PR Newswire
PORTLAND, Ore., Aug. 7, 2024
PORTLAND, Ore., Aug. 7, 2024 /PRNewswire/ -- Pixelworks, Inc. (NASDAQ: PXLW), a leading provider of innovative video and display processing solutions, today announced financial results for the second quarter ended June 30, 2024.
Second Quarter and Recent Highlights
- OPPO affiliate, OnePlus, launched the OnePlus Ace 3 Pro smartphone, incorporating Pixelworks' X7 Gen 2 visual processor featuring AI-based distributed computing architecture and enhanced rendering capability
- Announced collaboration with Tencent's TiMi Studio group and the integration of Pixelworks' IRX rendering acceleration technology in the Honor of Kings mobile game
- Collaborated with Seasun Games to optimize visual processing and bring detailed 120fps display effects to JX3 Ultimate Mobile, making it the latest mobile game to leverage IRX certified rendering acceleration
- Implemented reduction in workforce to better align operating expense with near-term revenue levels, anticipated to contribute approximately $4.0 million of annualized savings beginning in the third quarter
"Second quarter revenue was at the midpoint guidance and largely reflected the expected headwinds in our mobile business, primarily related to the inventory correction at a large mobile OEM customer," stated Todd DeBonis, President and CEO of Pixelworks. "In response and to better align expenses with near-term revenue levels, we implemented cost reduction actions during the quarter, which are anticipated to result in $4 million of annualized cost saving beginning in the third quarter of 2024.
"During the quarter, we made continued progress on the expansion of our IRX gaming ecosystem. Our recent announced collaborations with Tencent on Honor of Kings and Seasun Games on JX3 Ultimate Mobile represent the latest additions to the growing list of IRX certified mobile games. Coupled with one of Pixelworks' X-series of visual processors, our IRX rendering accelerator technology enables PC-quality visual performance on a smartphone without generating excessive heat or battery consumption. Growing this ecosystem remains a fundamental element of our multi-pronged mobile strategy to drive broader adoption of our mobile visual processors, and we currently engaged with multiple top gaming studios to release several additional high-profile IRX mobile games later this year.
"Looking ahead, we are confronting the recent challenges head-on while remaining focused on strategic and operational execution across all areas of the business. We are well positioned today for renewed growth in mobile, as we increasingly target an expanded served market for mid to lower tier smartphones. Additionally, the size and influence of our IRX gaming ecosystem continues to grow and will soon be further supported by the introduction of our next-generation mobile visual processor. Together with stable performance of our home and enterprise business, we expect to deliver sequential revenue growth in the third quarter as we continue to target improved operational results over the intermediate-term."
Second Quarter 2024 Financial Results
Revenue in the second quarter of 2024 was $8.5 million, compared to $16.1 million in the first quarter of 2024 and $13.6 million in the second quarter of 2023. The sequential and year-over-year decline in revenue primarily reflected the anticipated near-term headwinds in the Company's mobile business.
On a GAAP basis, gross profit margin in the second quarter of 2024 was 50.7%, compared to 50.5% in the first quarter of 2024 and 40.3% in the second quarter of 2023. Second quarter 2024 GAAP operating expenses were $15.1 million, compared to $13.6 million in the first quarter of 2024 and $12.0 million in the year-ago quarter.
On a non-GAAP basis, second quarter 2024 gross profit margin was 51.0%, compared to 50.7% in the first quarter of 2024 and 40.5% in the year-ago quarter. Second quarter 2024 non-GAAP operating expenses were $12.8 million, compared to $12.6 million in the first quarter of 2024 and $10.7 million in the year-ago quarter.
For the second quarter of 2024, the Company recorded a GAAP net loss of $10.1 million, or ($0.17) per share, compared to a GAAP net loss of $5.1 million, or ($0.09) per share, in the first quarter of 2024, and a GAAP net loss of $6.0 million, or ($0.11) per share, in the year-ago quarter. Note, the Company refers to "net loss attributable to Pixelworks, Inc." as "net loss".
