Achieved 36% Year-on-Year Revenue Growth,
excluding End of Life Products
Pixelworks, Inc. (NASDAQ: PXLW), a leading provider of visual
processing solutions, today announced financial results for the
second quarter ended June 30, 2017.
Second Quarter and Recent Highlights
- Revenue of $20.7 million, including
$5.1 million related to End of Life (EOL) products
- Achieved GAAP net income of $0.04 per
diluted share, non-GAAP net income of $0.10 per diluted share
- Recorded adjusted EBITDA of $4.7
million, and increased net cash balance by $12.6 million to $32.2
million
- Recognized first production revenue on
3rd generation Iris mobile display processor
- Completed acquisition of ViXS Systems
on August 2nd
For the second quarter 2017, revenue was $20.7 million, which
included $5.1 million of EOL product revenue, and compares to $22.7
million in the prior quarter and $12.6 million in the second
quarter of 2016. Excluding EOL contribution, second quarter 2017
revenue in the digital projection market grew 35% year-on-year.
On a GAAP basis, gross profit margin in the second quarter of
2017 was 54.1%, compared to 54.6% in the first quarter of 2017 and
51.0% in the second quarter of 2016. Second quarter 2017 GAAP
operating expenses were $9.2 million, compared to $9.0 million in
the previous quarter and $7.8 million in the second quarter of
2016.
For the second quarter of 2017, GAAP net income was $1.3
million, or $0.04 per diluted share, compared to a GAAP net income
of $2.8 million, or $0.09 per diluted share, in the first quarter
of 2017 and a GAAP net loss of $1.6 million, or ($0.06) per share,
in the second quarter of 2016.
On a non-GAAP basis, second quarter 2017 gross profit margin was
54.4%, compared to 54.8% in the first quarter of 2017 and 51.6% in
the second quarter of 2016. Second quarter 2017 operating expenses
on a non-GAAP basis were $7.6 million, compared to $8.3 million in
the previous quarter and $7.0 million in the second quarter of
2016.
For the second quarter of 2017, the Company recorded non-GAAP
net income of $3.2 million, or $0.10 per diluted share, compared to
non-GAAP net income of $3.8 million, or $0.12 per diluted share, in
the first quarter of 2017 and a non-GAAP net loss of $756,000, or
($0.03) per share, in the second quarter of 2016. Adjusted EBITDA
in the second quarter of 2017 was a positive $4.7 million, compared
to a positive $5.0 million in the previous quarter and a positive
$0.3 million in the second quarter of 2016.
President and CEO of Pixelworks, Todd DeBonis, commented, “Our
second quarter results reflect continued growth in our core
business and was complemented by approximately $5 million of EOL
product contribution. Revenue excluding EOL, grew 15% sequentially
and 36% year-over-year, demonstrating market share gains in our
Projector business as well as modestly higher Mobile revenue.
Highlighting the quarter, we achieved our third consecutive quarter
of profitability and generated over $13 million in cash flow from
operations.
“As recently announced, PXLW completed the complementary
acquisition of ViXS, and we are executing on what I expect to be a
seamless integration process. Following initial meetings with ViXS’
customers, I’m increasingly enthusiastic about the emerging market
opportunities for their current offerings, as well as the expanded
potential of our combined visual processing technologies. In
addition to creating an impressive portfolio of image, video and
streaming intellectual property, the transaction meaningfully
increases the scale of Pixelworks’ R&D resources in support of
current and future technology development. I look forward to what
we will be able to achieve together as a single company, and most
importantly we remain committed to the transaction being accretive
in 2018.”
Business Outlook for the Third Quarter of 2017
Pixelworks’ expectations for the third quarter of 2017,
including the partial quarter of contribution from ViXS Systems,
are as follows:
- Revenue to be between $18.0 million and
$19.0 million, including approximately $2.0 million contribution
from ViXS
Additional P&L guidance will be provided as part of the
earnings conference call.
Conference Call Information
Pixelworks will host a conference call today, August 8, at 2:00
p.m. Pacific Time, which can be accessed by calling 877-359-9508
and using passcode 59501640. 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 Tuesday,
August 15, 2017, and can be accessed by calling 855-859-2056 and
using passcode 59501640.
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.
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 excludes
acquisition-related costs, stock-based compensation expense and
restructuring expenses, which are required under GAAP. The press
release also 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. 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, ViXS integration process, impact and benefit of the
ViXS acquisition, the acquisition being accretive and the Company’s
potential and position for the future, statements made by Mr.
