Pixelworks Reports Second Quarter 2023 Financial Results
Mobile Revenue Increased
Second Quarter and Recent Highlights
- Total revenue increased
37% sequentially, driven by triple-digit growth in sales of mobile visual processors to tier-one mobile OEM customers in support of previously and soon to be launched smartphone models - Formally launched new IRX Gaming Experience brand and certification program for the mobile gaming ecosystem, representing a combination of Pixelworks' visual processor solutions and in-depth game tuning services to facilitate outstanding visual performance for top mobile games and smartphones
- Xiaomi, in collaboration with MediaTek and Pixelworks Shanghai, pre-announced the Xiaomi Redmi K60 Ultra smartphone, incorporating Pixelworks' X7 visual processor and newly launched IRX Gaming Experience device certification
- OPPO affiliate OnePlus previewed the scheduled launch of its OnePlus Ace2 Pro flagship smartphone, featuring simultaneous super frame rate and super-resolution functionality enabled by Pixelworks' X7 visual processor
- Announced incorporation of Pixelworks' Rendering Accelerator SDK in Nuverse's latest release of the popular mobile game, Crystal of Atlan (CoA), enabling exceptionally smooth 120fps gameplay with low power consumption
- Retained CITIC Securities, a leading investment bank in
China , and formally began the required tutoring process in support of the planned future listing of Pixelworks Shanghai subsidiary on the STAR exchange
"The sequential growth in the quarter was primarily driven by increased shipments of our mobile ICs, which contributed to mobile revenue more than doubling and reaching a record
"Also in the second quarter, we began ramping shipments to fulfill initial production orders from our fourth tier-one mobile customer, which is scheduled to officially launch its first model incorporating Pixelworks' visual processing solutions later this month. Additionally, we continue to make headway on building-out a collaborative ecosystem around mobile gaming, as highlighted by the recent launch of Pixelworks' IRX Gaming Experience brand. This new IRX branding and certification program represents an expansion of our ongoing mobile ecosystem initiatives and is specifically aimed at delivering higher consistency, quality and consumer awareness for Pixelworks as well as our content and OEM partners.
"Despite the generally subdued recovery of end market demand specifically in
Second Quarter Fiscal 2023 Financial Results
Revenue in the second quarter of 2023 was
On a GAAP basis, gross profit margin in the second quarter of 2023 was
On a non-GAAP basis, second quarter 2023 gross profit margin was
For the second quarter of 2023, the Company recorded a GAAP net loss of
For the second quarter of 2023, the Company recorded a non-GAAP net loss of
Adjusted EBITDA in the second quarter of 2023 was a negative
Cash and cash equivalents at the end of the second quarter of 2023 were
Business Outlook
The Company's current business outlook, including guidance for the third quarter of 2023, will be discussed as part of the scheduled conference call.
Conference Call Information
Pixelworks will host a conference call today, August 8, 2023, 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 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 amortization of acquired intangible assets and stock-based compensation expense which are required under GAAP as well as the tax effect of the non-GAAP adjustments and the impact of non-GAAP adjustments to redeemable non-controlling interest. 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 (benefit), depreciation and amortization, as well as the specific items 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 the Company's businesses, including plans to seek a local public listing in
