Pixelworks, Inc. (NASDAQ: PXLW), a leading provider of power
efficient visual processing solutions, today announced financial
results for the fourth quarter and fiscal year ended December 31,
2018.
Fourth Quarter and Recent
Highlights
- Mobile revenue increased 78%
year-over-year, reflecting volume production in support of a
growing number of smartphone design wins
- Video Delivery revenue increased
31% year-over-year, driven by ramping shipments of XCode
transcoding chips to leading consumer electronics OEMs in
Japan
- GAAP gross profit margin increased
340 basis points year-over-year to 53.1%; non-GAAP gross profit
margin was 55.1%
- Nokia 7.1 and Black Shark Helo
smartphones, featuring Iris visual processor, recognized for
superior display performance
- Monetized non-strategic patents for
an after-tax gain of $3.9 million, net, to be recognized in first
quarter of 2019
- Entered into an agreement with HMD
Global to provide visual processing solutions for next-generation
Nokia smartphones
Full Year 2018 Business
Highlights
- Secured five smartphone wins across
four OEMs for 3rd and 4th generation Iris visual processors
- Launched 4th generation Iris mobile
visual processor, and taped-out 5th generation Iris
- Successfully integrated previously
acquired Video Delivery business which became accretive to
quarterly operating results
- Completed multi-year SoC
co-development project with large Projector customer
President and CEO of Pixelworks, Todd DeBonis,
commented, “I’m pleased with our team’s execution in 2018, as we
demonstrated substantial progress on both operational improvements
and our growth objectives. In addition to the successful
integration of ViXS Systems, we ramped a meaningful number of
programs at new and existing customers across our targeted end
markets. Notably, we maintained our investments in research and
development in support of future growth, while also generating
positive adjusted EBITDA and cash flow from operations for the
year. In late December, we entered into an agreement to monetize
non-strategic patents acquired as part of ViXS, which will result
in recognizing a net gain of $3.9 million for the transaction in
the first quarter of 2019 – further underscoring the realized value
from this highly-accretive transaction for Pixelworks.
“2018 was also a transformative year in our
Mobile business with announced wins on five smartphones, two of
which were launched in the fourth quarter. Awareness and interest
in our Iris family of mobile visual processors continue to build,
and we exited the year with the strongest pipeline of active
engagements to-date. Further highlighting our recent momentum, most
recently we announced an agreement with HMD Global to incorporate
Pixelworks’ Iris solution into a broad range of next-generation
Nokia smartphones.
“In our Video Delivery business, we continue to
see strong demand from our lead Japanese consumer electronics
customers for our XCode family of transcoding solutions for
ADSB-compatible 4K set-top-boxes and advanced PVRs. Initial uptake
for these devices has been strong, and we expect healthy follow-on
orders as OEM customers replenish the sales channel in order to
meet future consumer demand in Japan.”
DeBonis concluded, “Looking to 2019, we are
focused on realizing the next leg of growth and targeting expanded
opportunities across flagship and mid-tier mobile devices as well
as next-generation consumer platforms for high-quality video
streaming and delivery. As we ramp our growing pipeline of customer
engagements and additional production orders, we expect to drive
continued year-over-year growth in both our Mobile and Video
Delivery end markets.”
Fourth Quarter and Fiscal 2018 Financial
Results
Revenue in the fourth quarter of 2018 was $20.5
million, which included approximately $1.5 million of planned
end-of-life (EOL) product revenue, compared to $21.5 million in the
third quarter of 2018. Revenue in the fourth quarter of 2017 was
$18.4 million, which included approximately $1.0 million of EOL
product revenue. The year-over-year increase in fourth quarter
revenue was driven by growth in all of the Company’s target end
markets. For the full year 2018, revenue was $76.6 million, which
included approximately $2.0 million of EOL product revenue,
compared to full year revenue of $80.6 million in 2017, which
included approximately $15.3 million of EOL product revenue.
Excluding the respective contributions from EOL products and the
inclusion of a full year of Video Deliver revenues, full year 2018
revenue grew more than 14% year-over-year.
