

Ford Tamer, Chief Executive Officer, said, “The addition of AMI’s capabilities expands the solutions we can provide for compute and communications, and broadens our relationships with hyperscalers, OEMs, ODMs and neocloud providers, while doubling our addressable market. AMI will continue to operate on an open, silicon-agnostic basis, preserving the neutrality and customer choice that are central to its value.”

For more information, please see the transaction announcement and related materials available on the investor relations section of www.latticesemi.com.

Business Outlook - Third Quarter of 2026:

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 2026, certain items that affect reconciliation of non-GAAP financial measures for non-GAAP gross margin percentage, non-GAAP total operating expenses, non-GAAP income tax rate, and non-GAAP net income are not available on a forward-looking basis because such items cannot be reasonably calculated without unreasonable efforts due to the unpredictability of the amounts and timing of events affecting the items we exclude from non-GAAP financial measures, including certain large and/or unpredictable charges such as stock-based compensation expense; performance-based equity expense; legal expense outside the ordinary course of business; restructuring; impairment and acquisition related charges. Consequently, the Company is unable to calculate the most directly comparable GAAP measure to non-GAAP gross margin percentage, non-GAAP total operating expenses, non-GAAP income tax rate, non-GAAP EPS, and non-GAAP net income for the Company’s third quarter of 2026 guidance.

Investor Conference Call / Webcast Details:

Lattice Semiconductor will review the Company's financial results for the fiscal second quarter 2026, and business outlook on Tuesday, August 4 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 13761016. 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:

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements involve estimates, assumptions, risks and uncertainties. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are neither historical facts nor assurances of future performance and may be forward-looking. Such forward-looking statements include, but are not limited to, statements relating to our revenue, EPS growth, and free cash flow and related drivers; future financial performance; market share; profitable growth; shareholder value, our expectations related to market recovery and growth including AI and data center-related growth; statements about operating leverage and margin expansion; statements about design win momentum, backlog strength, and our companion chip opportunity; our expectations regarding the acquisition of AMI, including expected benefits, integration, and expected accretive impact on non-GAAP gross margin, adjusted EBITDA, free cash flow, and EPS, and our trajectory toward a $1 billion+ or greater annual revenue run rate in Q3 2026; the statements under the heading “Lattice Closes AMI Acquisition: Creates Most Complete Secure Management and Control Platform for data center AI and physical AI” and “Business Outlook - Third Quarter of 2026.” 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 and other financial and operational outcomes are inherently uncertain due to factors such as: global economic conditions which may affect customer demand; the cyclical nature of the semiconductor industry including fluctuating customer and distributor purchasing patterns, inventory levels, and order timing; pricing and inflationary pressures; competitive actions; international trade disputes and sanctions; the impact of tariffs, trade restrictions, export controls, license requirements or similar actions on us or our suppliers and customers, including the impact on the costs of our products, the products into which they are integrated, and the impact on demand due to costs and uncertainty; the risk that we will not successfully integrate AMI's businesses within the anticipated timeframe, or that such integration will be more difficult, costly, or time-consuming than anticipated; the risk that we may fail to realize the anticipated benefits, synergies, cost savings, or accretive impact on gross margin, adjusted EBITDA, free cash flow, and EPS on a non-GAAP basis of the AMI acquisition within the expected timeframe or at all; and other significant risks and uncertainties that are beyond our ability to predict or control. Actual gross margin percentage, operating expenses, income tax rate, and net income on a per share basis 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, our ability to secure sufficient supply to meet customer demand; 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 our filings with the Securities and Exchange Commission, including Lattice’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, especially those under the captions “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations”, all of which are expressly incorporated herein by reference.

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 the Company to predict all risk factors. You should not 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 and undertakes no obligation 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, including non-GAAP gross margin, gross margin percentage, R&D expense, SG&A expense, operating expenses, income from operations, income tax expense, net income, net income per share – basic, and net income per share – diluted, adjusted EBITDA, adjusted EBITDA margin, free cash flow, and free cash flow margin. The non-GAAP measures presented exclude charges and adjustments primarily related to stock-based compensation and related payroll tax effects; accruals related to the portion of our annual incentive plan that we intend to settle in shares of our common stock; transformation activities; legal expense outside the ordinary course of business; amortization of acquired intangible assets; restructuring plan and other charges; acquisition related charges, write-off of unamortized debt costs; and the estimated tax effect of these items, non-cash changes in net deferred income taxes, change in tax law and other tax adjustments; and depreciation and other amortization. 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. The non-GAAP financial information used by the Company may differ from that used by other companies. 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, X, Facebook, YouTube, WeChat, or Weibo.

