Pixelworks Reports First Quarter 2017 Financial Results

SAN JOSE, Calif. — (BUSINESS WIRE) — April 27, 2017 — Pixelworks, Inc. (NASDAQ: PXLW), a leading provider of visual processing solutions, today announced financial results for the first quarter ended March 31, 2017.

First Quarter Highlights

  • Revenue of $22.7 million, including $9.2 million related to End of Life (EOL) products
  • Achieved GAAP net income of $0.09 per diluted share, non-GAAP net income of $0.12 per diluted share
  • Recorded adjusted EBITDA of $5.0 million, and net cash balance of $19.6 million

For the first quarter 2017, revenue was $22.7 million, which included $9.2 million of End of Life (EOL) product revenue, and compares to $16.0 million in the prior quarter and $11.2 million in the first quarter of 2016. Excluding EOL contribution, first quarter 2017 revenue in the digital projection market reflected typical seasonality and grew 42% year-on-year.

On a GAAP basis, gross profit margin in the first quarter of 2017 was 54.6%, compared to 53.2% in the fourth quarter of 2016 and 32.2% in the first quarter of 2016. First quarter 2017 GAAP operating expenses were $9.0 million, compared to $8.1 million in the previous quarter and $12.1 million in the first quarter of 2016.

For the first quarter of 2017, GAAP net income was $2.8 million, or $0.09 per diluted share, compared to a GAAP net income of $337,000, or $0.01 per diluted share, in the fourth quarter of 2016 and a GAAP net loss of $8.6 million, or ($0.31) per share, in the first quarter of 2016, which included a restructuring charge of $4.3 million, or $0.15 per share.

On a non-GAAP basis, first quarter 2017 gross profit margin was 54.8%, compared to 53.6% in the fourth quarter of 2016 and 48.0% in the first quarter of 2016. First quarter 2017 gross profit margin increased compared to the prior periods due to a decrease in direct material cost as a percentage of revenue related to a more favorable mix of products sold. First quarter 2017 operating expenses on a non-GAAP basis were $8.3 million, compared to $7.3 million in the previous quarter and $9.2 million in the first quarter of 2016.

For the first quarter of 2017, the Company recorded non-GAAP net income of $3.8 million, or $0.12 per diluted share, compared to non-GAAP net income of $1.2 million, or $0.04 per diluted share, in the fourth quarter of 2016 and a non-GAAP net loss of $4.0 million, or ($0.14) per share, in the first quarter of 2016. Adjusted EBITDA in the first quarter of 2017 was a positive $5.0 million, compared to a positive $2.1 million in the previous quarter and a negative $2.9 million in the first quarter of 2016.

President and CEO of Pixelworks, Todd DeBonis, commented, “First quarter revenue of $22.7 million was near the high-end of our guidance, reflecting a combination of solid end market demand and approximately $9 million related to EOL products. Combined with gross margin being at the upper end of our guidance and operating expenses being at the low end, we achieved strong bottom line results and adjusted EBITDA of $5 million, which is a multi-year high. Also notable in the quarter, we entered into an $8 million co-development agreement with a large projector customer that we believe will further solidify and extend our leadership position in this market. We remain on track for year-over-year revenue growth and continued profitability in 2017, even when excluding the contribution from EOL products.”

Business Outlook for the Second Quarter of 2017

The Company’s expectations for the second quarter of 2017 include:

  • Revenue to be between $20 million and $21 million, including approximately $5.0 million of revenue related to End of Life (EOL) products;
  • Gross profit margin of approximately 53% to 55% on both a GAAP basis and non-GAAP basis; and
  • Operating expenses of $8.5 million to $9.5 million on a GAAP basis and $7.5 million to $8.5 million on a non-GAAP basis.

The difference in estimated operating expenses on a GAAP basis, versus a non-GAAP basis, is stock-based compensation expense, of which a range between $0.5 million to $1.0 million is included on a GAAP basis. Stock-based compensation expense is excluded from the calculation of estimated operating expenses on a non-GAAP basis.

Conference Call Information

Pixelworks will host a conference call today, April 27, at 2:00 p.m. Pacific Time, which can be accessed by calling 877-359-9508 and using passcode 3822948. A Web broadcast of the call can be accessed by visiting the Company's investor page at www.pixelworks.com . For those unable to listen to the live Web broadcast, it will be archived for approximately 30 days. A replay of the conference call will also be available through Thursday, May 4, 2017, and can be accessed by calling 855-859-2056 and using passcode 3822948.

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