Pixelworks Reports Third Quarter 2022 Financial Results
Pixelworks reported a 16% year-over-year increase in total revenue for Q3 2022, reaching $17.6 million, despite an 8% sequential decline. Mobile revenue surged 25% year-over-year, contributing to a 44% growth year-to-date, while projector revenue rose 10%. The company recorded a GAAP net loss of $4.5 million or ($0.08) per share, an improvement from Q2. Cash and cash equivalents grew to $57.6 million. The firm remains cautiously optimistic amid macroeconomic challenges, highlighting ongoing investments and partnerships in the visual processing market.
- Mobile revenue increased 25% year-over-year.
- Projector revenue grew 10% year-over-year, reaching a two-year high.
- Closed a $10.7 million strategic investment in Shanghai subsidiary, boosting valuation to $471.5 million.
- Cash and cash equivalents increased to $57.6 million.
- Total revenue decreased 8% sequentially.
- GAAP net loss was $4.5 million, reflecting ongoing losses.
- Adjusted EBITDA remained negative at $2.1 million.
Mobile Revenue Grew
Projector Revenue Increased
PORTLAND, Ore., Nov. 7, 2022 /PRNewswire/ -- Pixelworks, Inc. (NASDAQ: PXLW), a leading provider of innovative video and display processing solutions, today announced financial results for the third quarter ended September 30, 2022.
Third Quarter Overview
- Total revenue increased
16% year-over-year and decreased8% sequentially, in line with expectations - Mobile revenue increased
25% year-over-year, contributing to growth of44% year-to-date compared to the same period in 2021 - Projector revenue increased
10% year-over-year and5% sequentially to represent the highest quarterly level in more than two years - iQOO Neo7 smartphone incorporated the upgraded Pixelworks X5 series visual processor, providing end-users with a more captivating gaming and video experience
- Disney and 20th Century rereleased James Cameron's Avatar in 4K HDR to theaters, marking the first-ever title to be remastered and released in cinematic high frame rate utilizing the TrueCut Motion platform
- Closed new strategic investment in the Company's Shanghai subsidiary, generating net proceeds of approximately
$10.7 million USD and valuing the subsidiary at approximately$471.5 million .
"Total revenue was at the mid-point of our guidance, demonstrating the team's continued execution while navigating a weaker smartphone market and overall macro environment," stated Todd DeBonis, President and CEO of Pixelworks. "Further underscoring our sustained progress against this challenging backdrop, both our mobile and projector businesses achieved double-digit revenue growth year-over-year for the sixth consecutive quarter."
"In addition to our solid operating performance, during the quarter we successfully closed a strategic investment in our Shanghai subsidiary at nearly 2x the valuation of the previous investment round. Our ability to execute this transaction in the current environment highlights the recognition and growing opportunity for our visual processing technology across Asia. It also enabled us to further strengthen our balance sheet in support of driving continued momentum in our mobile business and commercialization of our TrueCut Motion platform.
"We also continue to expand the ecosystems around our growth businesses, which includes a growing number of strategic engagements and design wins targeted at mobile gaming as well as advancing in-depth evaluations of our TrueCut Motion platform with a series of leading content creators and streaming service providers. Although we remain cautious about the overall macro environment and consumer demand, we are in a strong financial position to fully execute on our growth initiatives and extend Pixelworks' technology leadership in our target end markets."
Third Quarter Fiscal 2022 Financial Results
Revenue in the third quarter of 2022 was
On a GAAP basis, gross profit margin in the third quarter of 2022 was
On a non-GAAP basis, third quarter 2022 gross profit margin was
For the third quarter of 2022, the Company recorded a GAAP net loss of
For the third quarter of 2022, the Company recorded a non-GAAP net loss of
Adjusted EBITDA in the third quarter of 2022 was a negative
Cash and cash equivalents at the end of the third quarter of 2022 were
Business Outlook
The Company's current business outlook, including guidance for the fourth quarter of 2022, will be provided as part of the scheduled conference call.
