Pixelworks Reports First Quarter 2024 Financial Results
Pixelworks (NASDAQ: PXLW) reported a 61% year-over-year revenue increase for Q1 2024. Mobile revenue surged nearly 200% to $9.8 million, accounting for 61% of total revenue. Gross margins expanded to 50.5%. Notable product integrations include the Infinix GT 20 Pro and vivo iQOO Z9 Turbo, powered by Pixelworks' X5 Turbo visual processor. The company’s TrueCut Motion platform expanded with new film releases. Despite operational gains, Pixelworks reported a GAAP net loss of $5.1 million, or ($0.09) per share, and a non-GAAP net loss of $4.0 million, or ($0.07) per share. EBITDA was negative $3.2 million, with cash reserves of $46.2 million.
- Total revenue increased 61% year-over-year, reaching $16.1 million.
- Mobile revenue grew nearly 200% year-over-year, reaching $9.8 million.
- Mobile revenue now constitutes 61% of total revenue.
- GAAP gross margin expanded to 50.5%.
- New integrations with Infinix GT 20 Pro and vivo iQOO Z9 Turbo smartphones.
- Expanded TrueCut Motion platform with new film releases.
- Non-GAAP gross profit margin improved to 50.7%.
- Well-managed operating expenses at $12.6 million (non-GAAP).
- Significant reduction in year-over-year net loss: GAAP net loss down from $9.4 million to $5.1 million.
- Non-GAAP net loss decreased from $8.2 million to $4.0 million year-over-year.
- Revenue decreased from $20.1 million in Q4 2023 to $16.1 million in Q1 2024.
- GAAP net loss increased from $3.7 million in Q4 2023 to $5.1 million in Q1 2024.
- Non-GAAP net loss grew from $2.6 million in Q4 2023 to $4.0 million in Q1 2024.
- Adjusted EBITDA was a negative $3.2 million, worsening from negative $1.9 million in Q4 2023.
- Cash and cash equivalents decreased from $62.8 million year-over-year to $46.2 million.
Insights
Pixelworks' recent performance in the first quarter of 2024 demonstrates noteworthy growth, particularly in its mobile revenue segment. The company reported a
However, while the revenue growth is impressive, the company still recorded a GAAP net loss of
For retail investors, it's important to recognize the potential for continued growth in the mobile sector, but also to keep an eye on how the company manages its expenses and moves towards profitability. The balance between growth and financial health will be a key area to watch in the coming quarters.
The significant increase in mobile revenue, particularly from Pixelworks' X-series visual processors, is a clear indicator of strong demand in the mid to lower-tier smartphone market. The inclusion of Pixelworks technology in devices like Transsion's Infinix GT 20 Pro and vivo's iQOO Z9 Turbo highlights the company's successful penetration into emerging markets and mid-tier devices, which are growth segments in the smartphone industry.
The expansion into TrueCut Motion technology in premium format theaters with releases from major studios like Legendary Pictures and Universal Pictures showcases Pixelworks' ability to diversify its revenue streams and leverage its technology for high-value applications. However, the challenge will be to maintain and grow these partnerships while managing the competitive pressures in both the mobile and cinematic technology spaces.
For investors, the focus should be on the sustainability of these revenue streams and the company's ability to expand its ecosystem further. The successful adoption of Pixelworks' technology in high-profile devices and formats bodes well for market positioning, but continued innovation and market engagement will be essential.
