Pixelworks, Inc. (NASDAQ: PXLW), an innovative provider of video
display processing technology, today announced financial results
for the second quarter ended June 30, 2016.
Second Quarter Highlights
- Revenue increased 12% sequentially to
$12.6 million;
- ASUS ZenPad Z8 launched by tier-one
North American carrier incorporates Iris video display
processor;
- Iris incorporated into first-ever
smartphone with launch of ASUS ZenFone 3 Ultra; and
- David Sabo joined Pixelworks in June as
Senior Vice President, Business Development and IP Licensing.
For the second quarter of 2016, revenue was $12.6 million,
compared to $11.2 million in the prior quarter and $15.1 million in
the second quarter of 2015. Revenue during the second quarter
reflected the expected sequential increase in the sale of chips
sold into both the digital projection and mobile markets.
On a GAAP basis, gross profit margin in the second quarter of
2016 was 51.0%, compared to 32.2% in the first quarter of 2016 and
48.0% in the second quarter of 2015. Second quarter 2016 GAAP
operating expenses were $7.8 million, compared to $12.1 million in
the previous quarter and $9.7 million in the second quarter of
2015.
For the second quarter of 2016, the Company recorded a GAAP net
loss of $1.6 million, or $0.06 per share, compared to a GAAP net
loss of $8.6 million, or $0.31 per share, in the first quarter of
2016, which included $4.3 million, or $0.15 per share, in charges
related to the Company’s announced restructuring. GAAP net loss was
$2.8 million, or $0.12 per share, in the second quarter of
2015.
On a non-GAAP basis, gross profit margin in the second quarter
of 2016 was 51.6%, compared to 48.0% in the first quarter of 2016
and 48.3% in the second quarter of 2015. Second quarter 2016 gross
margin was higher compared to the prior periods primarily due to a
more favorable product mix specific to revenue generated in the
digital projection market. Second quarter 2016 operating expenses
on a non-GAAP basis were $7.0 million, compared to $9.2 million in
the previous quarter and $8.8 million in the second quarter of
2015. Lower operating expenses compared to the prior periods
reflected the net benefit of the Company’s announced
restructuring.
For the second quarter of 2016, the Company recorded a non-GAAP
net loss of $756,000, or $0.03 per share, compared to a non-GAAP
net loss of $4.0 million, or $0.14 per share, in the first quarter
of 2016 and non-GAAP net loss of $1.9 million, or $0.08 per share,
in the second quarter of 2015. Adjusted EBITDA in the second
quarter of 2016 was a positive $0.3 million, compared to a negative
$2.9 million in the previous quarter and a negative $0.5 million in
the second quarter of 2015.
“Our second quarter results exceeded expectations across all
metrics, reflecting the team's strong execution as well as the
benefits of our recent restructuring and cost reduction efforts,”
stated Todd DeBonis, president and CEO of Pixelworks. “We also made
significant forward progress on our mobile initiative during the
quarter, with the announcement of our first design win for both a
smart phone, the ASUS ZenFone 3 Ultra, and a tier-one North
American carrier launched tablet, the ZenPad Z8. Our renewed sales
focus combined with the mobile market naturally moving in the
direction of higher quality video is driving a decided increase in
the amount of interest and opportunities for Pixelworks’
technology.”
Business Outlook for the Third Quarter of 2016
The Company’s expectations for the third quarter of 2016
include:
- Revenue to be between $13 million and
$14 million;
- Gross profit margin of approximately
48% to 50% on both a GAAP basis and non-GAAP basis; and
- Operating expenses of $8 million to $9
million on a GAAP basis and $7 million to $8 million on a non-GAAP
basis. The difference in estimated operating expenses on a GAAP
basis, versus a non-GAAP basis, is stock-based compensation
expense, of which a range between $0.5 million to $1.0 million is
included on a GAAP basis. Stock-based compensation expense is
excluded from the calculation of estimated operating expenses on a
non-GAAP basis.
Conference Call Information
Pixelworks will host a conference call today at 2:00 p.m.
Pacific Time, which can be accessed by calling 877-359-9508 and
using passcode 47925364. 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 4, 2016, and can be accessed by calling 855-859-2056 and
using passcode 47925364.
About Pixelworks, Inc.
Pixelworks creates, develops and markets video display
processing technology for digital video applications that demand
the very highest quality images. At design centers around the
world, Pixelworks engineers constantly push video performance to
keep manufacturers of consumer electronics and professional
displays worldwide on the leading edge. The Company is
headquartered in San Jose, CA.
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 loss and
non-GAAP net loss per share, which excludes restructuring charges
and stock-based compensation expense, which are both required under
GAAP. The press release also reconciles GAAP net loss and adjusted
EBITDA, which Pixelworks defines as GAAP net loss before interest
expense and other, net, income tax provision, depreciation and
amortization, as well as the specific items listed above. The
Company believes these non-GAAP measures provide a meaningful
perspective on the Company's core operating results and underlying
cash flow dynamics, but cautions investors to consider these
measures in addition to, not as a substitute for, its 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 Company's website.