For the second quarter of 2024, the Company recorded a non-GAAP net loss of $7.7 million, or ($0.13) per share, compared to a non-GAAP net loss of $4.0 million, or ($0.07) per share, in the first quarter of 2024, and a non-GAAP net loss of $4.8 million, or ($0.09) per share, in the second quarter of 2023.
Adjusted EBITDA in the second quarter of 2024 was a negative $7.0 million, compared to a negative $3.2 million in the first quarter of 2024 and a negative $4.0 million in the year-ago quarter.
Cash and cash equivalents at the end of the second quarter of 2024 were $37.8 million, compared to $47.5 million as of the year ended December 31, 2023.
Business Outlook
The Company's current business outlook, including guidance for the third quarter of 2024, will be discussed as part of the scheduled conference call.
Conference Call Information
Pixelworks will host a conference call today, August 7, 2024, at 2:00 p.m. Pacific Time. To join the conference call via phone, participants are required to complete the following registration form to receive a dial-in number and dedicated PIN for accessing the conference call. Additionally, a live and archived audio webcast of the conference call will be accessible via the investors section of Pixelworks' website at www.pixelworks.com.
About Pixelworks, Inc.
Pixelworks provides industry-leading content creation, video delivery and display processing solutions and technology that enable highly authentic viewing experiences with superior visual quality, across all screens – from cinema to smartphone and beyond. The Company has a 20-year history of delivering image processing innovation to leading providers of consumer electronics, professional displays, and video streaming services. For more information, please visit the company's web site at www.pixelworks.com.
Note: Pixelworks, MotionEngine, TrueCut Motion and the Pixelworks logo are trademarks of Pixelworks, Inc.
Non-GAAP Financial Measures
This earnings release makes reference to non-GAAP gross profit margins, non-GAAP operating expenses, non-GAAP net loss and non-GAAP net loss per share, which exclude stock-based compensation expense and restructuring expense which are both required under GAAP. The press release also makes reference to and reconciles GAAP net loss and adjusted EBITDA, which Pixelworks defines as GAAP net loss attributable to Pixelworks Inc. before interest income and other, net, income tax provision, depreciation and amortization, as well as the specific item listed above.
Pixelworks management uses these non-GAAP financial measures internally to understand, manage and evaluate the business and establish its operational goals, review its operations on a period-to-period basis, for compensation evaluations, to measure performance, and for budgeting and resource allocation. Pixelworks management believes it is useful for the Company and investors to review, as applicable, both GAAP information and non-GAAP financial measures to help assess the performance of Pixelworks' continuing business and to evaluate Pixelworks' future prospects. These non-GAAP measures, when reviewed together with the GAAP financial information, provide additional transparency and information for comparison and analysis of operating performance and trends. These non-GAAP measures exclude certain items to facilitate management's review of the comparability of our core operating results on a period-to-period basis.
Because the Company's non-GAAP financial measures are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures and should be read only in conjunction with the Company's consolidated financial results as presented in accordance with GAAP. A reconciliation between GAAP and non-GAAP financial measures is included in this earnings release which is available in the investor relations section of the Pixelworks website.
Safe Harbor Statement
This release contains forward-looking statements within the meaning 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 may be identified by use of terms such as "begin," "continue," "will," "expect", "believe," "anticipate" and similar terms or the negative of such terms, and include, without limitation, statements about future collaborations with game studios, the expected growth of the IRX ecosystem, expected adoption rates for our mobile visual processors, expansion into mid- to low-tier smartphones, continued performance of our home and enterprise business, and expected cost savings. All statements other than statements of historical fact are forward-looking statements for purposes of this release, including any projections of revenue or other financial items or any statements regarding the plans and objectives of management for future operations. Such statements are based on management's current expectations, estimates and projections about the Company's business. These statements are not guarantees of future performance and involve numerous risks, uncertainties and assumptions that are difficult to predict. Actual results could vary materially from those contained in forward looking statements due to many factors, including, without limitation: the actual performance of the smartphone market throughout 2024; our ability to execute on our strategy; competitive factors, such as rival chip architectures, introduction or traction by competing designs, or pricing pressures; the success of our products in expanding markets; current global economic challenges; changes in the digital display and projection markets; seasonality in the consumer electronics market; our efforts to achieve profitability from operations; our limited financial resources; and our ability to attract and retain key personnel. More information regarding potential factors that could affect the Company's financial results and could cause actual results to differ materially from those discussed in the forward-looking statements is included from time to time in the Company's Securities and Exchange Commission filings, including its Annual Report on Form 10-K for the year ended December 31, 2023, as well as subsequent SEC filings.
