Pixelworks Inc (PXLW) Q1 2025 Earnings Call Highlights: Navigating Challenges with Strategic ...

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Wed, May 14, 2025, 1:17 AM 4 min read

Revenue: $7.1 million for Q1 2025, down from $9.1 million in Q4 2024 and $16.1 million in Q1 2024.
Home and Enterprise Revenue: Approximately $5.8 million for Q1 2025.
Mobile Revenue: Approximately $1.3 million for Q1 2025.
Non-GAAP Gross Profit Margin: 49.9% for Q1 2025, compared to 54.8% in Q4 2024 and 50.7% in Q1 2024.
Non-GAAP Operating Expenses: $10.4 million for Q1 2025, down from $12.6 million in Q1 2024.
Non-GAAP Net Loss: $6.5 million or $0.11 per share for Q1 2025, compared to $4.3 million or $0.07 per share in Q4 2024.
Adjusted EBITDA: Negative $5.8 million for Q1 2025, compared to negative $3.6 million in Q4 2024.
Cash and Cash Equivalents: $18.5 million at the end of Q1 2025, down from $23.6 million at the end of Q4 2024.
Q2 2025 Revenue Guidance: Expected to be between $8 million and $9 million.
Q2 2025 Non-GAAP Gross Profit Margin Guidance: Expected to be between 41% and 43%.
Q2 2025 Non-GAAP EPS Guidance: Expected to range between a loss of $0.11 per share and a loss of $0.08 per share.

Warning! GuruFocus has detected 6 Warning Signs with PXLW.

Release Date: May 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Pixelworks Inc (NASDAQ:PXLW) reported first-quarter results consistent with expectations, with sequential growth in the mobile business.
The company has significantly reduced operating expenses, down more than $2 million year over year, and expects further reductions in 2025.
Pixelworks Inc (NASDAQ:PXLW) is making progress with its TrueCut Motion platform, targeting to double the number of titles from 5 in 2024 to 10 in 2025.
The company has formalized a strategic partnership with a market-leading post-production company to expand the TrueCut ecosystem.
Pixelworks Shanghai subsidiary is poised to reach profitability in the second half of 2025, with multiple revenue opportunities in play.

Negative Points

First-quarter revenue decreased to $7.1 million from $16.1 million in the first quarter of 2024, reflecting anticipated seasonality and lower sales of end-of-life products.
Non-GAAP gross profit margin decreased to 49.9% from 54.8% in the previous quarter, due to a shift in product mix and less overhead absorption.
The company reported a non-GAAP net loss of $6.5 million for the first quarter of 2025, compared to a net loss of $4 million in the first quarter of 2024.
Cash and cash equivalents decreased to $18.5 million from $23.6 million at the end of the fourth quarter.
Guidance for the second quarter of 2025 indicates continued challenges, with expected revenue between $8 million and $9 million and a non-GAAP EPS loss between $0.11 and $0.08 per share.

Q & A Highlights

Q: Todd, you talked about Pixelworks Shanghai reaching profitability. Can you give us some help with what the revenue levels that might be achieved at? And maybe what portion of the OpEx is attributable to Shanghai so we can understand that operating model? A: Todd DeBonis, President and CEO, explained that OpEx for Pixelworks Shanghai is expected to be around $7 million to $7.5 million per quarter. The revenue mix includes home and entertainment, mobile, IP licensing, and design services. Profitability depends on a combination of these revenue streams, and if all goes as planned, the unit could be profitable in Q3 and Q4.

Q: Regarding TrueCut, are your device discussions with Chinese brands or global non-Chinese smartphone OEMs? A: Todd DeBonis clarified that the device discussions for TrueCut are with mobile OEMs, but the one that completed certification testing is not a Chinese OEM. The focus is on bringing TrueCut to premium home entertainment devices, primarily targeting North America and Europe.

Q: On the ASIC design services engagements, how would you give a framework for sizing those opportunities and the revenue models associated? A: Todd DeBonis explained that design services can range from partial to full turnkey solutions, with costs for large SoCs in 12-nanometer ranging from $10 million to $20 million. The revenue size depends on the extent of services provided to the customer.

Q: For mobile, how are the engagements lining up with the revenue expectations for this year? A: Todd DeBonis indicated that given the Q2 guidance, replicating 2023's $30 million mobile revenue would be challenging. However, an uptick is expected in the second half of the year, with revenue likely closer to 2024 levels or slightly above.

Q: Could you expand on the multiple programs with your lead mobile customer and additional engagements? Will any additional engagements generate revenue in 2025? A: Todd DeBonis stated that additional engagements are booked design wins with the X7P. The co-development with the lead customer involves a new solution not yet offered to the market, enhancing graphical experiences. While no designs are in the bag yet, there are opportunities available this year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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