SAN JOSE, Calif. — (BUSINESS WIRE) — February 2, 2017 — Pixelworks, Inc. (NASDAQ: PXLW), an innovative provider of video display processing technology, today announced financial results for the fourth quarter and fiscal year ended December 31, 2016.
Fourth Quarter Highlights
- Increased revenue 19% year over year and 17% sequentially to $16.0 million
- Achieved GAAP net income of $0.01 and non-GAAP net income of $0.04, per diluted share
- Generated positive cash flow from operations, with net cash balance of $19.6 million at quarter-end
For the fourth quarter 2016, revenue was $16.0 million, compared to $13.7 million in the prior quarter and $13.5 million in the fourth quarter of 2015. The increase in revenue was primarily driven by healthy demand for the Company’s chips sold into digital projection market as order patterns continued to normalize from the previous supply channel disruption.
On a GAAP basis, gross profit margin in the fourth quarter of 2016 was 53.2%, compared to 48.0% in the third quarter of 2016 and 50.6% in the fourth quarter of 2015. Fourth quarter 2016 GAAP operating expenses were $8.1 million, compared to $7.5 million in the previous quarter and $9.7 million in the fourth quarter of 2015.
For the fourth quarter of 2016, the Company recorded GAAP net income of $337,000, or $0.01 per diluted share, compared to a GAAP net loss of $1.2 million, or $0.04 per share, in the third quarter of 2016 and a GAAP net loss of $3.2 million, or $0.11 per share, in the fourth quarter of 2015.
On a non-GAAP basis, fourth quarter 2016 gross profit margin was 53.6%, compared to 48.6% in the third quarter of 2016 and 50.9% in the fourth quarter of 2015. Fourth quarter 2016 gross profit margin increased compared to the prior periods due to a more favorable sales mix and lower direct material cost, primarily for products sold into the digital projector market. Fourth quarter 2016 operating expenses on a non-GAAP basis were $7.3 million, compared to $6.8 million in the previous quarter and $8.8 million in the fourth quarter of 2015.
For the fourth quarter of 2016, the Company recorded non-GAAP net income of $1.2 million, or $0.04 per diluted share, compared to a non-GAAP net loss of $438,000, or $0.02 per share, in the third quarter of 2016 and non-GAAP net loss of $2.2 million, or $0.08 per share, in the fourth quarter of 2015. Adjusted EBITDA in the fourth quarter of 2016 was a positive $2.1 million, compared to a positive $670,000 in the previous quarter and a negative $941,000 in the fourth quarter of 2015.
President and CEO of Pixelworks, Todd DeBonis, commented, “Fourth quarter revenue increased 17% sequentially to $16 million, reaching the high-end of guidance and reflecting solid demand across the projector market. We also achieved profitability on both a GAAP and non-GAAP basis in the quarter – the first time in over three years. Finally, we significantly exceeded our stated goal earlier in the year to achieve cash flow breakeven by the fourth quarter, generating $3 million in cash from operations in the quarter.
“These results demonstrate the considerable progress we’ve made over the last few quarters to transform our operating model and strengthen the Company’s fundamentals. Looking forward, we expect to achieve year-over-year revenue growth, excluding the anticipated EOL contribution, while also maintaining a goal of delivering profitability in 2017. We are now well positioned to capture additional share in the projector market, which continues to exhibit improving dynamics. In mobile, the efforts of our strengthened sales organization remains focused on driving incremental adoption of Pixelworks’ technology, including at targeted OEMs in Asia as well as across the broader mobile ecosystem.”
Business Outlook for the First Quarter of 2017
The Company’s expectations for the first quarter of 2017 include:
- Revenue to be between $22 million and $23 million, including approximately $9.0 million of revenue related to End of Life (EOL) products with the run-rate projector business reflecting typical seasonality;
- Gross profit margin of approximately 53% to 55% on both a GAAP basis and non-GAAP basis; and
- Operating expenses of $9 million to $10 million on a GAAP basis and $8 million to $9 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.