Pixelworks Upholds Stability Despite Decline in Mobile Revenue

Pixelworks Inc. Reports Q2 2024 Results with Cost Reduction Strategy Amid Revenue Challenges

Pixelworks Inc. recently announced its financial results for the second quarter of 2024, reporting revenue of $8.5 million, which met analyst expectations despite a notable decline in mobile revenue. The company, known for its visual processing technologies, highlighted improvements in gross margins and unveiled a strategy aimed at reducing costs, including workforce adjustments.

Key Highlights:

• The company reported Q2 revenue of $8.5 million, aligning with market expectations.
• A significant pause in orders from a major mobile customer contributed to a drop in mobile revenue.
• Gross margins showed a year-over-year improvement, exceeding 50%.
• Pixelworks implemented cost-cutting measures, which included a reduction in headcount.
• Revenue from the home and enterprise segment remained stable at $6.4 million.
• For Q3, Pixelworks forecasts revenue between $9 million and $10 million.
• Projected non-GAAP EPS for Q3 is expected to be a loss of $0.11 to $0.14 per share.

Company Outlook:
Looking ahead, Pixelworks is optimistic about the second half of 2024, bolstered by expansions in its gaming ecosystem and new mobile visual processor products. The engagement with various customers concerning next-generation visual processors is ongoing, and a new system-on-chip (SoC) for projectors co-developed for volume production is anticipated in Q4.

Challenges:
The company faced significant declines in mobile sales, specifically reporting $2.1 million in mobile revenue out of a total of $8.5 million for Q2. Additionally, Pixelworks incurred a net loss of $7.7 million and a loss of $0.13 per share during the quarter.

Positive Developments:
Despite the challenges, there were encouraging improvements in gross margins, which now stand above 50%. Market feedback indicates that premium large format exhibitors utilizing the TrueCut Motion technology are experiencing enhanced viewer satisfaction and increased box office performance.

Operational Review:
During the second quarter, Pixelworks dealt with challenges in its mobile sector while maintaining a stable financial performance. The home and enterprise side generated consistent revenue, while operating expenses totaled $12.8 million. The company ended the quarter with $37.8 million in cash and cash equivalents.

Future Prospects:
To navigate mobile sector hurdles, Pixelworks is releasing new motion grading tools and expects a revenue lift from the forthcoming projector SoC. The company remains committed to overcoming current challenges, with strategic plans in place for new product launches and market expansions.

In summary, while facing specific challenges in its mobile business, Pixelworks is implementing strategic measures to improve future performance, with hopeful prospects for revenue growth in the coming months.