20-Year Media and Entertainment Executive to Drive Expanded Partnerships and Industry Adoption of TrueCut Motionâ"¢ Platform SOURCE Pixelworks, Inc. "I'm excited to join the Pixelworks team and lead business development efforts for TrueCut Motion," said Sevan Brown, EVP of Business Development. "With the industry's ongoing shift toward premium theatrical experiences, I look forward to spearheading expanded partnership with studios, exhibitors and other key stakeholders to position TrueCut Motion as the indu ...

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $8.8 million, a 6% increase from $8.3 million in Q2 2025, but a decrease from $9.5 million in Q3 2024 [18] - Non-GAAP gross profit margin improved to 49.9% from 46% in Q2 2025, but decreased from 51.3% in Q3 2024 [18] - Non-GAAP operating expenses decreased to $9.2 million from $9.7 million in the prior quarter and $12.4 million year-over-year [19] - Net loss for Q3 2025 was $3.8 million, or a loss of $0.69 per share, compared to a net loss of $5.3 million, or a loss of $1 per share in Q2 2025, and a net loss of $7.1 million, or a loss of $1.45 per share in Q3 2024 [19] - Cash burn from operations reduced by over 60% year-over-year to under $3 million in Q3 2025 [6] Business Line Data and Key Metrics Changes - Home and enterprise revenue was approximately $7.4 million, while mobile revenue was approximately $1.4 million in Q3 2025 [18] - The sequential increase in revenue was attributed to growth in both end markets, particularly in home and enterprise [18] Market Data and Key Metrics Changes - The proposed transaction involving the Shanghai subsidiary is expected to yield net cash proceeds of between $50 million and $60 million upon closing [10] - The Shanghai subsidiary was valued at approximately $133 million, but obligations to minority shareholders and transaction costs will reduce the net proceeds [24][25] Company Strategy and Development Direction - The company aims to transition into a global technology licensing business specializing in cinematic visualization solutions post-transaction [11] - The focus will shift to an asset-light, IP-rich model, enhancing competitive differentiation and long-term growth potential [11] - The TrueCut Motion platform will anchor the company's portfolio, with plans to expand into high-growth enterprise and consumer visualization markets [13] Management's Comments on Operating Environment and Future Outlook - Management noted that geopolitical tensions have impacted the Shanghai subsidiary, but opportunities have emerged since the announcement of the transaction [27][28] - The company is not providing financial guidance for Q4 2025 due to the pending sale of the Shanghai subsidiary [20] - Management expressed optimism about the future growth of the TrueCut business, emphasizing the need for increased investment and focus post-transaction [31] Other Important Information - The company closed a registered direct offering and the sale of patents in October 2025, contributing approximately $10 million to its cash position [20] - As of October 31, 2025, the cash and cash equivalents balance was approximately $22 million, with half associated with Pixelworks Shanghai and the other half with Pixelworks [20] Q&A Session Summary Question: Can you help bridge the $133 million consideration to the $50-$60 million expected proceeds? - The company owns 78% of the Shanghai entity, valued at $133 million, but obligations to employees and investors, along with transaction costs and a 10% withholding tax, will reduce net proceeds to $50-$60 million [24][25] Question: Have there been impacts on the Shanghai subsidiary due to geopolitical issues? - Management indicated that there has been a noticeable impact, but opportunities have arisen since the announcement of the transaction, which may not have occurred if ownership remained unchanged [27][28] Question: How will the TrueCut business be run differently post-transaction? - The focus will be on accelerating investment and energy into the TrueCut business, which had been constrained due to previous headwinds in China [31]

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].

Core Insights - Pixelworks' TrueCut Motion technology will be utilized in DreamWorks Animation's upcoming film "The Bad Guys 2," set to release on August 1, 2025, enhancing the viewing experience on premium screens worldwide [1][2][3] Company Overview - Pixelworks, Inc. specializes in content creation, video delivery, and display processing solutions, aiming to provide superior visual quality across various screens, including cinema and smartphones [6] - The company has over 20 years of experience in image processing innovation, catering to leading providers in consumer electronics, professional displays, and video streaming services [6] Technology Highlights - TrueCut Motion technology offers filmmakers an unprecedented ability to fine-tune motion looks during post-production while maintaining the intended cinematic feel [4] - This technology ensures consistent delivery of creative choices across all viewing devices, optimizing the experience in both 3D and standard 2D environments [4]

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]