Lattice Semiconductor Corporation

Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

Three Months Ended

Six Months Ended

July 4,

April 4,

June 28,

July 4,

June 28,

2026

2025

2026

2025

Revenue

201,079

170,897

123,971

371,976

244,121

Cost of sales

59,747

53,265

39,220

113,012

77,642

Gross margin

141,332

117,632

84,751

258,964

166,479

Operating expenses:

Research and development

64,231

50,836

43,530

115,067

84,917

Selling, general, and administrative

50,278

40,105

34,811

90,383

67,937

Amortization of acquired intangible assets

Restructuring and other

603

1,691

625

1,932

Acquisition related

4,429

—

4,429

—

Total operating expenses

118,979

91,564

80,045

210,543

154,799

Income from operations

22,353

26,068

4,706

48,421

11,680

Interest income (expense), net

(88

)

1,269

614

1,181

1,666

Other income (expense), net

(5,048

)

(71

)

(238

)

(5,119

)

(283

)

Income before income taxes

17,217

27,266

5,082

44,483

13,063

Income tax expense (benefit)

(2,142

)

5,449

2,169

3,307

5,128

Net income

19,359

21,817

2,913

41,176

7,935

Net income per share:

Basic

0.14

0.16

0.02

0.30

0.06

Diluted

0.14

0.16

0.02

0.29

0.06

Shares used in per share calculations:

Basic

137,049

136,814

137,112

136,932

137,399

Diluted

140,232

139,390

137,596

140,024

137,675

Lattice Semiconductor Corporation

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

July 4,

January 3,

2026

Assets

Current assets:

Cash and cash equivalents

173,305

133,886

Accounts receivable, net

120,024

102,277

Inventories, net

100,501

89,202

Other current assets

44,308

38,509

Total current assets

438,138

363,874

Property and equipment, net

80,550

77,032

Operating lease right-of-use assets

36,161

39,459

Intangible assets, net

20,082

4,143

Goodwill

315,358

Deferred income taxes

62,454

62,675

Other long-term assets

23,438

20,579

976,181

883,120

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

80,894

56,518

Accrued liabilities

32,691

30,594

Accrued payroll obligations

31,281

30,561

Total current liabilities

144,866

117,673

Long-term operating lease liabilities, net of current portion

32,591

36,127

Other long-term liabilities

11,197

15,266

Total liabilities

188,654

169,066

Stockholders' equity

787,527

714,054

976,181

883,120

Lattice Semiconductor Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Six Months Ended

July 4,

June 28,

2026

2025

Cash flows from operating activities:

Net income

41,176

7,935

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Stock-based compensation expense

72,472

44,459

Depreciation and amortization

18,985

17,539

Change in deferred income tax provision

568

1,136

Other non-cash adjustments

9,615

4,164

Net changes in assets and liabilities

(4,259

)

(4,810

)

Net cash provided by (used in) operating activities

138,557

70,423

Cash flows from investing activities:

Capital expenditures

(17,553

)

(15,846

)

Other investing activities

(25,190

)

(7,782

)

Net cash provided by (used in) investing activities

(42,743

)

(23,628

)

Cash flows from financing activities:

Repurchase of common stock

(15,000

)

(70,855

)

Net cash flows related to stock compensation exercises

(29,705

)

(5,729

)

Cash paid for debt issuance costs

(11,749

)

—

Net cash provided by (used in) financing activities

(56,454

)

(76,584

)

Effect of exchange rate change on cash

654

Net increase (decrease) in cash and cash equivalents

39,419

(29,135

)

Beginning cash and cash equivalents

133,886

136,291

Ending cash and cash equivalents

173,305

107,156

Supplemental disclosure of cash flow information and non-cash investing and financing activities:

Income taxes paid, net of refunds

3,333

4,192

Operating lease payments

5,276

4,187

Lattice Semiconductor Corporation

Supplemental Historical Financial Information

(unaudited)

Three Months Ended

July 4,

April 4,

June 28,

2026

2025

Balance Sheet Information

A/R Days Revenue Outstanding (DSO)

Inventory Days (DIO)

153

151

218

Revenue % (by Geography)

Asia

Americas

Europe (incl. Africa)

Revenue % (by End Market) (1)

Compute and Communications

Industrial and Embedded

Revenue $M (by End Market) (1)

