Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION (Mark One) WASHINGTON, D.C. 20549 ________________________________ FORM 10-Q ________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Exact name of registrant as specified in its charter) 16760 SW Upper Boones Ferry Rd., Ste. 101 Portland ...

Core Insights - Pixelworks reported a quarterly loss of $1 per share, which was better than the Zacks Consensus Estimate of a loss of $1.08, and improved from a loss of $1.56 per share a year ago, resulting in an earnings surprise of +7.41% [1] - The company generated revenues of $8.25 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 2.94% and down from $8.53 million year-over-year [2] - Pixelworks has surpassed consensus EPS estimates three times over the last four quarters, but has only topped revenue estimates once in the same period [2] Future Outlook - The immediate price movement of Pixelworks' stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [3][4] - The current consensus EPS estimate for the upcoming quarter is -$0.48 on revenues of $13.5 million, and for the current fiscal year, it is -$3.12 on revenues of $45 million [7] - The Zacks Rank for Pixelworks is currently 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Industry Context - The Electronics - Semiconductors industry, to which Pixelworks belongs, is currently ranked in the bottom 31% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact investor sentiment [5]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $8.3 million, compared to $7.1 million in Q1 2025 and $8.5 million in Q2 2024, indicating a sequential increase driven by product shipments in the home and enterprise market [26] - Non-GAAP gross profit margin for Q2 2025 was 46%, down from 49.9% in Q1 2025 and 51% in Q2 2024, reflecting a unique product mix [26] - Non-GAAP operating expenses decreased to $9.7 million in Q2 2025 from $10.4 million in Q1 2025 and $12.8 million in Q2 2024, showing effective cost reduction measures [27] - The net loss for Q2 2025 was $5.3 million, or a loss of $1 per share, compared to a net loss of $6.5 million in Q1 2025 and $7.7 million in Q2 2024 [28] - Cash and cash equivalents at the end of Q2 2025 were $14.3 million, down from $18.5 million at the end of Q1 2025 [28] Business Line Data and Key Metrics Changes - Home and enterprise revenue was approximately $7.1 million in Q2 2025, while mobile revenue was approximately $1.2 million [26] - The mobile business saw a similar revenue profile to the prior quarter, with shipments supporting residual demand from previously launched smartphone models [14] - Revenue from the home and enterprise market increased over 20% sequentially, driven by a combination of seasonal demand recovery and ramping shipments of new SOCs [18] Market Data and Key Metrics Changes - The TrueCut Motion platform has been credited with three new theatrical releases, indicating growing acceptance and demand in the market [10] - Titles utilizing TrueCut Motion have achieved over $4 billion at the box office, demonstrating the format's value to studio partners [12] - The mobile market is expected to remain flat, with Chinese OEMs focusing on differentiation to expand globally [33] Company Strategy and Development Direction - The company is focusing on two defined approaches in the mobile segment: expanding the target market with a low-cost mobile graphics accelerator and pursuing premium gaming experiences [15] - The strategic review process for the Pixelworks Shanghai subsidiary is nearing closure, with potential new ownership structures being evaluated [23] - The company aims to reach profitability for its Shanghai subsidiary by Q4 2025, despite delays in mobile revenue recovery [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of the TrueCut Motion format, anticipating it to become a standard for premium large format cinemas [12] - The company is better positioned to drive bottom-line results from a small uplift in revenue due to previous cost structure reductions [22] - Management noted that the overall market for projectors is expected to remain similar to 2024, with no significant impacts from global trade dynamics observed so far [18] Other Important Information - The company received approximately $1.6 million in cash subsidies as part of China's Little Giant program, aiding in R&D expenses [27] - The company completed all scheduled end-of-life shipments of transcoding products in Q4 2024, with potential one-time orders from prior customers being evaluated [19] Q&A Session Summary Question: Why are mobile customers in China emphasizing custom ASIC? - Management indicated that differentiation is key for Chinese OEMs in a flat market, as they seek to expand globally and compete against established brands [33][38] Question: Will the transcoding one-time customer revenue hit in Q3 or Q4? - Management confirmed that the revenue from the transcoding order would be recognized in Q4 [42] Question: How will Pixelworks be different post-transaction regarding the Shanghai division? - Management stated it is too early to provide details on the strategic direction post-transaction [44] Question: How broad is the ASIC design and IP application? - Management clarified that the IP is not limited to smartphones and can be applied in tablets, AR/VR markets, and other display technologies [48] Question: What is driving the strength in the home and enterprise market? - Management noted that the strength is partly due to a higher ASP of new SOCs and stocking needs from customers [52]

