SAN JOSE, Calif., Aug. 02, 2018 (GLOBE NEWSWIRE) -- Pixelworks, Inc. (NASDAQ: PXLW), a leading provider of power efficient visual processing solutions, today announced financial results for the second quarter ended June 30, 2018.
Second Quarter Highlights
- Digital Projector revenue grew 31% sequentially
- Mobile revenue grew 66% sequentially and 29% year-over-year, on increased production volume shipments of both 3rd and 4th generation Iris processors to smartphone OEM customers
- Secured multiple new wins and increased pipeline of customer engagements in both mobile and video delivery
President and CEO of Pixelworks, Todd DeBonis, commented, “Second quarter revenue of $19.3 million was above the high-end of our guidance range, reflecting strong sequential growth in both the digital projector and mobile markets. Additionally, consolidated revenue in the second quarter grew more than 20 percent year-over-year after adjusting for the end-of-life revenue we recognized in 2017. Operating expenses were in-line with our expectations, and we achieved breakeven bottom-line results on a non-GAAP basis.
“Complementing our solid financial results, we announced several notable wins during the second quarter. In mobile, we shipped increased volumes of 3rd and 4th generation Iris processors in support of announced wins on Xiaomi Blackshark’s gaming smartphone and ASUS’ flagship ROG Phone. In our video delivery business, we announced our XCode transcoding SoCs were selected to enable multiple leading OTA devices, including AirTV and Nuvyyo’s Tablo Dual-Lite DVR.
“Prevailing video consumption trends among consumers are continuing to drive increased momentum for the incorporation of Pixelworks’ advanced display technologies in next-generation devices. As evidence, today we have the largest pipeline of customer and program engagements in recent history, and we anticipate being able to announce multiple new wins in mobile during the second half of the year. Specific to the third quarter, we expect to report healthy sequential and year-over-year consolidated revenue growth, with our video delivery business anticipated to be accretive and contribute to our improvement in overall profitability.”
Second Quarter 2018 Financial Results
Revenue in the second quarter of 2018 was $19.3 million, compared to $15.3 million in the first quarter of 2018. The sequential increase reflects a combination of seasonal growth in the Company’s digital projector business and expanded shipments of Iris mobile processors in support of new product launches at multiple smartphone customers. Revenue in the second quarter of 2017 was $20.7 million, which included $5.1 million of legacy end-of-life product revenue.
On a GAAP basis, gross profit margin in the second quarter of 2018 was 49.5%, compared to 51.0% in the first quarter of 2018 and 54.1% in the second quarter of 2017. Second quarter 2018 GAAP operating expenses were $12.0 million compared to $9.1 million in the first quarter of 2018 and $9.2 million in the year-ago quarter.
For the second quarter of 2018, the Company recorded a GAAP net loss of $2.6 million, or $(0.07) per share, compared to a GAAP net loss of $598,000, or $(0.02) per share, in the first quarter of 2018 and GAAP net income of $1.3 million, or $0.04 per diluted share, in the year-ago quarter.
On a non-GAAP basis, second quarter 2018 gross profit margin was 52.7%, compared to 54.2% in the first quarter of 2018 and 54.4% in the year-ago quarter. Second quarter 2018 non-GAAP operating expenses were $10.0 million, compared to $7.8 million in the first quarter of 2018 and $7.6 million in the year-ago quarter. Operating expenses in both the first quarter of 2018 and second quarter of 2017 included the recognition of approximately $2 million of offsets to R&D related to the Company’s ongoing co-development project with a large digital projector customer.
For the second quarter of 2018, the Company recorded a non-GAAP net loss of $140,000, or $(0.00) per share, compared to non-GAAP net income of $38,000, or $0.00 per diluted share, in the first quarter of 2018 and non-GAAP net income of $3.2 million, or $0.10 per diluted share, in the year-ago quarter. Adjusted EBITDA in the second quarter of 2018 was $1.1 million, compared with $1.3 million in the first quarter of 2018 and $4.7 million in the year-ago quarter.
Business Outlook
For the third quarter of 2018, Pixelworks expects revenue to be in a range of between $21 million and $22 million. Additional guidance will be provided as part of the Company’s earnings conference call.
Conference Call Information
Pixelworks will host a conference call today, August 2, 2018, at 2:00 p.m. Pacific Time, which can be accessed by calling 877-359-9508 and using passcode 8078505. A Web broadcast of the call can be accessed by visiting the Company's investor page at www.pixelworks.com. For those unable to listen to the live Web broadcast, it will be archived for approximately 30 days. A replay of the conference call will also be available through Thursday, August 9, 2018, and can be accessed by calling 855-859-2056 and using passcode 8078505.
About Pixelworks Inc.
Pixelworks creates, develops and markets high efficiency visual display processing and advanced video delivery solutions for the highest quality display and streaming applications. The Company has a 20-year history of delivering image processing innovation to providers of leading edge consumer electronics and professional displays. Pixelworks is headquartered in San Jose, Calif. For more information, please visit the company’s Web site at www.pixelworks.com.
Note: Pixelworks and the Pixelworks logo are registered 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 income (loss) and non-GAAP net income (loss) per share, which exclude inventory step-up and backlog amortization, amortization of acquired intangible assets, stock-based compensation expense, restructuring expenses, discount accretion on convertible debt fair value and gain on extinguishment of convertible debt, which are all required under GAAP as well as the tax effect of the non-GAAP adjustments. The press release also makes reference to and reconciles GAAP net income (loss) and adjusted EBITDA, which Pixelworks defines as GAAP net income (loss) before interest expense and other, net, income tax provision, 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 businesses 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.
In calculating the above non-GAAP results, management specifically adjusted for certain items related to the acquisition of ViXS Systems, Inc., including amortization of acquired intangible assets, impact of inventory step up both related to fair valuing the items, restructuring expenses related to a reduction in workforce, accretion on convertible debt of ViXS. Management considers these items as either limited in term or having no impact on Pixelworks’ cash flows, and therefore has excluded such items to facilitate a review of current operating performance and comparisons to our past operating performance.
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
