Pixelworks(US:PXLW)2019-02-08 02:48Financial Data and Key Metrics Changes - Consolidated revenue for Q4 2018 increased more than 11% year-over-year to $20.5 million, with full-year revenue growing 14% after adjusting for EOL products [10][11] - Non-GAAP gross margin for Q4 2018 was just over 55%, slightly better than expected, while full-year gross margin remained favorable within the mid 50% range [11][32] - Non-GAAP net income for Q4 2018 was $1.1 million or $0.03 per diluted share, compared to $2.5 million or $0.07 per diluted share in the prior quarter [34] Business Line Data and Key Metrics Changes - Digital projector revenue was approximately $16.4 million in Q4 2018, including about $1.5 million from planned EOL product revenue [32] - Video delivery revenue was approximately $3.4 million, representing the second consecutive quarter of over 30% year-over-year growth [20][32] - Mobile revenue grew 75% year-over-year in Q4 2018, reaching approximately $750,000, with nearly 90% growth for the full year [25][32] Market Data and Key Metrics Changes - The digital projector market is influenced by macroeconomic conditions in China, with demand beginning to deteriorate late in Q4 2018 [19] - The video delivery market is experiencing robust demand due to the rollout of next-generation TV broadcast standards in Japan, leading to increased inventory orders [54] - The mobile market is seeing significant growth driven by the adoption of Iris Visual processors in new smartphones [25][29] Company Strategy and Development Direction - The company is focused on expanding opportunities in mobile and video delivery markets, targeting flagship and mid-tier devices [31] - A strategic partnership with HMD Global aims to incorporate Pixelworks technology into a broad range of Nokia's next-generation smartphones [28][64] - The transition to new SoC products for a large projector customer is expected to dampen typical seasonality but improve cumulative margins over time [44] Management's Comments on Operating Environment and Future Outlook - Management noted that the macro environment, particularly in China, is impacting demand and customer order patterns, but they do not anticipate significant corrections [42] - The company expects continued year-over-year growth in mobile and video delivery markets, with potential acceleration in the second half of 2019 [31] - Management expressed excitement about growth in both video delivery and mobile segments, despite headwinds in the projector business [74] Other Important Information - The company entered into an agreement to monetize non-strategic patents, resulting in a net gain of $3.9 million expected in Q1 2019 [14] - Non-GAAP operating expenses for Q4 2018 were $10.3 million, reflecting financial discipline in managing costs associated with the acquisition of ViXS [33] Q&A Session Summary Question: Impact of macro issues on projector business - Management observed rising distributor inventories and softer backfill orders due to poor results in the tender business, particularly in China [42] Question: Mobile growth expectations - Growth in mobile is anticipated from both existing customers ramping up and new customers being added, with several new phones launching throughout the year [46][59] Question: Video delivery market demand - Demand for set-top boxes and PVRs has been robust since the launch of the ADSB 4K HDR broadcast signal in Japan, with partners seeing increased demand [54] Question: Customer count and engagement - The number of active customer engagements has increased significantly, with a focus on quality over quantity, including tier 1 customers [68]