First Quarter and Recent Highlights
- HONOR Magic5 Pro and HONOR Magic5 Ultimate smartphones launched incorporating Pixelworks' advanced X5 Plus visual processor, with the HONOR Magic5 Pro scoring 151 in DXOMARK's display test and ranking #1 in global smartphone display performance
- OnePlus 11 and OnePlus Ace 2 flagship smartphones launched with Pixelworks' X7 visual processor, enabling both ultra-low latency 120fps and low power super-resolution mobile gaming on over 100 game titles
- OPPO affiliate incorporated Pixelworks' X5 Plus visual processor in newly launched realme GT Neo5, enabling powerful display performance that couples high frame rate together with high clarity and color accuracy
- ASUS launched ROG Phone 7 Series integrating Pixelworks visual processing enhancements, including immersive HDR picture quality, superior color calibration and reproduction as well as DC dimming
- Announced partnership with GALA Sports, the largest mobile sports simulation game developer in China, to integrate Pixelworks' Rendering Accelerator SDK in Total Football, a top-ranking football simulation game
- 20th Century Studios and Lightstorm Entertainment re-release Titanic '25th Anniversary' remastered in 4K 3D and cinematic high frame rate, becoming the third theatrical release to utilize the TrueCut Motion platform
- Closed previously announced strategic investment in the Company's Shanghai subsidiary, generating net proceeds of $14.6 million USD based on a pre-money valuation of $501.4 million, further strengthening Pixelworks Shanghai's capital position and contributing to the Company's consolidated cash balance of $62.8 million at quarter end
"First quarter results were consistent with our prior guidance, as we worked through the inventory correction in the broader smartphone industry as well as the anticipated seasonality in the projector market," stated Todd DeBonis, President and CEO of Pixelworks. "We are confident that the first quarter represented the bottom for Pixelworks in the cyclical downturn, as the previous inventory of our mobile ICs both within the channel and held at customers was below normal levels as of the end of March.
"Further reinforcing our optimism for renewed growth, we have received upside demand from leading customers on a combination of existing and soon to be launched mobile programs. We also recently secured the first design-in and initial production orders with our fourth tier-one mobile customer. Additionally, we continue to expand our initiatives with key partners aimed at establishing an advanced mobile gaming ecosystem, which has contributed to a robust pipeline of tier-one mobile engagements on next-gen programs for the second half of the year.
"Specific to the second quarter, our current bookings support strong sequential revenue growth in mobile as well as an uptick in sales into the projector market. We expect the renewed momentum in mobile to accelerate into the second half of the year, further highlighted by the planned application for our Pixelworks Shanghai subsidiary to publicly list on the STAR exchange."
First Quarter Fiscal 2023 Financial Results
Revenue in the first quarter of 2023 was $10.0 million, compared to $16.9 million in the fourth quarter of 2022 and $16.6 million in the first quarter of 2022. The sequential and year-over-year decline in revenue reflected a combination of seasonality in the projector market and an inventory correction in the mobile market, as well as the lower anticipated revenue contribution from video delivery following the end-of-life implemented for certain products at the end of 2022.
On a GAAP basis, gross profit margin in the first quarter of 2023 was 43.8%, compared to 53.1% in the fourth quarter of 2022 and 52.7% in the first quarter of 2022. First quarter 2023 GAAP operating expenses were $14.7 million, compared to $12.0 million in the fourth quarter of 2022 and $12.6 million in the year-ago quarter.
On a non-GAAP basis, first quarter 2023 gross profit margin was 44.1%, compared to 53.3% in the fourth quarter of 2022 and 53.2% in the year-ago quarter. First quarter 2023 non-GAAP operating expenses were $13.6 million, compared to $10.8 million in the fourth quarter of 2022 and $11.6 million in the year-ago quarter.
For the first quarter of 2023, the Company recorded a GAAP net loss of $9.4 million, or ($0.17) per share, compared to a GAAP net loss of $1.9 million, or ($0.04) per share, in the fourth quarter of 2022, and a GAAP net loss of $4.6 million, or ($0.09) per share, in the year-ago quarter. Note, the Company refers to "net loss attributable to Pixelworks Inc." as "net loss".
For the first quarter of 2023, the Company recorded a non-GAAP net loss of $8.2 million, or ($0.15) per share, compared to a non-GAAP net loss of $0.8 million, or ($0.01) per share, in the fourth quarter of 2022, and a non-GAAP net loss of $3.5 million, or ($0.06) per share, in the first quarter of 2022.
Adjusted EBITDA in the first quarter of 2023 was a negative $7.8 million, compared to a negative $1.0 million in the fourth quarter of 2022 and a negative $2.2 million in the year-ago quarter.