Total Revenue Increased
Mobile Revenue Grew nearly
First Quarter and Recent Highlights
- Total revenue increased
61% year-over-year, driven by strong growth in mobile revenue - Mobile revenue grew year-over-year to
$9.8 million - GAAP gross margin expanded almost 600 basis points sequentially and 670 basis point year-over-year to
50.5% , primarily driven by revenue mix comprised of newer generation mobile visual processors - Transsion, a global tier-one manufacturer of smart devices, launched the Infinix GT 20 Pro smartphone in emerging market geographies, incorporating Pixelworks' X5 Turbo visual processor
- vivo's newly launched iQOO Z9 Turbo smartphone incorporated the Pixelworks' X5 Turbo visual processor, extending a more immersive, high-frame-rate gaming experience to the mid-tier device market
- Diablo® Immortal™, co-developed by Blizzard Entertainment® and NetEase, became latest AAA mobile game to integrate Pixelworks' IRX Rendering Accelerator SDK for superior visual experiences on IRX certified devices
- Legendary Pictures' Godzilla x Kong: New Empire was released globally by Warner Bros. to select premium format theaters in TrueCut Motion format
- Universal Pictures released DreamWorks Animation's Kung Fu Panda 4 in TrueCut Motion format to both 3D and 2D premium theaters, showcasing the enhanced motion look of cinematic high-frame-rate
"First quarter revenue was slightly above the midpoint of guidance and reflected the anticipated March quarter seasonality following our record mobile revenue in the fourth quarter," stated Todd DeBonis, President and CEO of Pixelworks. "Year-over-year, mobile revenue was up almost 3x and represented a record
"Our recently announced mobile wins, including Transsion's Infinix GT 20 Pro smartphone and vivo's newly launched iQOO Z9 Turbo, represent notable traction on our two-pronged strategy aimed at increased penetration of the mid- to lower-tier device market as well as expanded adoption in smartphone models targeted for outside of
"We remain focused on operational execution in a challenging environment, while also continuing to navigate a dynamic smartphone market in
First Quarter 2024 Financial Results
Revenue in the first quarter of 2024 was
On a GAAP basis, gross profit margin in the first quarter of 2024 was
On a non-GAAP basis, first quarter 2024 gross profit margin was
For the first quarter of 2024, the Company recorded a GAAP net loss of
For the first quarter of 2024, the Company recorded a non-GAAP net loss of
Adjusted EBITDA in the first quarter of 2024 was a negative
Cash and cash equivalents at the end of the first quarter of 2024 were
Business Outlook
The Company's current business outlook, including guidance for the second quarter of 2024, will be discussed as part of the scheduled conference call.
Conference Call Information
Pixelworks will host a conference call today, May 14, 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 which is 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 expected adoption rates, increased volumes, new product introductions, gross margin expansion, and achievement of quarterly breakeven results. 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 adoption rate of our TrueCut Motion technology or of high frame rate content by the motion picture and streaming video industries; the actual performance of the motion picture and streaming video industries; 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 | |||
March 31, | December 31, | March 31, | |
2024 | 2023 | 2023 | |
Revenue, net | $ 16,054 | $ 20,074 | $ 9,966 |
Cost of revenue (1) | 7,940 | 11,098 | 5,599 |
Gross profit | 8,114 | 8,976 | 4,367 |
Operating expenses: | |||
Research and development (2) | 8,073 | 6,953 | 8,666 |
Selling, general and administrative (3) | 5,534 | 6,151 | 6,072 |
Total operating expenses | 13,607 | 13,104 | 14,738 |
Loss from operations | (5,493) | (4,128) | (10,371) |
Interest income and other, net | 434 | 435 | 671 |
Loss before income taxes | (5,059) | (3,693) | (9,700) |
Provision for income taxes | 105 | 39 | 34 |
Net loss | (5,164) | (3,732) | (9,734) |
Less: Net (income) loss attributable to non-controlling interests and redeemable non-controlling interests | 98 | (12) | 338 |
Net loss attributable to Pixelworks Inc. | $ (5,066) | $ (3,744) | $ (9,396) |
Net loss attributable to Pixelworks Inc. per share - basic and diluted | $ (0.09) | $ (0.07) | $ (0.17) |
Weighted average shares outstanding - basic and diluted | 57,472 | 56,895 | 55,720 |
—————— | |||
(1) Includes stock-based compensation | 18 | 22 | 24 |
(2) Includes stock-based compensation | 330 | 396 | 491 |
(3) Includes stock-based compensation | 727 | 701 | 651 |
PIXELWORKS, INC. | |||
Three Months Ended | |||
March 31, | December 31, | March 31, | |
2024 | 2023 | 2023 | |
Reconciliation of GAAP and non-GAAP gross profit | |||