Compute and Communications

126.0

106.6

68.7

Industrial and Embedded

75.1

64.3

55.3

Revenue % (by Channel)

Distribution

Direct

(1)

Lattice Semiconductor previously announced that it has updated its disaggregated end market reporting to better reflect how the Company views its business. Effective beginning Q1 2026, Lattice Semiconductor will disaggregate revenue by end market into (i) Compute and Communications and (ii) Industrial and Embedded. Compute and Communications reflects a reordering of the Company's prior Communications and Computing end market, while Industrial and Embedded combines the Company's previously reported Industrial and Automotive, and Consumer end markets. This change represents a presentation-only update and has no impact on the Company’s consolidated financial results. Prior period end market information will be recast to conform to the new presentation to facilitate comparability.

Lattice Semiconductor Corporation

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

(in thousands, except per share data)

(unaudited)

Three Months Ended

July 4,

April 4,

June 28,

2026

2025

Gross Margin Reconciliation

GAAP Gross margin

141,332

117,632

84,751

Stock-based compensation - gross margin (1)

2,632

1,687

1,105

Incentive compensation to be settled in equity - gross margin (2)

248

235

Non-GAAP Gross margin

144,212

119,554

85,918

Gross Margin % Reconciliation

GAAP Gross margin %

70.3

68.8

68.4

Stock-based compensation - gross margin (1)

1.3

1.1

0.8

Incentive compensation to be settled in equity - gross margin (2)

0.1

Non-GAAP Gross margin %

71.7

70.0

69.3

Research and Development Expense % (R&D Expense %) Reconciliation

GAAP R&D Expense %

31.9

29.7

35.1

Stock-based compensation - R&D (1)

(9.4

(7.0

(8.3

Incentive compensation to be settled in equity - R&D (2)

(1.2

(0.9

(0.5

Transformation charges

—

(1.2

Non-GAAP R&D Expense %

21.3

21.8

25.1

Selling, General, and Administrative Expense % (SG&A Expense %) Reconciliation

GAAP SG&A Expense %

25.0

23.5

28.1

Stock-based compensation - SG&A (1)

(11.5

(8.7

(10.3

Incentive compensation to be settled in equity - SG&A (2)

(1.4

(0.9

(0.5

Legal expenses (3)

—

(0.5

Non-GAAP SG&A Expense %

12.1

13.9

16.8

Operating Expenses Reconciliation

GAAP Operating expenses

118,979

91,564

80,045

Stock-based compensation - operations (1)

(42,220

)

(26,804

)

(23,036

)

Incentive compensation to be settled in equity - operations (2)

(5,179

)

(3,198

)

(1,212

)

Transformation charges

—

(1,541

)

Legal expenses (3)

—

(568

)

Amortization of acquired intangible assets

(19

)

(20

)

(13

)

Restructuring and other

(22

)

(703

)

(1,841

)

Acquisition related

(4,429

)

—

Non-GAAP Operating expenses

67,110

60,839

51,834

(1)

Includes stock-based compensation and related payroll tax expenses.

(2)

Includes accruals for the portion of our annual incentive plan that we intend to settle in equity and related payroll tax expenses.

(3)

Includes legal expenses outside the ordinary course of business, including those incurred defending against claims brought against the Company by Steven A.W. De Jaray, Perienne De Jaray and Darrell R. Oswalde.

Lattice Semiconductor Corporation

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

(in thousands, except per share data)

(unaudited)

Three Months Ended

July 4,

April 4,

June 28,

2026

2025

Income from Operations Reconciliation

GAAP Income from operations

22,353

26,068

4,706

Stock-based compensation (1)

44,852

28,491

24,141

Incentive compensation to be settled in equity (2)

5,427

3,433

1,274

Transformation charges

—

1,541

Legal expenses (3)

—

568

Amortization of acquired intangible assets

Restructuring and other

703

1,841

Acquisition related

4,429

—

Non-GAAP Income from operations

77,102

58,715

34,084

Income from Operations % Reconciliation

GAAP Income from operations %

11.1

15.3

3.8

Cumulative effect of non-GAAP Gross Margin and Operating adjustments

27.2

19.1

23.7

Non-GAAP Income from operations %

38.3

34.4

27.5

Interest Income (Expense) Reconciliation

GAAP Interest income (expense), net

(88

)

1,269

614

Bridge facility debt cost amortization

876

—

Non-GAAP Interest income (expense), net

788

1,269

614

Other Income (Expense) Reconciliation

GAAP Other income (expense), net

(5,048

)

(71

)

(238

)

Write-off unamortized debt costs

4,898

—

Non-GAAP Other income (expense), net

(150

)

(71

)

(238

)

Income Tax Expense (Benefit) Reconciliation

GAAP Income tax expense

(2,142

)

5,449

2,169

Estimated tax effect of non-GAAP adjustments

7,438

5,119

2,158

Non-cash changes in net deferred income taxes

(1,966

)

(7,625

)

(1,723

)

Change in tax law (4)

—

(741

)

Non-GAAP Income tax expense

3,330

2,943

1,863

(1)

Includes stock-based compensation and related payroll tax expenses.