Conference Call Information
Pixelworks will host a conference call today, November 7, 2022, 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, the Pixelworks logo and TrueCut Motion 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 efforts to expand the ecosystem for our growth businesses, to advance evaluations of the TrueCut Motion platform, and to execute on our growth initiatives and extend Pixelworks' technology leadership in our target end markets. 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: 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; lack of adoption of our TrueCut Motion platform; our efforts to achieve profitability from operations; our limited financial resources; our ability to attract and retain key personnel; and the impact of the COVID-19 pandemic on our business and on our suppliers and customers. 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, 2021, 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 | Nine Months Ended | ||||
September 30, | June 30, | September 30, | September 30, | September 30, | |
2022 | 2022 | 2021 | 2022 | 2021 | |
Revenue, net | $ 17,552 | $ 19,078 | $ 15,196 | $ 53,258 | $ 38,516 |
Cost of revenue (1) | 8,756 | 9,730 | 7,211 | 26,351 | 19,696 |
Gross profit | 8,796 | 9,348 | 7,985 | 26,907 | 18,820 |
Operating expenses: | |||||
Research and development (2) | 8,445 | 8,521 | 6,792 | 24,126 | 20,248 |
Selling, general and administrative (3) | 5,082 | 6,024 | 5,097 | 16,590 | 14,847 |
Total operating expenses | 13,527 | 14,545 | 11,889 | 40,716 | 35,095 |
Loss from operations | (4,731) | (5,197) | (3,904) | (13,809) | (16,275) |
Interest income and other, net | 165 | 101 | 54 | 428 | 292 |
Loss before income taxes | (4,566) | (5,096) | (3,850) | (13,381) | (15,983) |
Provision (benefit) for income taxes | (70) | (88) | (9) | 245 | 315 |
Net loss | (4,496) | (5,008) | (3,841) | (13,626) | (16,298) |
Less: Net income attributable to redeemable non-controlling interest | — | — | (232) | (470) | (232) |
Net loss attributable to Pixelworks Inc. | $ (4,496) | $ (5,008) | $ (4,073) | $ (14,096) | $ (16,530) |
Net loss attributable to Pixelworks Inc. per share - basic and diluted | (0.08) | (0.09) | (0.08) | (0.26) | (0.32) |
Weighted average shares outstanding - basic and diluted | 54,826 | 54,120 | 52,768 | 54,120 | 52,245 |
—————— | |||||
(1) Includes: | |||||
Stock-based compensation | (47) | 59 | (138) | 20 | 17 |
Amortization of acquired intangible assets | — | — | 218 | 72 | 681 |
(2) Includes stock-based compensation | 565 | 647 | 549 | 1,795 | 1,740 |
(3) Includes: | |||||
Stock-based compensation | 776 | 989 | 1,146 | 2,223 | 2,738 |
Amortization of acquired intangible assets | — | — | 53 | 18 | 166 |
PIXELWORKS, INC. | |||||
Three Months Ended | Nine Months Ended | ||||
September 30, | June 30, | September 30, | September 30, | September 30, | |
2022 | 2022 | 2021 | 2022 | 2021 | |
Reconciliation of GAAP and non-GAAP gross profit | |||||
GAAP gross profit | $ 8,796 | $ 9,348 | $ 7,985 | $ 26,907 | $ 18,820 |
Stock-based compensation | (47) | 59 | (138) | 20 | 17 |
Amortization of acquired intangible assets | — | — | 218 | 72 | 681 |
Total reconciling items included in gross profit | (47) | 59 | 80 | 92 | 698 |
Non-GAAP gross profit | $ 8,749 | $ 9,407 | $ 8,065 | $ 26,999 | $ 19,518 |
Non-GAAP gross profit margin | 49.8 % | 49.3 % | 53.1 % | 50.7 % | 50.7 % |
Reconciliation of GAAP and non-GAAP operating expenses | |||||
GAAP operating expenses | $ 13,527 | $ 14,545 | $ 11,889 | $ 40,716 | $ 35,095 |
Reconciling item included in research and development: | |||||
Stock-based compensation | 565 | 647 | 549 | 1,795 | 1,740 |
Reconciling items included in selling, general and administrative: | |||||
Stock-based compensation | 776 | 989 | 1,146 | 2,223 | 2,738 |
Amortization of acquired intangible assets | — | — | 53 | 18 | 166 |
Total reconciling items included in operating expenses | 1,341 | 1,636 | 1,748 | 4,036 | 4,644 |
Non-GAAP operating expenses | $ 12,186 | $ 12,909 | $ 10,141 | $ 36,680 | $ 30,451 |
Reconciliation of GAAP and non-GAAP net loss attributable to Pixelworks, Inc. | |||||
GAAP net loss attributable to Pixelworks Inc. | $ (4,496) | $ (5,008) | $ (4,073) | $ (14,096) | $ (16,530) |
Reconciling items included in gross profit | (47) | 59 | 80 | 92 | 698 |
Reconciling items included in operating expenses | 1,341 | 1,636 | 1,748 | 4,036 | 4,644 |
Tax effect of non-GAAP adjustments | 1 | (1) | 7 | (3) | (9) |
Impact of non-GAAP adjustments to redeemable non-controlling interest | — | — | (9) | — | (9) |
