Second Quarter and Recent Highlights
- Total revenue increased 37% sequentially, driven by triple-digit growth in sales of mobile visual processors to tier-one mobile OEM customers in support of previously and soon to be launched smartphone models
- Formally launched new IRX Gaming Experience brand and certification program for the mobile gaming ecosystem, representing a combination of Pixelworks' visual processor solutions and in-depth game tuning services to facilitate outstanding visual performance for top mobile games and smartphones
- Xiaomi, in collaboration with MediaTek and Pixelworks Shanghai, pre-announced the Xiaomi Redmi K60 Ultra smartphone, incorporating Pixelworks' X7 visual processor and newly launched IRX Gaming Experience device certification
- OPPO affiliate OnePlus previewed the scheduled launch of its OnePlus Ace2 Pro flagship smartphone, featuring simultaneous super frame rate and super-resolution functionality enabled by Pixelworks' X7 visual processor
- Announced incorporation of Pixelworks' Rendering Accelerator SDK in Nuverse's latest release of the popular mobile game, Crystal of Atlan (CoA), enabling exceptionally smooth 120fps gameplay with low power consumption
- Retained CITIC Securities, a leading investment bank in China, and formally began the required tutoring process in support of the planned future listing of Pixelworks Shanghai subsidiary on the STAR exchange
"The sequential growth in the quarter was primarily driven by increased shipments of our mobile ICs, which contributed to mobile revenue more than doubling and reaching a record 50% of total revenue," stated Todd DeBonis, President and CEO of Pixelworks. "Our results also reflected the expected initial rebound from the low point in the cycle and the end of the smartphone inventory correction for Pixelworks.
"Also in the second quarter, we began ramping shipments to fulfill initial production orders from our fourth tier-one mobile customer, which is scheduled to officially launch its first model incorporating Pixelworks' visual processing solutions later this month. Additionally, we continue to make headway on building-out a collaborative ecosystem around mobile gaming, as highlighted by the recent launch of Pixelworks' IRX Gaming Experience brand. This new IRX branding and certification program represents an expansion of our ongoing mobile ecosystem initiatives and is specifically aimed at delivering higher consistency, quality and consumer awareness for Pixelworks as well as our content and OEM partners.
"Despite the generally subdued recovery of end market demand specifically in China, we remain optimistic about Pixelworks' positioning and expanding prospects for the second half of the year. Specific to the third quarter, we are guiding for solid sequential top-line growth as the projector market continues to gradually recover and we further ramp mobile shipments in support of a healthy pipeline of design-ins on customers' next-gen programs."
Second Quarter Fiscal 2023 Financial Results
Revenue in the second quarter of 2023 was $13.6 million, compared to $10.0 million in the first quarter of 2023 and $19.1 million in the second quarter of 2022. The sequential increase in revenue was driven by strong growth in Pixelworks' mobile business, while the year-over-year decline primarily reflected lower revenue contribution from the Company's home and enterprise business due to an inventory correction in the projector market as well as the previously implemented end-of-life of products sold into the video delivery market.
On a GAAP basis, gross profit margin in the second quarter of 2023 was 40.3%, compared to 43.8% in the first quarter of 2023 and 49.0% in the second quarter of 2022. Second quarter 2023 GAAP operating expenses were $12.0 million, compared to $14.7 million in the first quarter of 2023 and $14.5 million in the year-ago quarter.
On a non-GAAP basis, second quarter 2023 gross profit margin was 40.5%, compared to 44.1% in the first quarter of 2023 and 49.3% in the year-ago quarter. Second quarter 2023 non-GAAP operating expenses were $10.7 million, compared to $13.6 million in the first quarter of 2023 and $12.9 million in the year-ago quarter.
For the second quarter of 2023, the Company recorded a GAAP net loss of $6.0 million, or ($0.11) per share, compared to a GAAP net loss of $9.4 million, or ($0.17) per share, in the first quarter of 2023, and a GAAP net loss of $5.0 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 second quarter of 2023, the Company recorded a non-GAAP net loss of $4.8 million, or ($0.09) per share, compared to a non-GAAP net loss of $8.2 million, or ($0.15) per share, in the first quarter of 2023, and a non-GAAP net loss of $3.3 million, or ($0.06) per share, in the second quarter of 2022.
Adjusted EBITDA in the second quarter of 2023 was a negative $4.0 million, compared to a negative $7.8 million in the first quarter of 2023 and a negative $2.4 million in the year-ago quarter.
Cash and cash equivalents at the end of the second quarter of 2023 were $54.5 million , compared to $62.8 million at the end of the first quarter of 2023 and $49.6 million at the end of the second quarter of 2022.