Pixelworks Reports Second Quarter 2025 Financial Results PORTLAND, Ore., August 12, 2025 – Pixelworks, Inc. (NASDAQ: PXLW), a leading provider of innovative video and display processing solutions, today announced financial results for the second quarter ended June 30, 2025. Exhibit 99.1 Second Quarter and Recent Highlights "Second quarter financial results were within guidance and reflected our expectations for a return to sequential revenue growth," stated Todd DeBonis, President and CEO of Pixelworks. "Gr ...

Core Viewpoint - Pixelworks, Inc. reported its financial results for the second quarter of 2025, showing a sequential revenue increase driven by seasonal growth in product shipments, while also highlighting ongoing strategic opportunities and collaborations in the mobile sector [1][4][17]. Financial Performance - Revenue for Q2 2025 was $8.3 million, up from $7.1 million in Q1 2025 but down from $8.5 million in Q2 2024, indicating a 16% sequential increase [4][17]. - GAAP gross profit margin for Q2 2025 was 45.8%, compared to 48.7% in Q1 2025 and 50.7% in Q2 2024 [5][23]. - Non-GAAP gross profit margin for Q2 2025 was 46.0%, down from 49.9% in Q1 2025 and 51.0% in Q2 2024 [6][23]. - The company recorded a GAAP net loss of $6.7 million, or ($1.27) per share, an improvement from a loss of $7.8 million, or ($1.54) per share in Q1 2025, and a loss of $10.1 million, or ($2.09) per share in Q2 2024 [7][8][21]. - Non-GAAP net loss for Q2 2025 was $5.3 million, or ($1.00) per share, compared to a loss of $6.5 million, or ($1.30) per share in Q1 2025, and a loss of $7.7 million, or ($1.60) per share in Q2 2024 [8][21]. Business Developments - The company is focusing on advancing market opportunities through its Shanghai-based subsidiary, with increased interest in collaborations for mobile visual processors and ASIC design services [3][17]. - Pixelworks is experiencing momentum in its TrueCut Motion business, securing new titles and expanding partnerships in content and distribution [3][17]. - The Shanghai subsidiary received approximately $1.6 million in cash subsidies as part of China's "Little Giant" program [17]. Operational Efficiency - GAAP operating expenses for Q2 2025 were $11.1 million, down from $11.5 million in Q1 2025 and $15.1 million in Q2 2024 [5][6]. - Non-GAAP operating expenses for Q2 2025 were $9.7 million, compared to $10.4 million in Q1 2025 and $12.8 million in Q2 2024 [6][21]. - Adjusted EBITDA for Q2 2025 was a negative $4.3 million, an improvement from a negative $5.8 million in Q1 2025 and a negative $7.0 million in Q2 2024 [10][24].

Core Viewpoint - Pixelworks, Inc. is set to release its second quarter 2025 financial results on August 12, 2025, after market close, indicating ongoing transparency and communication with investors [1]. Group 1: Financial Results Announcement - The financial results will be discussed in a conference call hosted by Todd DeBonis, President and CEO, and Haley Aman, CFO [1]. - The conference call is scheduled for 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) on the same day [1]. - Analysts and investors can participate via a live webcast or by registering for dial-in access [1]. Group 2: Company Overview - Pixelworks provides innovative video and display processing solutions, enhancing viewing experiences across various screens, from cinema to smartphones [2]. - The company has over 20 years of experience in image processing innovation, serving leading providers in consumer electronics, professional displays, and video streaming services [2].

Company Overview - Pixelworks (PXLW) shares increased by 20.8% to $12.66 in the last trading session, with a notable trading volume and a total gain of 36.9% over the past four weeks [1] - The company is experiencing benefits from cost reduction actions, strategic partnerships, and advancements in mobile and TrueCut Motion ecosystems [1] Financial Performance - Pixelworks is expected to report a quarterly loss of $1.08 per share, reflecting a year-over-year change of +30.8%, with revenues projected at $8.5 million, a decrease of 0.4% from the previous year [2] - The consensus EPS estimate for Pixelworks has remained unchanged over the last 30 days, indicating a lack of upward trend in earnings estimate revisions [3] Industry Context - Pixelworks operates within the Zacks Electronics - Semiconductors industry, where another company, Silvaco Group, Inc. (SVCO), saw a 5.3% increase in its stock price to $4.59, but has returned -9.7% over the past month [3] - Silvaco Group's consensus EPS estimate for the upcoming report is -$0.09, representing a significant change of -228.6% from the previous year, and it also holds a Zacks Rank of 3 (Hold) [4]

