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01/11 16:21
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents mixed signals. The company shows revenue growth and reduced operating expenses, which are positive signs. However, there are concerns about reliance on subsidies, uncertainty in ASIC design services, and a decline in cash position. The Q&A section highlights uncertainties in revenue timelines and unclear management responses, which could weigh on investor sentiment. These factors balance out to a neutral prediction for the stock price over the next two weeks, with no strong catalysts for significant movement in either direction.
Revenue $8.3 million for Q2 2025, compared to $7.1 million in Q1 2025 and $8.5 million in Q2 2024. The sequential increase was primarily driven by product shipments in the home and enterprise market.
Home and Enterprise Revenue Approximately $7.1 million in Q2 2025.
Mobile Revenue Approximately $1.2 million in Q2 2025.
Non-GAAP Gross Profit Margin 46% in Q2 2025, compared to 49.9% in Q1 2025 and 51% in Q2 2024. The sequential decrease was due to a unique mix consisting of a new product ramp within home and enterprise, though yields were better than expected.
Non-GAAP Operating Expenses $9.7 million in Q2 2025, compared to $10.4 million in Q1 2025 and $12.8 million in Q2 2024. The decrease reflects actions to reduce operating expenses and streamline the cost structure.
Non-GAAP Net Loss $5.3 million or $1 per share in Q2 2025, compared to $6.5 million or $1.30 per share in Q1 2025 and $7.7 million or $1.60 per share in Q2 2024.
Adjusted EBITDA Negative $4.3 million in Q2 2025, compared to negative $5.8 million in Q1 2025 and negative $7 million in Q2 2024.
Cash and Cash Equivalents $14.3 million at the end of Q2 2025, compared to $18.5 million at the end of Q1 2025.
TrueCut Motion platform: Accredited with 3 new theatrical releases, including Universal Pictures' Jurassic World: Rebirth, DreamWorks Animation's The Bad Guys 2, and Universal Pictures' Nobody 2. Titles using TrueCut Motion have achieved over $4 billion at the box office. The format is gaining traction in premium large-format cinemas and home entertainment devices like Apple Vision Pro.
Mobile visual processors: Realme P4 series smartphones to feature Pixelworks X7 Gen 2 visual processor, enabling advanced gaming features like 144 fps gaming and AI-enhanced resolution upscaling. Focus on expanding market with low-cost mobile graphics solutions and premium gaming experiences.
Home and enterprise visual processors: Revenue increased by over 20% sequentially, driven by a ramp in shipments of a new SoC for digital projectors. The total projector business in 2025 is expected to be similar to 2024.
Geographic expansion: China's flagship CINITY theaters exclusively showcased Jurassic World: Rebirth in TrueCut Motion format, indicating growing adoption in the Chinese market.
Cost reduction: Operating expenses decreased by over $3 million year-over-year to below $10 million. Actions to streamline cost structure have been effective.
Revenue growth: Second quarter revenue increased to $8.3 million, driven by home and enterprise market shipments.
Strategic review of Pixelworks Shanghai subsidiary: Received nonbinding term sheets from three potential buyers. The process is progressing and expected to conclude by the end of Q3 2025.
Mobile Revenue Recovery: The planned recovery in mobile revenue is taking longer than anticipated, with shipments largely supporting residual demand from previously launched smartphone models. This delay could impact the company's ability to achieve renewed mobile growth in the near term.
Strategic Review Process for Shanghai Subsidiary: The strategic review process for the Shanghai subsidiary is still ongoing, with no definitive outcome yet. This uncertainty could affect the company's strategic direction and operational focus.
Gross Profit Margin Decline: Non-GAAP gross profit margin decreased sequentially from 49.9% to 46%, reflecting a unique mix of new product ramp within home and enterprise. This decline could impact overall profitability.
Dependence on Subsidies: The Shanghai subsidiary received $1.6 million in cash subsidies as part of China's Little Giant program. Dependence on such subsidies could pose a risk if they are reduced or discontinued in the future.
Customer Demand for Transcoding Chips: The company is relying on one-time orders from prior customers for transcoding chips that are no longer in production. This reliance on legacy products could indicate a lack of sustainable revenue streams in this segment.
ASIC Design Services Uncertainty: The company is engaged with two potential ASIC design service customers but has not yet secured definitive agreements. This uncertainty could delay revenue contributions from this segment.
IP Licensing Revenue Uncertainty: Active IP evaluations are underway with multiple companies, but the binary and open-ended nature of these programs makes it challenging to predict revenue timelines.
Cash Position: The company’s cash and cash equivalents decreased from $18.5 million to $14.3 million in the second quarter, which could limit financial flexibility.
Revenue Expectations: For the third quarter of 2025, total revenue is expected to be in the range of $8.5 million to $9.5 million.
Gross Profit Margin: Non-GAAP gross profit margin for the third quarter is expected to be between 47% and 49%, reflecting a more favorable product mix within home and enterprise.
Operating Expenses: Third quarter operating expenses are expected to range between $8.5 million and $9.5 million on a non-GAAP basis, reflecting incremental benefits from cost reduction actions.
Earnings Per Share (EPS): Non-GAAP EPS for the third quarter is expected to range between a loss of $0.70 per share and a loss of $1.02 per share.
Mobile Business Recovery: The company anticipates renewed mobile growth over the coming quarters, driven by existing engagements and new product launches.
Pixelworks Shanghai Subsidiary Profitability: Targeting profitability for the Pixelworks Shanghai subsidiary as soon as the fourth quarter of 2025.
Strategic Review Process: The strategic review process for the Pixelworks Shanghai subsidiary is progressing well, with a potential new strategic direction expected before the end of the third quarter of 2025.
The selected topic was not discussed during the call.
The earnings call highlights several concerns: geopolitical tensions affecting the Shanghai subsidiary, a significant revenue decline YoY, and a net loss. Despite some positive developments like reduced losses and cash burn, the lack of Q4 guidance and reliance on uncertain new ventures like TrueCut Motion pose risks. The Q&A revealed management's vague responses, adding uncertainty. The stock is likely to react negatively due to these factors, compounded by the sale of a major revenue-generating subsidiary and transition risks to a licensing model.
The earnings call presents mixed signals. The company shows revenue growth and reduced operating expenses, which are positive signs. However, there are concerns about reliance on subsidies, uncertainty in ASIC design services, and a decline in cash position. The Q&A section highlights uncertainties in revenue timelines and unclear management responses, which could weigh on investor sentiment. These factors balance out to a neutral prediction for the stock price over the next two weeks, with no strong catalysts for significant movement in either direction.
The earnings call reveals several concerns: declining revenue and margins, increased net loss, and uncertain guidance on future revenue from key projects. Although there are strategic initiatives and potential new engagements, the lack of clarity and missed financial targets overshadow these positives. The absence of a share repurchase program and increased operational costs add to the negative outlook, likely resulting in a stock price decline of -2% to -8% over the next two weeks.
The earnings call reveals several concerning factors: a significant drop in revenue, increasing net loss, and deteriorating EBITDA. The Q&A highlighted uncertainties in revenue levels and strategic reviews. Despite some promising developments, such as cost reduction initiatives and potential profitability in Shanghai, the lack of a share repurchase program and competitive pressures weigh heavily. The market's negative reaction is likely, given the weak financial performance and guidance, compounded by unclear management responses and strategic uncertainties. A negative stock price movement of -2% to -8% is anticipated over the next two weeks.
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