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]

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].

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $7.1 million, down from $9.1 million in Q4 2024 and $16.1 million in Q1 2024, reflecting anticipated seasonality and previous higher sales of end-of-life products [22][25] - Non-GAAP gross profit margin for Q1 2025 was 49.9%, compared to 54.8% in Q4 2024 and 50.7% in Q1 2024, primarily due to product mix shifts [23][24] - Non-GAAP operating expenses were $10.4 million, flat sequentially but down $2.2 million year-over-year, with total expected reductions of approximately $10 million for the full year of 2025 [24][25] Business Line Data and Key Metrics Changes - Home and Enterprise revenue was approximately $5.8 million, while mobile revenue was approximately $1.3 million in Q1 2025, with mobile showing sequential growth [22][23] - The TrueCut Motion platform is targeting to double the number of titles from five in 2024 to ten in 2025, indicating growth in the film industry [9][10] Market Data and Key Metrics Changes - The mobile business saw sequential revenue growth in Q1 2025, driven by shipments of visual processors for previously launched smartphone models [12][22] - The projector market remained stable, with no significant impacts noted from the global macro environment, and revenue expected to mirror 2024 levels [15][16] Company Strategy and Development Direction - The company is focused on expanding the TrueCut ecosystem and achieving critical mass for broader adoption in both theaters and home entertainment devices [21] - A strategic review process for the Pixelworks Shanghai subsidiary is underway, with potential outcomes expected within 90 days [19][20] Management's Comments on Operating Environment and Future Outlook - Management anticipates a challenging first half of 2025 from a revenue perspective but is optimistic about engagements across diverse opportunities to drive growth [18][20] - The company expects Pixelworks Shanghai to reach profitability in the second half of 2025, contingent on various revenue streams materializing [19][20] Other Important Information - The company has engaged in a formal review process for its Shanghai subsidiary after receiving strategic interest, indicating potential changes in ownership or collaboration structures [19] - The company has implemented additional cost reduction measures since the beginning of 2025, which are expected to yield further benefits [24][26] Q&A Session Summary Question: What revenue levels might Pixelworks Shanghai achieve for profitability? - Management indicated that operating expenses for Shanghai could be around $7 million per quarter, with profitability achievable if a mix of revenue streams materializes as anticipated [29][30] Question: Are the device discussions for TrueCut with Chinese brands or global OEMs? - Management clarified that the certification testing mentioned is not with a Chinese brand, focusing instead on North American and European markets for home entertainment devices [32][38] Question: Can you provide a framework for sizing ASIC design services opportunities? - Management explained that revenue size for design services depends on the extent of involvement, with potential costs ranging from $10 million to $20 million for full turnkey services [39][42] Question: How are mobile engagements lining up for revenue expectations? - Management noted that replicating 2023 revenue levels in mobile would be challenging, with expectations closer to 2024 levels, but an uptick is anticipated in the second half of the year [46][47] Question: What is the status of the collaboration with the post-production house? - Management confirmed a signed agreement with a large post-production house, emphasizing the benefits of motion grading for premium large format experiences [50]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $7.1 million, down from $9.1 million in Q4 2024 and $16.1 million in Q1 2024, reflecting anticipated seasonality and previous higher sales of end-of-life products [21] - Non-GAAP gross profit margin for Q1 2025 was 49.9%, compared to 54.8% in Q4 2024 and 50.7% in Q1 2024, primarily due to product mix shifts [21][22] - Non-GAAP operating expenses were $10.4 million, flat sequentially but down $2.2 million year-over-year, with expectations for a total year-over-year decrease of approximately $10 million for 2025 [22][23] - Non-GAAP net loss for Q1 2025 was $6.5 million, or a loss of $0.11 per share, compared to a net loss of $4.3 million in Q4 2024 and $4 million in Q1 2024 [24] Business Line Data and Key Metrics Changes - Home and Enterprise revenue was approximately $5.8 million, while mobile revenue was approximately $1.3 million in Q1 2025 [21] - Mobile revenue increased sequentially in Q1 2025, driven by shipments of visual processors for previously launched smartphone models [12] - Projector revenue was effectively flat year-over-year, with no significant impacts noted from the global macro environment [15] Market Data and Key Metrics Changes - The film industry is showing signs of recovery, with an uptick in activity from filmmakers and studios, indicating a positive shift from previous headwinds [8] - The exhibition ecosystem for TrueCut Motion includes over 1,500 premium theaters, with significant capital investments from exhibitors [10] Company Strategy and Development Direction - The company is focused on expanding the TrueCut Motion ecosystem and achieving critical mass for broader adoption in both theaters and home entertainment devices [20] - The strategic review process for Pixelworks Shanghai is nearing closure, with expectations for a clear strategic direction within 90 days [18] Management's Comments on Operating Environment and Future Outlook - The first half of 2025 is expected to be challenging from a revenue perspective, but the company is well-positioned to benefit from diverse opportunities for growth [17][19] - Management remains optimistic about reaching profitability for Pixelworks Shanghai in the second half of 2025 [19] Other Important Information - The company has engaged in a formal review process for Pixelworks Shanghai after receiving strategic interest, with ongoing due diligence with several parties [18] - The company anticipates continued benefits from cost reduction measures implemented over the past year [23] Q&A Session Summary Question: What revenue levels might Pixelworks Shanghai achieve for profitability? - Management indicated that operating expenses for Pixelworks Shanghai could be around $7 million per quarter, with a mix of revenue sources needed to reach profitability [29][30] Question: Are the device discussions for TrueCut with Chinese brands or global OEMs? - Management clarified that the focus is on global home entertainment devices, primarily targeting North America and Europe [37] Question: Can you provide a framework for sizing ASIC design services opportunities? - Management explained that revenue size depends on the extent of design services provided, with potential costs ranging from $10 million to $20 million for full turnkey services [41] Question: How are mobile engagements lining up for revenue levels? - Management noted that replicating 2023 revenue levels in mobile would be challenging, with expectations closer to 2024 year-over-year levels [44] Question: Can you elaborate on the collaboration with the post-production house for TrueCut? - Management confirmed a signed agreement with a large post-production house, emphasizing the benefits of motion grading for premium large format experiences [48]