Core Insights - Pixelworks Shanghai has received approximately $1.6 million in new subsidies, recognizing its contributions to technology innovation and advanced R&D capabilities [1][2] - The subsidies are linked to Pixelworks Shanghai's designation as a "Little Giant" enterprise by the China Ministry of Industry and Information Technology, highlighting its investments in semiconductor design and R&D [1][3] Group 1 - Pixelworks Shanghai is integral to the company's 25-year history of developing innovative image processing solutions that enhance visual quality and user experience [2] - Recent advancements include the integration of AI enhancements with distributed rendering architecture, significantly improving rendering performance for mobile devices and gaming [2] - The awarded subsidies aim to offset previous investments in intellectual property, EDA software, and initial chip production [2] Group 2 - The "Little Giant" designation was achieved after an extensive certification process, recognizing outstanding small and medium-sized enterprises based on strict criteria [3] - Certified enterprises benefit from increased visibility and can apply for local and national government subsidies, including grants and reimbursements for R&D investments [3] - Pixelworks has a 20-year history of delivering image processing innovations to various sectors, including consumer electronics and video streaming services [4]

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for Q1 2025, including balance sheets, statements of operations, comprehensive loss, cash flows, and shareholders' equity, with notes on strategic plans and restructuring [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets decreased to $58.5 million from $64.1 million, primarily due to reduced cash, while total shareholders' equity significantly declined Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $18,504 | $23,647 | | Total current assets | $30,593 | $34,852 | | Total assets | $58,460 | $64,072 | | Total current liabilities | $8,834 | $8,346 | | Total liabilities | $23,996 | $24,194 | | Redeemable non-controlling interest | $27,533 | $27,396 | | Total shareholders' equity | $6,931 | $12,482 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2025 net revenue declined to $7.1 million from $16.1 million in Q1 2024, resulting in an $8.1 million operating loss and a $7.8 million net loss attributable to Pixelworks, Inc Q1 2025 vs. Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue, net | $7,094 | $16,054 | | Gross profit | $3,452 | $8,114 | | Loss from operations | $(8,096) | $(5,493) | | Net loss attributable to Pixelworks, Inc. | $(7,761) | $(5,066) | | Net loss per share - basic and diluted | $(0.13) | $(0.09) | [Condensed Consolidated Statements of Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Comprehensive loss attributable to Pixelworks, Inc. increased to $8.0 million in Q1 2025 from $4.3 million in Q1 2024, including a negative foreign currency translation adjustment Comprehensive Loss (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss | $(8,020) | $(5,164) | | Foreign currency translation adjustment | $(252) | $775 | | Total comprehensive loss attributable to Pixelworks, Inc. | $(8,013) | $(4,291) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly increased to $6.7 million in Q1 2025, leading to a $5.1 million net decrease in cash and cash equivalents Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(6,716) | $(815) | | Net cash used in investing activities | $(17) | $(386) | | Net cash provided by (used in) financing activities | $1,590 | $(150) | | Net decrease in cash and cash equivalents | $(5,143) | $(1,351) | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, the strategic plan to list Chinese subsidiary PWSH on the STAR Market, recent restructuring activities, and risks from redeemable non-controlling interests - The company is pursuing a strategic plan to re-align its Mobile and Home & Enterprise businesses under its Chinese subsidiary, PWSH, with the intention of an IPO on the Shanghai STAR Market, though market conditions are not currently conducive[31](index=31&type=chunk)[32](index=32&type=chunk) - A restructuring plan was executed in February 2025, involving a **6% workforce reduction** and incurring **$468,000 in total restructuring expenses** during Q1 2025[48](index=48&type=chunk)[49](index=49&type=chunk) - Investors in PWSH hold redemption rights exercisable if a STAR Market listing is not completed by June 30, 2024, and the company is in discussions to extend or remove this option, while ESOPs hold similar rights with a December 31, 2024 deadline[83](index=83&type=chunk)[84](index=84&type=chunk)[89](index=89&type=chunk) - Subsequent to the quarter end, on May 1, 2025, the Board approved another restructuring plan involving a **4% workforce reduction**, with expected charges of approximately **$600,000 in Q2 2025**[99](index=99&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 56% Q1 2025 revenue decline to a significant Mobile market drop and delayed product transition, with operating expenses decreasing due to cost-cutting Revenue by End Market (in thousands) | End Market | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Home & Enterprise | $5,761 | $6,198 | (7)% | | Mobile | $1,310 | $9,200 | (86)% | | **Total IC Sales** | **$7,071** | **$15,398** | **(54)%** | - The decrease in IC revenue was primarily due to an **86% ($7.9 million) decline** in the Mobile market, associated with a delayed transition to the company's latest generation mobile products[112](index=112&type=chunk) - Operating expenses decreased year-over-year, with R&D down **$1.6 million (19%)** and SG&A down **$0.9 million (16%)**, mainly due to reduced headcount from the June 2024 restructuring and other cost control measures[114](index=114&type=chunk)[116](index=116&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) - The company's cash and cash equivalents decreased by **$5.1 million** to **$18.5 million**, and during the quarter, the company raised approximately **$1.8 million** in net proceeds from a registered direct offering and its 'at the market' equity program[123](index=123&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) [Item 3. Quantitative and Qualitative Disclosure About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) This section is noted as not applicable for the current reporting period - This item is noted as 'Not applicable'[138](index=138&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including CEO and CFO, deemed disclosure controls effective as of March 31, 2025, with no material changes to internal control over financial reporting - Management concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period[139](index=139&type=chunk) - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[140](index=140&type=chunk) PART II – OTHER INFORMATION [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks, including those from China operations, potential failure of the PWSH STAR Market listing, dependence on limited customers and manufacturers, and Nasdaq delisting risk - The company faces significant risks from its majority operations in China, including changes in political/economic conditions, PRC legal system uncertainties, and potential difficulties in transferring funds from its Chinese subsidiary, PWSH[221](index=221&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk) - The strategic plan to list PWSH on the STAR Market is uncertain, and investors and ESOPs hold redemption rights that could trigger if the listing is not completed by set deadlines (June 30, 2024, and Dec 31, 2024, respectively), which would materially impact the company's cash position[226](index=226&type=chunk)[227](index=227&type=chunk) - The company is highly dependent on a limited number of customers and distributors, with the top five end customers accounting for **98% of revenue** for Q1 2025[156](index=156&type=chunk) - The company is not in compliance with Nasdaq's minimum bid price requirement of **$1.00 per share** and has until September 6, 2025, to regain compliance, which may necessitate a reverse stock split[244](index=244&type=chunk) - The company relies on a limited number of sole-source, third-party manufacturers, exposing it to risks of shortages, price increases, and supply chain disruptions[191](index=191&type=chunk)[192](index=192&type=chunk) [Item 5. Other Information](index=54&type=section&id=Item%205.%20Other%20Information) During Q1 2025, no director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement - During the three months ended March 31, 2025, no director or officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or a 'non-Rule 10b5-1 trading arrangement'[249](index=249&type=chunk) [Item 6. Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate documents, a common stock purchase agreement, and CEO/CFO certifications - The exhibits include key corporate documents, the Form of Common Stock Purchase Agreement dated March 24, 2025, and required CEO/CFO certifications[251](index=251&type=chunk) SIGNATURE - The report was signed on May 14, 2025, by Haley F. Aman, Chief Financial Officer[253](index=253&type=chunk)[255](index=255&type=chunk)

Core Viewpoint - Pixelworks reported a quarterly loss of $0.11 per share, aligning with the Zacks Consensus Estimate, compared to a loss of $0.07 per share a year ago [1] - The company’s revenues for the quarter ended March 2025 were $7.09 million, missing the Zacks Consensus Estimate by 5.41%, and down from $16.05 million year-over-year [2] Financial Performance - Over the last four quarters, Pixelworks has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2] - The company has experienced a stock price decline of approximately 21.8% since the beginning of the year, while the S&P 500 has only declined by 0.6% [3] Future Outlook - The future performance of Pixelworks' stock will largely depend on management's commentary during the earnings call and the trends in earnings estimate revisions [3][4] - The current consensus EPS estimate for the upcoming quarter is -$0.06 on revenues of $10 million, and for the current fiscal year, it is -$0.21 on revenues of $48 million [7] Industry Context - The Electronics - Semiconductors industry, to which Pixelworks belongs, is currently ranked in the top 39% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Pixelworks' stock performance [5]