On a GAAP basis, gross profit margin in the
fourth quarter of 2018 was 53.1%, compared to 52.3% in the third
quarter of 2018 and 49.7% in the fourth quarter of 2017. GAAP gross
profit margin for the full year 2018 was 51.6% compared to 51.8% in
the prior year. Fourth quarter 2018 GAAP operating expenses were
$12.4 million, compared to $10.8 million in the third quarter of
2018 and $12.2 million in the year-ago quarter. For full year 2018,
GAAP operating expenses were $44.3 million, compared to $43.8
million in full year 2017.
For the fourth quarter of 2018, the Company
recorded a GAAP net loss of $1.6 million, or ($0.04) per share,
compared to GAAP net income of $231,000, or $0.01 per diluted
share, in the third quarter of 2018 and a GAAP net loss of $3.6
million, or ($0.10) per share, in the year-ago quarter. GAAP net
loss for the full year 2018 was $4.6 million, or ($0.13) per share,
compared to a GAAP net loss of $4.2 million, or ($0.13) per share,
for the full year 2017.
On a non-GAAP basis, fourth quarter 2018 gross
profit margin was 55.1%, compared to 54.7% in the third quarter of
2018 and 56.9% in the year-ago quarter. Fourth quarter 2018
non-GAAP operating expenses were $10.3 million, compared to $8.9
million in the third quarter of 2018 and $10.6 million in the
year-ago quarter. Operating expenses in the fourth quarter of 2018
included the recognition of approximately $220,000 of anticipated
offsets to R&D related to the Company’s co-development project
with a large digital projector customer compared to $1.8 million of
related offsets in the prior quarter. Non-GAAP gross profit margin
for the full year 2018 was 54.2% compared to 55.2% in the prior
year.
For the fourth quarter of 2018, the Company
recorded non-GAAP net income of $1.1 million, or $0.03 per diluted
share, compared to non-GAAP net income of $2.5 million, or $0.07
per diluted share, in the third quarter of 2018 and a non-GAAP net
loss of $379,000, or ($0.01) per share, in the year-ago quarter.
For the full year 2018, non-GAAP net income was $3.4 million, or
$0.09 per diluted share, compared to net income of $7.7 million, or
$0.23 per diluted share, for the full year 2017.
Adjusted EBITDA in the fourth quarter of 2018
was $1.8 million, compared to $3.8 million in the third quarter of
2018 and $778,000 in the year-ago quarter. For the full year 2018,
adjusted EBITDA was $8.0 million, compared to adjusted EBITDA of
$12.9 million for the full year 2017.
Business Outlook
For the first quarter of 2019, Pixelworks
expects revenue to be in a range of between $15.5 million and $16.5
million, reflecting more than typical seasonality in the Digital
Projection market partially offset by continued year-over-year
growth in the Company’s Mobile and Video Delivery businesses.
Additional guidance will be provided as part of the Company’s
earnings conference call.
Conference Call Information
Pixelworks will host a conference call today,
February 7, 2019, at 2:00 p.m. Pacific Time, which can be accessed
by calling 1-877-359-9508 and using passcode 4458566. 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, February 14, 2019, and can be accessed by calling
1-855-859-2056 and using passcode 4458566.
About Pixelworks, Inc.
Pixelworks creates, develops and markets
high-efficiency visual display processing and advanced video
delivery solutions for the highest quality display and streaming
applications. The Company has a 20-year history of delivering image
processing innovation to providers of leading-edge consumer
electronics and professional displays. Pixelworks is headquartered
in San Jose, Calif. For more information, please visit the
company’s Web site at www.pixelworks.com.
Note: Pixelworks and the Pixelworks logo are
registered trademarks of Pixelworks, Inc.
Non-GAAP Financial MeasuresThis
earnings release makes reference to non-GAAP gross profit margins,
non-GAAP operating expenses, non-GAAP net income (loss) and
non-GAAP net income (loss) per share, which exclude deferred
revenue fair value adjustment, inventory step-up and backlog
amortization, amortization of acquired intangible assets,
stock-based compensation expense, restructuring expenses,
acquisition and integration expenses, gain on extinguishment of
convertible debt, fair value adjustment on convertible debt
conversion option, discount accretion on convertible debt fair
value, and benefit related to tax reform which are all required
under GAAP as well as the tax effect of the non-GAAP adjustments.