The forward-looking statements contained in this release are as of the date of this release, and the Company does not undertake any obligation to update any such statements, whether as a result of new information, future events or otherwise.
[Financial Tables Follow]
PIXELWORKS, INC. | |||||
Three Months Ended | Six Months Ended | ||||
June 30, | March 31, | June 30, | June 30, | June 30, | |
2024 | 2024 | 2023 | 2024 | 2023 | |
Revenue, net | $ 8,535 | $ 16,054 | $ 13,605 | $ 24,589 | $ 23,571 |
Cost of revenue (1) | 4,209 | 7,940 | 8,121 | 12,149 | 13,720 |
Gross profit | 4,326 | 8,114 | 5,484 | 12,440 | 9,851 |
Operating expenses: | |||||
Research and development (2) | 7,943 | 8,073 | 6,507 | 16,016 | 15,173 |
Selling, general and administrative (3) | 5,722 | 5,534 | 5,468 | 11,256 | 11,540 |
Restructuring | 1,403 | — | — | 1,403 | — |
Total operating expenses | 15,068 | 13,607 | 11,975 | 28,675 | 26,713 |
Loss from operations | (10,742) | (5,493) | (6,491) | (16,235) | (16,862) |
Interest income and other, net | 327 | 434 | 473 | 761 | 1,144 |
Loss before income taxes | (10,415) | (5,059) | (6,018) | (15,474) | (15,718) |
Provision for income taxes | 32 | 105 | 126 | 137 | 160 |
Net loss | (10,447) | (5,164) | (6,144) | (15,611) | (15,878) |
Less: Net loss attributable to non-controlling | 298 | 98 | 107 | 396 | 445 |
Net loss attributable to Pixelworks Inc. | $ (10,149) | $ (5,066) | $ (6,037) | $ (15,215) | $ (15,433) |
Net loss attributable to Pixelworks Inc. per share - basic and | $ (0.17) | $ (0.09) | $ (0.11) | $ (0.26) | $ (0.28) |
Weighted average shares outstanding - basic and diluted | 58,151 | 57,472 | 55,917 | 57,812 | 55,666 |
—————— | |||||
(1) Includes: | |||||
Restructuring | 16 | — | — | 16 | — |
Stock-based compensation | 10 | 18 | 22 | 28 | 46 |
(2) Includes stock-based compensation | 316 | 330 | 527 | 646 | 1,018 |
(3) Includes stock-based compensation | 599 | 727 | 710 | 1,326 | 1,361 |
PIXELWORKS, INC. | |||||
Three Months Ended | Six Months Ended | ||||
June 30, | March 31, | June 30, | June 30, | June 30, | |
2024 | 2024 | 2023 | 2024 | 2023 | |
Reconciliation of GAAP and non-GAAP gross profit | |||||
GAAP gross profit | $ 4,326 | $ 8,114 | $ 5,484 | $ 12,440 | $ 9,851 |
Restructuring | 16 | — | — | 16 | — |
Stock-based compensation | 10 | 18 | 22 | 28 | 46 |
Total reconciling items included in gross profit | 26 | 18 | 22 | 44 | 46 |
Non-GAAP gross profit | $ 4,352 | $ 8,132 | $ 5,506 | $ 12,484 | $ 9,897 |
Non-GAAP gross profit margin | 51.0 % | 50.7 % | 40.5 % | 50.8 % | 42.0 % |
Reconciliation of GAAP and non-GAAP operating expenses | |||||
GAAP operating expenses | $ 15,068 | $ 13,607 | $ 11,975 | $ 28,675 | $ 26,713 |
Reconciling item included in research and development: | |||||
Stock-based compensation | 316 | 330 | 527 | 646 | 1,018 |
Reconciling items included in selling, general and administrative: | |||||
Stock-based compensation | 599 | 727 | 710 | 1,326 | 1,361 |
Restructuring | 1,403 | — | — | 1,403 | — |
Total reconciling items included in operating expenses | 2,318 | 1,057 | 1,237 | 3,375 | 2,379 |
Non-GAAP operating expenses | $ 12,750 | $ 12,550 | $ 10,738 | $ 25,300 | $ 24,334 |
Reconciliation of GAAP and non-GAAP net loss | |||||