Non-GAAP net loss attributable to Pixelworks Inc. | $ (3,201) | $ (3,314) | $ (2,247) | $ (9,971) | $ (11,206) |
Non-GAAP net loss attributable to Pixelworks Inc. per share - basic and diluted | $ (0.06) | $ (0.06) | $ (0.04) | $ (0.18) | $ (0.21) |
Non-GAAP weighted average shares outstanding - basic and diluted | 54,826 | 54,120 | 52,768 | 54,120 | 52,245 |
*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 | Nine Months Ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||
2022 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||
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. | $ (0.08) | $ (0.08) | $ (0.09) | $ (0.09) | $ (0.08) | $ (0.08) | $ (0.26) | $ (0.26) | $ (0.32) | $ (0.32) | ||||||||||
Reconciling items included in gross profit | (0.00) | (0.00) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.01 | 0.01 | ||||||||||
Reconciling items included in operating expenses | 0.02 | 0.02 | 0.03 | 0.03 | 0.03 | 0.03 | 0.07 | 0.07 | 0.09 | 0.09 | ||||||||||
Non-GAAP net loss attributable to Pixelworks Inc. | $ (0.06) | $ (0.06) | $ (0.06) | $ (0.06) | $ (0.04) | $ (0.04) | $ (0.18) | $ (0.18) | $ (0.21) | $ (0.21) | ||||||||||
*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 | Nine Months Ended | |||||||||
September 30, | June 30, | September 30, | September 30, | September 30, | ||||||
2022 | 2022 | 2021 | 2022 | 2021 | ||||||
Reconciliation of GAAP and non-GAAP gross profit margin | ||||||||||
GAAP gross profit margin | 50.1 % | 49.0 % | 52.5 % | 50.5 % | 48.9 % | |||||
Stock-based compensation | (0.3) % | 0.3 % | (0.9) % | 0.0 % | 0.0 % | |||||
Amortization of acquired intangible assets | — % | — % | 1.4 % | 0.1 % | 1.8 % | |||||
Total reconciling items included in gross profit | (0.3) % | 0.3 % | 0.5 % | 0.2 % | 1.8 % | |||||
Non-GAAP gross profit margin | 49.8 % | 49.3 % | 53.1 % | 50.7 % | 50.7 % | |||||
*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 | Nine Months Ended | ||||
September 30, | June 30, | September 30, | September 30, | September 30, | |
2022 | 2022 | 2021 | 2022 | 2021 | |
Reconciliation of GAAP net loss attributable to Pixelworks Inc. and adjusted EBITDA | |||||
GAAP net loss attributable to Pixelworks Inc. | $ (4,496) | $ (5,008) | $ (4,073) | $ (14,096) | $ (16,530) |
Stock-based compensation | 1,294 | 1,695 | 1,557 | 4,038 | 4,495 |
Tax effect of non-GAAP adjustments | 1 | (1) | 7 | (3) | (9) |
Amortization of acquired intangible assets | — | — | 271 | 90 | 847 |
Impact of non-GAAP adjustments to redeemable non-controlling interest | — | — | (9) | — | (9) |
Non-GAAP net loss attributable to Pixelworks Inc. | $ (3,201) | $ (3,314) | $ (2,247) | $ (9,971) | $ (11,206) |
EBITDA adjustments: | |||||
Depreciation and amortization | $ 1,324 | $ 1,126 | $ 762 | $ 3,490 | $ 2,684 |
Non-GAAP interest income and other, net | (165) | (101) | (54) | (428) | (292) |
Non-GAAP provision (benefit) for income taxes | (71) | (87) | (16) | 248 | 324 |
Adjusted EBITDA | $ (2,113) | $ (2,376) | $ (1,555) | $ (6,661) | $ (8,490) |
*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. | ||
September 30, | December 31, | |
ASSETS | ||
Current assets: | ||
Cash and cash equivalents | $ 57,615 | $ 61,587 |
Accounts receivable, net | 10,770 | 8,708 |
Inventories | 2,716 | 1,469 |
Prepaid expenses and other current assets | 1,522 | 2,732 |
Total current assets | 72,623 | 74,496 |
Property and equipment, net | 3,825 | 5,656 |
Operating lease right of use assets | 3,687 | 4,789 |
Other assets, net | 3,758 | 3,162 |
Acquired intangible assets, net | — | 90 |
Goodwill | 18,407 | 18,407 |
Total assets | $ 102,300 | $ 106,600 |
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND | ||
Current liabilities: | ||
Accounts payable | $ 2,354 | $ 2,747 |
Accrued liabilities and current portion of long-term liabilities | 10,070 | 13,563 |
Current portion of income taxes payable | 148 | 128 |
Total current liabilities | 12,572 | 16,438 |
Long-term liabilities, net of current portion | 421 | 519 |
Deposit liability | 11,815 | 12,716 |
Operating lease liabilities, net of current portion | 2,254 | 2,853 |
Income taxes payable, net of current portion | 2,575 | 2,948 |
Total liabilities | 29,637 | 35,474 |
Redeemable non-controlling interest | 28,202 | 30,905 |
Total Pixelworks, Inc. shareholders' equity | 33,723 | 40,221 |
Non-controlling interest | 10,738 | — |
Total shareholders' equity | 44,461 | 40,221 |
Total liabilities, redeemable non-controlling interest and shareholders' equity | $ 102,300 | $ 106,600 |
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SOURCE Pixelworks, Inc.
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