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, | |
2023 | 2023 | 2022 | 2023 | 2022 | |
Revenue, net | $ 13,605 | $ 9,966 | $ 19,078 | $ 23,571 | $ 35,706 |
Cost of revenue (1) | 8,121 | 5,599 | 9,730 | 13,720 | 17,595 |
Gross profit | 5,484 | 4,367 | 9,348 | 9,851 | 18,111 |
Operating expenses: | |||||
Research and development (2) | 6,507 | 8,666 | 8,521 | 15,173 | 15,681 |
Selling, general and administrative (3) | 5,468 | 6,072 | 6,024 | 11,540 | 11,508 |
Total operating expenses | 11,975 | 14,738 | 14,545 | 26,713 | 27,189 |
Loss from operations | (6,491) | (10,371) | (5,197) | (16,862) | (9,078) |
Interest income and other, net | 473 | 671 | 101 | 1,144 | 263 |
Loss before income taxes | (6,018) | (9,700) | (5,096) | (15,718) | (8,815) |
Provision (benefit) for income taxes | 126 | 34 | (88) | 160 | 315 |
Net loss | (6,144) | (9,734) | (5,008) | (15,878) | (9,130) |
Less: Net (income) loss attributable to non-controlling interest and redeemable non-controlling interest | 107 | 338 | — | 445 | (470) |
Net loss attributable to Pixelworks Inc. | $ (6,037) | $ (9,396) | $ (5,008) | $ (15,433) | $ (9,600) |
Net loss attributable to Pixelworks Inc. per share - basic and diluted | $ (0.11) | $ (0.17) | $ (0.09) | $ (0.28) | $ (0.18) |
Weighted average shares outstanding - basic and diluted | 55,917 | 55,720 | 54,120 | 55,666 | 53,901 |
—————— | |||||
(1) Includes: | |||||
Stock-based compensation | 22 | 24 | 59 | 46 | 67 |
Amortization of acquired intangible assets | — | — | — | — | 72 |
(2) Includes stock-based compensation | 527 | 491 | 647 | 1,018 | 1,230 |
(3) Includes: | |||||
Stock-based compensation | 710 | 651 | 989 | 1,361 | 1,447 |
Amortization of acquired intangible assets | — | — | — | — | 18 |
PIXELWORKS, INC. | |||||
Three Months Ended | Six Months Ended | ||||
June 30, | March 31, | June 30, | June 30, | June 30, | |
2023 | 2023 | 2022 | 2023 | 2022 | |
Reconciliation of GAAP and non-GAAP gross profit | |||||
GAAP gross profit | $ 5,484 | $ 4,367 | $ 9,348 | $ 9,851 | $ 18,111 |
Stock-based compensation | 22 | 24 | 59 | 46 | 67 |
Amortization of acquired intangible assets | — | — | — | — | 72 |
Total reconciling items included in gross profit | 22 | 24 | 59 | 46 | 139 |
Non-GAAP gross profit | $ 5,506 | $ 4,391 | $ 9,407 | $ 9,897 | $ 18,250 |
Non-GAAP gross profit margin | 40.5 % | 44.1 % | 49.3 % | 42.0 % | 51.1 % |
Reconciliation of GAAP and non-GAAP operating expenses | |||||
GAAP operating expenses | $ 11,975 | $ 14,738 | $ 14,545 | $ 26,713 | $ 27,189 |
Reconciling item included in research and development: | |||||
Stock-based compensation | 527 | 491 | 647 | 1,018 | 1,230 |
Reconciling items included in selling, general and administrative: | |||||
Stock-based compensation | 710 | 651 | 989 | 1,361 | 1,447 |
Amortization of acquired intangible assets | — | — | — | — | 18 |
Total reconciling items included in operating expenses | 1,237 | 1,142 | 1,636 | 2,379 | 2,695 |
Non-GAAP operating expenses | $ 10,738 | $ 13,596 | $ 12,909 | $ 24,334 | $ 24,494 |
Reconciliation of GAAP and non-GAAP net loss attributable to Pixelworks, Inc. | |||||
GAAP net loss attributable to Pixelworks Inc. | $ (6,037) | $ (9,396) | $ (5,008) | $ (15,433) | $ (9,600) |
Reconciling items included in gross profit | 22 | 24 | 59 | 46 | 139 |
Reconciling items included in operating expenses | 1,237 | 1,142 | 1,636 | 2,379 | 2,695 |
Tax effect of non-GAAP adjustments | — | — | (1) | — | (4) |
Non-GAAP net loss attributable to Pixelworks Inc. | $ (4,778) | $ (8,230) | $ (3,314) | $ (13,008) | $ (6,770) |
Non-GAAP net loss attributable to Pixelworks Inc. per share - basic and diluted | $ (0.09) | $ (0.15) | $ (0.06) | $ (0.23) | $ (0.13) |
Non-GAAP weighted average shares outstanding - basic and diluted | 55,917 | 55,720 | 54,120 | 55,666 | 53,901 |
*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, | |||||||||||||||||