GAAP net loss attributable to Pixelworks Inc. | $ (10,149) | $ (5,066) | $ (6,037) | $ (15,215) | $ (15,433) |
Reconciling items included in gross profit | 26 | 18 | 22 | 44 | 46 |
Reconciling items included in operating expenses | 2,318 | 1,057 | 1,237 | 3,375 | 2,379 |
Tax effect of non-GAAP adjustments | 74 | — | — | 74 | — |
Non-GAAP net loss attributable to Pixelworks Inc. | $ (7,731) | $ (3,991) | $ (4,778) | $ (11,722) | $ (13,008) |
Non-GAAP net loss attributable to Pixelworks Inc. per share - | $ (0.13) | $ (0.07) | $ (0.09) | $ (0.20) | $ (0.23) |
Non-GAAP weighted average shares outstanding - basic and diluted | 58,151 | 57,472 | 55,917 | 57,812 | 55,666 |
*Set forth above are reconciliations of the non-GAAP financial measure to the most directly comparable GAAP financial measure. The non-GAAP financial measure disclosed by the company has limitations and should not be considered a substitute for, or superior to, the financial measure prepared in accordance with GAAP, and the reconciliations from GAAP to Non-GAAP actuals should be carefully evaluated. Please refer to "Non-GAAP Financial Measures" in this document for an explanation of the adjustments made to the comparable GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide useful information for investors. | |||||
PIXELWORKS, INC. | |||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | |||||||||||||||||
2024 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||
Dollars per share | Dollars per share | Dollars per share | Dollars per share | Dollars per share | |||||||||||||||||
Basic | Diluted | Basic | Diluted | Basic | Diluted | Basic | Diluted | Basic | Diluted | ||||||||||||
Reconciliation of GAAP and non-GAAP net loss | |||||||||||||||||||||
GAAP net loss attributable to Pixelworks Inc. | $ (0.17) | $ (0.17) | $ (0.09) | $ (0.09) | $ (0.11) | $ (0.11) | $ (0.26) | $ (0.26) | $ (0.28) | $ (0.28) | |||||||||||
Reconciling items included in gross profit | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||
Reconciling items included in operating expenses | 0.04 | 0.04 | 0.02 | 0.02 | 0.02 | 0.02 | 0.06 | 0.06 | 0.04 | 0.04 | |||||||||||
Non-GAAP net loss attributable to Pixelworks Inc. | $ (0.13) | $ (0.13) | $ (0.07) | $ (0.07) | $ (0.09) | $ (0.09) | $ (0.20) | $ (0.20) | $ (0.23) | $ (0.23) | |||||||||||
*Set forth above are reconciliations of the non-GAAP financial measure to the most directly comparable GAAP financial measure. The non-GAAP financial measure disclosed by the company has limitations and should not be considered a substitute for, or superior to, the financial measure prepared in accordance with GAAP, and the reconciliations from GAAP to Non-GAAP actuals should be carefully evaluated. Please refer to "Non-GAAP Financial Measures" in this document for an explanation of the adjustments made to the comparable GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide useful information for investors. | |||||||||||||||||||||
PIXELWORKS, INC. | ||||||||||
Three Months Ended | Six Months Ended | |||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | ||||||
2024 | 2024 | 2023 | 2024 | 2023 | ||||||
Reconciliation of GAAP and non-GAAP gross profit | ||||||||||