DeBonis about the Company’s digital projection and mobile
businesses, ViXS acquisition and statements with respect to the
business outlook for the third quarter, the full year of 2017 and
2018, including revenue, 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 acquisition of ViXS, including our ability to
successfully integrate ViXS into our business and whether the
Company will be able to realize the expected benefits of the
acquisition 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, 2016 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,
2017 2017
2016 2017 2016
Revenue, net $ 20,721 $ 22,710 $ 12,580 $ 43,431 $ 23,747
Cost of revenue (1) 9,520 10,318
6,165 19,838 13,740 Gross profit
11,201 12,392 6,415 23,593 10,007 Operating expenses: Research and
development (2) 4,501 4,906 4,504 9,407 10,179 Selling, general and
administrative (3) 4,660 4,139 3,180 8,799 7,045 Restructuring
— — 67 —
2,605 Total operating expenses 9,161
9,045 7,751 18,206
19,829 Income (loss) from operations 2,040 3,347 (1,336 )
5,387 (9,822 ) Interest expense and other, net (107 )
(93 ) (107 ) (200 ) (206 ) Income (loss)
before income taxes 1,933 3,254 (1,443 ) 5,187 (10,028 ) Provision
for income taxes 669 433 117
1,102 174 Net income (loss) $
1,264 $ 2,821 $ (1,560 ) $ 4,085 $ (10,202 )
Net income (loss) per share: Basic $ 0.04 $ 0.10 $
(0.06 ) 0.14 (0.36 ) Diluted $ 0.04 $
0.09 $ (0.06 ) 0.13 (0.36 ) Weighted
average shares outstanding: Basic 29,766
29,283 28,167 29,526
28,051 Diluted 31,974 31,146
28,167 31,601 28,051
_____________
(1) Includes: Stock-based compensation $ 69 $ 53 $ 46 $ 122 $ 90
Restructuring
— — 27 — 1,750 (2) Includes stock-based compensation 362 314 392
676 821 (3) Includes: Acquisition-related costs 730 — — 894 —
Stock-based compensation 519 422 268 941 161
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,
2017 2017 2016
2017 2016
Reconciliation of GAAP and non-GAAP gross profit GAAP gross
profit $ 11,201 $ 12,392 $ 6,415 $ 23,593 $ 10,007 Stock-based
compensation 69 53 46 122 90 Restructuring — —
27 — 1,750 Total
reconciling items included in cost of revenue 69
53 73 122 1,840
Non-GAAP gross profit $ 11,270 $ 12,445 $
6,488 $ 23,715 $ 11,847 Non-GAAP gross profit
margin 54.4 % 54.8 % 51.6 % 54.6 %
49.9 %
Reconciliation of GAAP and non-GAAP
operating expenses GAAP operating expenses $ 9,161 $ 9,045 $
7,751 $ 18,206 $ 19,829 Reconciling item included in research and
development: Stock-based compensation 362 314 392 676 821
Reconciling item included in selling, general and administrative:
Acquisition-related costs 730 — — 894 — Stock-based compensation
519 422 268 941 161 Restructuring — —
67 — 2,605 Total
reconciling items included in operating expenses 1,611
736 727 2,511
3,587 Non-GAAP operating expenses $ 7,550 $
8,309 $ 7,024 $ 15,695 $ 16,242
Reconciliation of GAAP and non-GAAP net income (loss) GAAP
net income (loss) $ 1,264 $ 2,821 $ (1,560 ) $ 4,085 $ (10,202 )
Reconciling items included in cost of revenue 69 53 73 122 1,840
Reconciling items included in operating expenses 1,611 736 727
2,511 3,587 Tax effect of non-GAAP adjustments 270
155 4 425 2
Non-GAAP net income (loss) $ 3,214 $ 3,765 $ (756 ) $
7,143 $ (4,773 ) Non-GAAP net income (loss) per share: Basic
$ 0.11 $ 0.13 $ (0.03 ) $ 0.24 $ (0.17 )
Diluted $ 0.10 $ 0.12 $ (0.03 ) $ 0.23 $ (0.17
) Non-GAAP weighted average shares outstanding: Basic 29,766
29,283 28,167 29,526
28,051 Diluted 31,974
31,146 28,167 31,601
28,051 * Our non-GAAP gross profit, non-GAAP gross
profit margin, non-GAAP operating expenses, non-GAAP net income
(loss) and non-GAAP net income (loss) per share differs from GAAP
gross profit, GAAP operating expenses, GAAP net income (loss) and
GAAP net income (loss) per share due to the exclusion of
acquisition-related costs, stock-based compensation expense and
restructuring expenses. Pixelworks' management believes the
presentation of non-GAAP gross profit, non-GAAP operating expenses,
non-GAAP net income (loss) and non-GAAP net income (loss) per share
provides useful information to investors regarding Pixelworks'
results of operations which allows investors an alternative
evaluation of underlying cash flow dynamics. Pixelworks' management
also uses each of these non-GAAP measures internally as an
alternative evaluation of 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, 2017 2017
2016 2017 2016
Reconciliation of GAAP net income (loss) and adjusted EBITDA
GAAP net income (loss) $ 1,264 $ 2,821 $ (1,560 ) $ 4,085 $ (10,202
) Stock-based compensation 950 789 706 1,739 1,072
Acquisition-related costs 730 — — 894 — Restructuring — — 94 —
4,355 Tax effect of non-GAAP adjustments 270 155
4 425 2 Non-GAAP net income
(loss) $ 3,214 $ 3,765 $ (756 ) $ 7,143 $ (4,773 ) EBITDA
adjustments: Depreciation and amortization $ 975 $ 839 $ 832 $
1,814 $ 1,822 Interest expense and other, net 107 93 107 200 206
Non-GAAP provision for income taxes 399 278
113 677 172 Adjusted EBITDA $ 4,695 $
4,975 $ 296 $ 9,834 $ (2,573 ) * Adjusted EBITDA
differs from GAAP net income (loss) due to the exclusion of
acquisition-related costs, restructuring expenses, 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 which allows investors an alternative evaluation of
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 30,2017
December 31,2016
ASSETS Current assets: Cash and cash equivalents $ 32,246 $
19,622 Accounts receivable, net 5,676 3,118 Inventories 1,954 2,803
Prepaid expenses and other current assets 1,341 736
Total current assets 41,217 26,279 Property and equipment, net
4,636 3,793 Other assets, net 781 785 Total assets $
46,634 $ 30,857
LIABILITIES AND SHAREHOLDERS’ EQUITY Current
liabilities: Accounts payable $ 2,516 $ 1,734 Accrued liabilities
and current portion of long-term liabilities 13,241 7,860 Current
portion of income taxes payable 989 140 Total current
liabilities 16,746 9,734 Long-term liabilities, net of current
portion 1,029 194 Income taxes payable, net of current portion
2,046 1,880 Total liabilities 19,821 11,808
Shareholders’ equity 26,813 19,049 Total liabilities
and shareholders’ equity $ 46,634 $ 30,857
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170808006370/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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