(2)

Includes accruals for the portion of our annual incentive plan that we intend to settle in equity and related payroll tax expenses.

(3)

(4)

Includes an increase in our provision for U.S. tax on foreign operations resulting from The 2017 Tax Cuts and Jobs Act and is related to the capitalization and subsequent amortization of R&D costs for tax purposes which was made permanent in the 2025 Tax Act in the third quarter of fiscal 2025.

Lattice Semiconductor Corporation

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

(in thousands, except per share data)

(unaudited)

Three Months Ended

July 4,

April 4,

June 28,

2026

2025

Net Income Reconciliation

GAAP Net income (loss)

19,359

21,817

2,913

Stock-based compensation (1)

44,852

28,491

24,141

Incentive compensation to be settled in equity (2)

5,427

3,433

1,274

Transformation charges

—

1,541

Legal expenses (3)

—

568

Amortization of acquired intangible assets

Restructuring and other

703

1,841

Acquisition related

4,429

—

Bridge facility debt cost amortization

876

—

Write-off unamortized debt costs

4,898

—

Estimated tax effect of non-GAAP adjustments

(7,438

)

(5,119

)

(2,158

)

Non-cash changes in net deferred income taxes

1,966

7,625

1,723

Change in tax law (4)

—

741

Non-GAAP Net income

74,410

56,970

32,597

Net Income Per Share Reconciliation

GAAP Net income (loss) per share - basic

0.14

0.16

0.02

Cumulative effect of Non-GAAP adjustments

0.40

0.26

0.22

Non-GAAP Net income per share - basic

0.54

0.42

0.24

GAAP Net income (loss) per share - diluted

0.14

0.16

0.02

Cumulative effect of Non-GAAP adjustments

0.39

0.25

0.22

Non-GAAP Net income per share - diluted

0.53

0.41

0.24

Shares used in per share calculations:

Basic

137,049

136,814

137,112

Diluted

140,232

139,390

137,596

(1)

Includes stock-based compensation and related payroll tax expenses.

(2)

Includes accruals for the portion of our annual incentive plan that we intend to settle in equity and related payroll tax expenses.

(3)

(4)

Lattice Semiconductor Corporation

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

(in thousands, except per share data)

(unaudited)

Three Months Ended

July 4,

April 4,

June 28,

2026

2025

Reconciliation of Net income to Adjusted EBITDA

GAAP Net income (loss)

19,359

21,817

2,913

Interest (income) expense, net

(1,269

)

(614

)

Income tax expense (benefit)

(2,142

)

5,449

2,169

Amortization of acquired intangible assets

Depreciation and other amortization

9,414

9,109

8,380

Stock-based compensation (1)

44,852

28,491

24,141

Incentive compensation to be settled in equity (2)

5,427

3,433

1,274

Transformation charges

—

1,541

Legal expenses (3)

—

568

Restructuring and other

703

1,841

Acquisition related

4,429

—

Write-off unamortized debt costs

4,898

—

Adjusted EBITDA

86,366

67,753

42,226

Adjusted EBITDA margin

43.0

39.6

34.1

Reconciliation of Net income margin to Adjusted EBITDA margin

GAAP Net income (loss) margin

9.6

12.8

2.3

Cumulative effect of EBITDA adjustments

33.4

26.8

31.8

Adjusted EBITDA margin

43.0

39.6

34.1

Reconciliation of GAAP Net Cash Provided by Operating Activities to Free Cash Flow

GAAP Net cash provided by operating activities

88,302

50,255

38,531

Operating cash flow margin

43.9

29.4

31.1

Capital expenditures

(7,020

)

(10,533

)

(7,230

)

Free cash flow

81,282

39,722

31,301

Free cash flow margin

40.4

23.2

25.2

(1)

Includes stock-based compensation and related payroll tax expenses.

(2)

Includes accruals for the portion of our annual incentive plan that we intend to settle in equity and related payroll tax expenses.

(3)