GAAP gross profit margin | 50.7 % | 50.5 % | 40.3 % | 50.6 % | 41.8 % | |||||
Stock-based compensation | 0.1 % | 0.1 % | 0.2 % | 0.1 % | 0.2 % | |||||
Restructuring | 0.2 % | — % | — % | 0.1 % | — % | |||||
Total reconciling items included in gross profit | 0.3 % | 0.1 % | 0.2 % | 0.2 % | 0.2 % | |||||
Non-GAAP gross profit margin | 51.0 % | 50.7 % | 40.5 % | 50.8 % | 42.0 % | |||||
*Set forth above are reconciliations of the non-GAAP financial measure to the most directly comparable GAAP financial measure. The non-GAAP | ||||||||||
PIXELWORKS, INC. | |||||
Three Months Ended | Six Months Ended | ||||
June 30, | March 31, | June 30, | June 30, | June 30, | |
2024 | 2024 | 2023 | 2024 | 2023 | |
Reconciliation of GAAP net loss attributable to Pixelworks Inc. and | |||||
GAAP net loss attributable to Pixelworks Inc. | $ (10,149) | $ (5,066) | $ (6,037) | $ (15,215) | $ (15,433) |
Restructuring | 1,419 | — | — | 1,419 | — |
Stock-based compensation | 925 | 1,075 | 1,259 | 2,000 | 2,425 |
Tax effect of non-GAAP adjustments | 74 | — | — | 74 | — |
Non-GAAP net loss attributable to Pixelworks Inc. | $ (7,731) | $ (3,991) | $ (4,778) | $ (11,722) | $ (13,008) |
EBITDA adjustments: | |||||
Depreciation and amortization | $ 1,059 | $ 1,109 | $ 1,077 | $ 2,168 | $ 2,158 |
Non-GAAP interest income and other, net | (327) | (434) | (473) | (761) | (1,144) |
Non-GAAP provision (benefit) for income taxes | (42) | 105 | 126 | 63 | 160 |
Adjusted EBITDA | $ (7,041) | $ (3,211) | $ (4,048) | $ (10,252) | $ (11,834) |
*Set forth above are reconciliations of the non-GAAP financial measure to the most directly comparable GAAP financial measure. The non-GAAP financial measure | |||||
PIXELWORKS, INC. | ||
June 30, 2024 | December 31, | |
ASSETS | ||
Current assets: | ||
Cash and cash equivalents | $ 37,824 | $ 47,544 |
Accounts receivable, net | 4,910 | 10,075 |
Inventories | 5,021 | 3,968 |
Prepaid expenses and other current assets | 2,222 | 3,138 |
Total current assets | 49,977 | 64,725 |
Property and equipment, net | 7,051 | 5,997 |
Operating lease right of use assets | 4,547 | 4,725 |
Other assets, net | 1,652 | 2,115 |
Goodwill | 18,407 | 18,407 |
Total assets | $ 81,634 | $ 95,969 |
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND SHAREHOLDERS' | ||
Current liabilities: | ||
Accounts payable | $ 2,500 | $ 2,416 |
Accrued liabilities and current portion of long-term liabilities | 9,148 | 9,692 |
Current portion of income taxes payable | 220 | 189 |
Total current liabilities | 11,868 | 12,297 |
Long-term liabilities, net of current portion | 673 | 1,373 |
Deposit liability | 14,098 | 13,781 |
Operating lease liabilities, net of current portion | 2,463 | 2,567 |
Income taxes payable, net of current portion | 1,006 | 939 |
Total liabilities | 30,108 | 30,957 |
Redeemable non-controlling interest | 27,517 | 28,214 |
Total Pixelworks, Inc. shareholders' equity | 486 | 12,541 |
Non-controlling interest | 23,523 | 24,257 |
Total shareholders' equity | 24,009 | 36,798 |
Total liabilities, redeemable non-controlling interest and shareholders' equity | $ 81,634 | $ 95,969 |
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SOURCE Pixelworks, Inc.