Safe Harbor Statement
This release contains forward-looking statements, including,
without limitation, statements with respect to the Company’s growth
opportunities, product shipments, product demand, customer
engagements, and the Company’s potential and position for the
future, statements made by Mr. DeBonis about our mobile initiative
and the mobile market, and statements with respect to the business
outlook for the third quarter of 2016, including revenue, gross
margin and operating expenses, 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,”
“believe,” “expect” and similar terms or the negative of such
terms. 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 deliver new products
in a timely fashion; our new product yield rates; changes in
estimated product costs; product mix; supply of products from
third-party foundries; failure or difficulty in achieving design
wins; timely customer transition to new product designs;
competitive factors, such as rival chip architectures, introduction
or traction by competing designs, or pricing pressures; risks
related to licensing our intellectual property; the success of our
products in expanded markets; current global economic challenges;
levels of inventory at distributors and customers; changes in the
digital display and projection markets; changes in customer
ordering patterns or lead times; seasonality in the consumer
electronics market; our efforts to achieve profitability from
operations; insufficient, excess or obsolete inventory and
variations in inventory valuation; the outcome of any litigation
related to our intellectual property rights; our limited financial
resources and our ability to attract and retain key personnel; and
risks related to our restructuring plan, including whether the
expected amount of the costs associated with the restructuring
program will differ from or exceed the Company's forecasts and
whether the Company will be able to realize the full amount of
estimated savings from the restructuring program or in the
timeframe expected. More information regarding potential factors
that could affect the Company's financial results and could cause
actual results to differ materially is included from time to time
in the Company's Securities and Exchange Commission filings,
including our Annual Report on Form 10-K for the year ended
December 31, 2015 as well as subsequent SEC filings.
The forward-looking statements contained in this release speak
as of the date of this release, and we do not undertake any
obligation to update any such statements, whether as a result of
new information, future events or otherwise.
PIXELWORKS, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (In thousands, except per share
data) (Unaudited) Three Months
Ended Six Months Ended June 30,
March 31, June 30,
June 30, June 30, 2016
2016 2015 2016 2015 Revenue, net $
12,580 $ 11,167 $ 15,078 $ 23,747 $ 29,470 Cost of revenue (1)
6,165 7,575 7,844
13,740 15,269 Gross profit 6,415 3,592 7,234
10,007 14,201 Operating expenses: Research and development (2)
4,504 5,675 6,105 10,179 12,423 Selling, general and administrative
(3) 3,180 3,865 3,584 7,045 7,471 Restructuring 67
2,538 — 2,605 —
Total operating expenses 7,751 12,078
9,689 19,829 19,894
Loss from operations (1,336 ) (8,486 ) (2,455 ) (9,822 )
(5,693 ) Interest expense and other, net (107 ) (99 )
(105 ) (206 ) (212 ) Loss before income taxes
(1,443 ) (8,585 ) (2,560 ) (10,028 ) (5,905 ) Provision for income
taxes 117 57 236
174 255 Net loss $ (1,560 ) $ (8,642 ) $
(2,796 ) $ (10,202 ) $ (6,160 ) Net loss per share - basic and
diluted $ (0.06 ) $ (0.31 )
$
(0.12 )
$
(0.36 )
$
(0.26 ) Weighted average shares outstanding - basic and diluted
28,167 27,936 23,539
28,051 23,434
——————
(1) Includes: Stock-based compensation $ 46 $ 44 $ 42 $ 90 $ 95
Restructuring 27 1,723 — 1,750 — (2) Includes stock-based
compensation 392 429 429 821 918 (3) Includes stock-based
compensation 268 (107 ) 422 161 958
PIXELWORKS,
INC. RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL
INFORMATION * (In thousands, except per share data)
(Unaudited) Three Months
Ended Six Months Ended June 30,
March 31, June 30,
June 30, June 30, 2016
2016 2015 2016 2015 Reconciliation
of GAAP and non-GAAP gross profit GAAP gross profit $ 6,415 $
3,592 $ 7,234 $ 10,007 $ 14,201 Stock-based compensation 46 44 42
90 95 Restructuring 27 1,723 —
1,750 — Total reconciling items
included in cost of revenue 73 1,767
42 1,840 95 Non-GAAP
gross profit $ 6,488 $ 5,359 $ 7,276 $ 11,847
$ 14,296 Non-GAAP gross profit margin 51.6 %
48.0 % 48.3 % 49.9 % 48.5 %
Reconciliation of GAAP and non-GAAP operating expenses GAAP