GAAP gross profit | $ 8,114 | $ 8,976 | $ 4,367 |
Stock-based compensation | 18 | 22 | 24 |
Non-GAAP gross profit | $ 8,132 | $ 8,998 | $ 4,391 |
Non-GAAP gross profit margin | 50.7 % | 44.8 % | 44.1 % |
Reconciliation of GAAP and non-GAAP operating expenses | |||
GAAP operating expenses | $ 13,607 | $ 13,104 | $ 14,738 |
Reconciling item included in research and development: | |||
Stock-based compensation | 330 | 396 | 491 |
Reconciling items included in selling, general and administrative: | |||
Stock-based compensation | 727 | 701 | 651 |
Total reconciling items included in operating expenses | 1,057 | 1,097 | 1,142 |
Non-GAAP operating expenses | $ 12,550 | $ 12,007 | $ 13,596 |
Reconciliation of GAAP and non-GAAP net loss attributable to Pixelworks, Inc. | |||
GAAP net loss attributable to Pixelworks Inc. | $ (5,066) | $ (3,744) | $ (9,396) |
Reconciling items included in gross profit | 18 | 22 | 24 |
Reconciling items included in operating expenses | 1,057 | 1,097 | 1,142 |
Non-GAAP net loss attributable to Pixelworks Inc. | $ (3,991) | $ (2,625) | $ (8,230) |
Non-GAAP net loss attributable to Pixelworks Inc. per share - basic and diluted | $ (0.07) | $ (0.05) | $ (0.15) |
Non-GAAP weighted average shares outstanding - basic and diluted | 57,472 | 56,895 | 55,720 |
*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 | ||||||||||||||
March 31, | December 31, | March 31, | ||||||||||||
2024 | 2023 | 2023 | ||||||||||||
Dollars per share | Dollars per share | Dollars per share | ||||||||||||
Basic | Diluted | Basic | Diluted | Basic | Diluted | |||||||||
Reconciliation of GAAP and non-GAAP net loss attributable to Pixelworks, Inc. | ||||||||||||||
GAAP net loss attributable to Pixelworks Inc. | $ (0.09) | $ (0.09) | $ (0.07) | $ (0.07) | $ (0.17) | $ (0.17) | ||||||||
Reconciling items included in gross profit | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||
Reconciling items included in operating expenses | 0.02 | 0.02 | 0.02 | 0.02 | 0.02 | 0.02 | ||||||||
Non-GAAP net loss attributable to Pixelworks Inc. | $ (0.07) | $ (0.07) | $ (0.05) | $ (0.05) | $ (0.15) | $ (0.15) | ||||||||
*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 | |||||||
March 31, | December 31, | March 31, | |||||
2024 | 2023 | 2023 | |||||
Reconciliation of GAAP and non-GAAP gross profit margin | |||||||
GAAP gross profit margin | 50.5 % | 44.7 % | 43.8 % | ||||
Stock-based compensation | 0.1 % | 0.1 % | 0.2 % | ||||
Total reconciling items included in gross profit | 0.1 % | 0.1 % | 0.2 % | ||||
Non-GAAP gross profit margin | 50.7 % | 44.8 % | 44.1 % | ||||
*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 | |||
March 31, | December 31, | March 31, | |
2024 | 2023 | 2023 | |
Reconciliation of GAAP net loss attributable to Pixelworks Inc. and adjusted EBITDA | |||
GAAP net loss attributable to Pixelworks Inc. | $ (5,066) | $ (3,744) | $ (9,396) |
Stock-based compensation | 1,075 | 1,119 | 1,166 |
Non-GAAP net loss attributable to Pixelworks Inc. | $ (3,991) | $ (2,625) | $ (8,230) |
EBITDA adjustments: | |||
Depreciation and amortization | $ 1,109 | $ 1,076 | $ 1,081 |
Non-GAAP interest income and other, net | (434) | (435) | (671) |
Non-GAAP provision for income taxes | 105 | 39 | 34 |
Adjusted EBITDA | $ (3,211) | $ (1,945) | $ (7,786) |
*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. | ||
March 31, | December 31, | |
ASSETS | ||
Current assets: | ||
Cash and cash equivalents | $ 46,193 | $ 47,544 |
Accounts receivable, net | 7,350 | 10,075 |
Inventories | 3,357 | 3,968 |
Prepaid expenses and other current assets | 2,104 | 3,138 |
Total current assets | 59,004 | 64,725 |
Property and equipment, net | 7,656 | 5,997 |
Operating lease right of use assets | 4,929 | 4,725 |
Other assets, net | 1,813 | 2,115 |
Goodwill | 18,407 | 18,407 |
Total assets | $ 91,809 | $ 95,969 |
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND SHAREHOLDERS' EQUITY | ||
Current liabilities: | ||
Accounts payable | $ 3,821 | $ 2,416 |
Accrued liabilities and current portion of long-term liabilities | 8,347 | 9,692 |
Current portion of income taxes payable | 182 | 189 |
Total current liabilities | 12,350 | 12,297 |
Long-term liabilities, net of current portion | 970 | 1,373 |
Deposit liability | 13,683 | 13,781 |
Operating lease liabilities, net of current portion | 2,777 | 2,567 |
Income taxes payable, net of current portion | 981 | 939 |
Total liabilities | 30,761 | 30,957 |
Redeemable non-controlling interest | 27,692 | 28,214 |
Total Pixelworks, Inc. shareholders' equity | 9,450 | 12,541 |
Non-controlling interest | 23,906 | 24,257 |
Total shareholders' equity | 33,356 | 36,798 |
Total liabilities, redeemable non-controlling interest and shareholders' equity | $ 91,809 | $ 95,969 |
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SOURCE Pixelworks, Inc.
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