Third Quarter Overview
- Total revenue increased 16% year-over-year and decreased 8% sequentially, in line with expectations
- Mobile revenue increased 25% year-over-year, contributing to growth of 44% year-to-date compared to the same period in 2021
- Projector revenue increased 10% year-over-year and 5% sequentially to represent the highest quarterly level in more than two years
- iQOO Neo7 smartphone incorporated the upgraded Pixelworks X5 series visual processor, providing end-users with a more captivating gaming and video experience
- Disney and 20th Century rereleased James Cameron's Avatar in 4K HDR to theaters, marking the first-ever title to be remastered and released in cinematic high frame rate utilizing the TrueCut Motion platform
- Closed new strategic investment in the Company's Shanghai subsidiary, generating net proceeds of approximately $10.7 million USD and valuing the subsidiary at approximately $471.5 million.
"Total revenue was at the mid-point of our guidance, demonstrating the team's continued execution while navigating a weaker smartphone market and overall macro environment," stated Todd DeBonis, President and CEO of Pixelworks. "Further underscoring our sustained progress against this challenging backdrop, both our mobile and projector businesses achieved double-digit revenue growth year-over-year for the sixth consecutive quarter."
"In addition to our solid operating performance, during the quarter we successfully closed a strategic investment in our Shanghai subsidiary at nearly 2x the valuation of the previous investment round. Our ability to execute this transaction in the current environment highlights the recognition and growing opportunity for our visual processing technology across Asia. It also enabled us to further strengthen our balance sheet in support of driving continued momentum in our mobile business and commercialization of our TrueCut Motion platform.
"We also continue to expand the ecosystems around our growth businesses, which includes a growing number of strategic engagements and design wins targeted at mobile gaming as well as advancing in-depth evaluations of our TrueCut Motion platform with a series of leading content creators and streaming service providers. Although we remain cautious about the overall macro environment and consumer demand, we are in a strong financial position to fully execute on our growth initiatives and extend Pixelworks' technology leadership in our target end markets."
Third Quarter Fiscal 2022 Financial Results
Revenue in the third quarter of 2022 was $17.6 million, compared to $19.1 million in the second quarter of 2022 and $15.2 million in the third quarter of 2021. The year-over-year increase in third quarter revenue reflected strong growth of visual processor solutions in the mobile market combined with sustained customer demand and recovery in the projector market.
On a GAAP basis, gross profit margin in the third quarter of 2022 was 50.1%, compared to 49.0% in the second quarter of 2022 and 52.5% in the third quarter of 2021. Third quarter 2022 GAAP operating expenses were $13.5 million, compared to $14.5 million in the second quarter of 2022 and $11.9 million in the year-ago quarter.
On a non-GAAP basis, third quarter 2022 gross profit margin was 49.8%, compared to 49.3% in the second quarter of 2022 and 53.1% in the year-ago quarter. Third quarter 2022 non-GAAP operating expenses were $12.2 million, compared to $12.9 million in the second quarter of 2022 and $10.1 million in the year-ago quarter.
For the third quarter of 2022, the Company recorded a GAAP net loss of $4.5 million, or ($0.08) per share, compared to a GAAP net loss of $5.0 million, or ($0.09) per share, in the second quarter of 2022, and a GAAP net loss of $4.1 million, or ($0.08) per share, in the year-ago quarter. Note, the Company refers to "net loss attributable to Pixelworks Inc." as "net loss".
For the third quarter of 2022, the Company recorded a non-GAAP net loss of $3.2 million, or ($0.06) per share, compared to a non-GAAP net loss of $3.3 million, or ($0.06) per share, in the second quarter of 2022, and a non-GAAP net loss of $2.2 million, or ($0.04) per share, in the third quarter of 2021.
Adjusted EBITDA in the third quarter of 2022 was a negative $2.1 million, compared to a negative $2.4 million in the second quarter of 2022 and a negative $1.6 million in the year-ago quarter.
Cash and cash equivalents at the end of the third quarter of 2022 were $57.6 million, compared to $49.6 million at the end of the second quarter of 2022.