operating expenses $ 7,751 $ 12,078 $ 9,689 $ 19,829 $ 19,894
Reconciling item included in research and development: Stock-based
compensation 392 429 429 821 918 Reconciling item included in
selling, general and administrative: Stock-based compensation 268
(107 ) 422 161 958 Restructuring 67 2,538
— 2,605 — Total
reconciling items included in operating expenses 727
2,860 851 3,587
1,876 Non-GAAP operating expenses $ 7,024 $ 9,218
$ 8,838 $ 16,242 $ 18,018
Reconciliation of GAAP and non-GAAP net loss GAAP net loss $
(1,560 ) $ (8,642 ) $ (2,796 ) $ (10,202 ) $ (6,160 ) Reconciling
items included in cost of revenue 73 1,767 42 1,840 95 Reconciling
items included in operating expenses 727 2,860 851 3,587 1,876 Tax
effect of non-GAAP adjustments 4 (2 )
(46 ) 2 (66 ) Non-GAAP net loss $ (756 ) $
(4,017 ) $ (1,949 ) $ (4,773 ) $ (4,255 ) Non-GAAP net loss per
share - basic and diluted $ (0.03 ) $ (0.14 ) $ (0.08 ) $ (0.17 ) $
(0.18 ) Non-GAAP weighted average shares outstanding - basic and
diluted 28,167 27,936 23,539
28,051 23,434
* Our non-GAAP gross profit, non-GAAP gross profit margin,
non-GAAP operating expenses, non-GAAP net loss and non-GAAP net
loss per share differs from GAAP gross profit, GAAP operating
expenses, GAAP net loss and GAAP net loss per share due to the
exclusion of restructuring charges and stock-based compensation
expense. Pixelworks' management believes the presentation of
non-GAAP gross profit, non-GAAP operating expenses, non-GAAP net
loss and non-GAAP net loss per share provides useful information to
investors regarding Pixelworks' results of operations by allowing
investors to better evaluate underlying cash flow dynamics.
Pixelworks' management also uses each of these non-GAAP measures
internally to better evaluate underlying cash flow dynamics.
Pixelworks, however, cautions investors to consider these non-GAAP
financial measures in addition to, and not as a substitute for, our
GAAP financial measures.
PIXELWORKS, INC. RECONCILIATION OF GAAP AND
NON-GAAP FINANCIAL INFORMATION * (In thousands)
(Unaudited) Three Months
Ended Six Months Ended June 30,
March 31, June 30,
June 30, June 30, 2016
2016 2015 2016 2015 Reconciliation
of GAAP net loss and adjusted EBITDA GAAP net loss $ (1,560 ) $
(8,642 ) $ (2,796 ) $ (10,202 ) $ (6,160 ) Stock-based compensation
706 366 893 1,072 1,971 Restructuring 94 4,261 — 4,355 — Tax effect
of non-GAAP adjustments 4 (2 ) (46 )
2 (66 ) Non-GAAP net loss $ (756 ) $ (4,017 )
$ (1,949 ) $ (4,773 ) $ (4,255 ) EBITDA adjustments: Depreciation
and amortization $ 832 $ 990 $ 1,041 $ 1,822 $ 2,139 Interest
expense and other, net 107 99 105 206 212 Non-GAAP provision for
income taxes 113 59 282
172 321 Adjusted EBITDA $ 296 $
(2,869 ) $ (521 ) $ (2,573 ) $ (1,583 )
* Adjusted EBITDA differs from GAAP net loss due to the
exclusion of restructuring charges, stock-based compensation
expense, interest expense and other, net, income tax provision and
depreciation and amortization. Pixelworks' management believes the
presentation of adjusted EBITDA provides useful information to
investors regarding Pixelworks' results of operations by allowing
investors to better evaluate underlying cash flow dynamics and core
operating results and are used by Pixelworks' management for these
purposes. Pixelworks, however, cautions investors to consider these
non-GAAP financial measures in addition to, and not as a substitute
for, our GAAP financial measures.
PIXELWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
(Unaudited)
June 30, 2016
December 31, 2015
ASSETS Current assets: Cash and cash equivalents $ 17,750 $
26,591 Accounts receivable, net 3,846 5,988 Inventories 3,345 3,266
Prepaid expenses and other current assets 730 644
Total current assets 25,671 36,489 Property and equipment, net
4,927 6,543 Other assets, net 763 810 Total assets $
31,361 $ 43,842
LIABILITIES AND SHAREHOLDERS’ EQUITY Current
liabilities: Accounts payable $ 2,836 $ 2,944 Accrued liabilities
and current portion of long-term liabilities 8,475 8,528 Current
portion of income taxes payable 199 221 Short-term line of credit
— 3,000 Total current liabilities 11,510 14,693
Long-term liabilities, net of current portion 565 831 Income taxes
payable, net of current portion 1,860 1,942 Total
liabilities 13,935 17,466 Shareholders’ equity 17,426
26,376 Total liabilities and shareholders’ equity $ 31,361 $ 43,842
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160728006493/en/
Investor ContactShelton GroupBrett Perry,
+1-214-272-0070bperry@sheltongroup.comorCompany ContactPixelworks,
Inc.Steven Moore, +1-408-200-9221smoore@pixelworks.com
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