2023 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||
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 attributable to Pixelworks, Inc. | |||||||||||||||||||||
GAAP net loss attributable to Pixelworks Inc. | $ (0.11) | $ (0.11) | $ (0.17) | $ (0.17) | $ (0.09) | $ (0.09) | $ (0.28) | $ (0.28) | $ (0.18) | $ (0.18) | |||||||||||
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 | 0.02 | 0.02 | 0.02 | 0.02 | 0.03 | 0.03 | 0.04 | 0.04 | 0.05 | 0.05 | |||||||||||
Non-GAAP net loss attributable to Pixelworks Inc. | $ (0.09) | $ (0.09) | $ (0.15) | $ (0.15) | $ (0.06) | $ (0.06) | $ (0.23) | $ (0.23) | $ (0.13) | $ (0.13) | |||||||||||
*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, | ||||||
2023 | 2023 | 2022 | 2023 | 2022 | ||||||
Reconciliation of GAAP and non-GAAP gross profit margin | ||||||||||
GAAP gross profit margin | 40.3 % | 43.8 % | 49.0 % | 41.8 % | 50.7 % | |||||
Stock-based compensation | 0.2 % | 0.2 % | 0.3 % | 0.2 % | 0.2 % | |||||
Amortization of acquired intangible assets | — % | — % | — % | — % | 0.2 % | |||||
Total reconciling items included in gross profit | 0.2 % | 0.2 % | 0.3 % | 0.2 % | 0.4 % | |||||
Non-GAAP gross profit margin | 40.5 % | 44.1 % | 49.3 % | 42.0 % | 51.1 % | |||||
*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 | Six Months Ended | ||||
June 30, | March 31, | June 30, | June 30, | June 30, | |
2023 | 2023 | 2022 | 2023 | 2022 | |
Reconciliation of GAAP net loss attributable to Pixelworks Inc. and adjusted EBITDA | |||||
GAAP net loss attributable to Pixelworks Inc. | $ (6,037) | $ (9,396) | $ (5,008) | $ (15,433) | $ (9,600) |
Stock-based compensation | 1,259 | 1,166 | 1,695 | 2,425 | 2,744 |
Tax effect of non-GAAP adjustments | — | — | (1) | — | (4) |
Amortization of acquired intangible assets | — | — | — | — | 90 |
Non-GAAP net loss attributable to Pixelworks Inc. | $ (4,778) | $ (8,230) | $ (3,314) | $ (13,008) | $ (6,770) |
EBITDA adjustments: | |||||
Depreciation and amortization | $ 1,077 | $ 1,081 | $ 1,126 | $ 2,158 | $ 2,166 |
Non-GAAP interest income and other, net | (473) | (671) | (101) | (1,144) | (263) |
Non-GAAP provision (benefit) for income taxes | 126 | 34 | (87) | 160 | 319 |
Adjusted EBITDA | $ (4,048) | $ (7,786) | $ (2,376) | $ (11,834) | $ (4,548) |
*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. | ||
June 30, | December 31, | |
ASSETS | ||
Current assets: | ||
Cash and cash equivalents | $ 54,477 | $ 56,821 |
Accounts receivable, net | 7,422 | 10,047 |
Inventories | 5,530 | 1,760 |
Prepaid expenses and other current assets | 2,693 | 3,745 |
Total current assets | 70,122 | 72,373 |
Property and equipment, net | 7,191 | 4,632 |
Operating lease right of use assets | 5,640 | 3,331 |
Other assets, net | 2,683 | 3,580 |
Goodwill | 18,407 | 18,407 |
Total assets | $ 104,043 | $ 102,323 |
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND SHAREHOLDERS' EQUITY | ||
Current liabilities: | ||
Accounts payable | $ 1,431 | $ 3,143 |
Accrued liabilities and current portion of long-term liabilities | 9,018 | 8,849 |
Current portion of income taxes payable | 431 | 519 |
Total current liabilities | 10,880 | 12,511 |
Long-term liabilities, net of current portion | 1,883 | 1,005 |
Deposit liability | 13,214 | 13,537 |
Operating lease liabilities, net of current portion | 3,588 | 2,148 |
Income taxes payable, net of current portion | 929 | 872 |
Total liabilities | 30,494 | 30,073 |
Redeemable non-controlling interest | 27,708 | 28,919 |
Total Pixelworks, Inc. shareholders' equity | 21,590 | 32,422 |
Non-controlling interest | 24,251 | 10,909 |
Total shareholders' equity | 45,841 | 43,331 |
Total liabilities, redeemable non-controlling interest and shareholders' equity | $ 104,043 | $ 102,323 |
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SOURCE Pixelworks, Inc.