The press release also makes reference to and reconciles GAAP net
income (loss) and adjusted EBITDA, which Pixelworks defines as GAAP
net income (loss) before interest income (expense) and other, net,
income tax provision, depreciation and amortization, as well as the
specific items listed above.
Pixelworks management uses these non-GAAP
financial measures internally to understand, manage and evaluate
the business and establish its operational goals, review its
operations on a period to period basis, for compensation
evaluations, to measure performance, and for budgeting and resource
allocation. Pixelworks management believes it is useful for the
Company and investors to review, as applicable, both GAAP
information and non-GAAP financial measures to help assess the
performance of Pixelworks’ continuing businesses and to evaluate
Pixelworks’ future prospects. These non-GAAP measures, when
reviewed together with the GAAP financial information, provide
additional transparency and information for comparison and analysis
of operating performance and trends. These non-GAAP measures
exclude certain items to facilitate management’s review of the
comparability of our core operating results on a period to period
basis.
In calculating the above non-GAAP results,
management specifically adjusted for certain items related to the
acquisition of ViXS Systems, Inc., including deferred revenue fair
value adjustment, amortization of acquired intangible assets,
impact of inventory step up, all related to fair valuing the items,
acquisition and integration costs, restructuring expenses related
to a reduction in workforce and facility closure and
consolidations, gain on debt extinguishment, fair value adjustment
on convertible debt conversion option, and accretion on convertible
debt. Management considers these items as either limited in term or
having no impact on Pixelworks’ cash flows, and therefore has
excluded such items to facilitate a review of current operating
performance and comparisons to our past operating performance.
Because the Company’s non-GAAP financial
measures are not calculated in accordance with GAAP, they may not
necessarily be comparable to similarly titled measures employed by
other companies. These non-GAAP financial measures should not be
considered in isolation or as a substitute for the comparable GAAP
measures, and should be read only in conjunction with the Company’s
consolidated financial results as presented in accordance with
GAAP. A reconciliation between GAAP and non-GAAP financial measures
is included in this earnings release which is available in the
investor relations section of the Pixelworks' website.
Safe Harbor StatementThis
release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These
statements may be identified by use of terms such as “begin,”
“continue,” “will,” “expect”, “believe,” “anticipate” and similar
terms or the negative of such terms, and include, without
limitation, statements about the Company’s digital projection,
mobile and video delivery businesses, including market movement and
demand, customer engagements, mobile wins and the timing thereof,
growth in the mobile and video delivery markets, strategy,
seasonality, the impact of our agreement as to non-strategic
patents, accretion and additional guidance, particularly as to
revenue for the first quarter of 2019. All statements other than
statements of historical fact are forward-looking statements for
purposes of this release, including any projections of revenue or
other financial items or any statements regarding the plans and
objectives of management for future operations. Such statements are
based on management's current expectations, estimates and
projections about the Company's business. These statements are not
guarantees of future performance and involve numerous risks,
uncertainties and assumptions that are difficult to predict. Actual
results could vary materially from those contained in forward
looking statements due to many factors, including, without
limitation: our ability to execute on our strategy, including the
integration of ViXS; competitive factors, such as rival chip
architectures, introduction or traction by competing designs, or
pricing pressures; the success of our products in expanded markets;
current global economic challenges; changes in the digital display
and projection markets; seasonality in the consumer electronics
market; our efforts to achieve profitability from operations; our
limited financial resources and our ability to attract and retain
key personnel. More information regarding potential factors that
could affect the Company's financial results and could cause actual
results to differ materially from those discussed in the
forward-looking statements is included from time to time in the
Company's Securities and Exchange Commission filings, including its
Annual Report on Form 10-K for the year ended December 31, 2017 as
well as subsequent SEC filings.
The forward-looking statements contained in this
release are as of the date of this release, and the Company does
not undertake any obligation to update any such statements, whether
as a result of new information, future events or otherwise.
[Financial Tables Follow]
|
PIXELWORKS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (In
thousands, except per share data)
(Unaudited) |
|
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
2018 |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenue, net (1) |
|
$ |
20,539 |
|
|
$ |
21,472 |
|
|
$ |
18,448 |
|
|
$ |
76,554 |
|
|
$ |
80,637 |
|
Cost of revenue
(2) |
|
|
9,634 |
|
|
|
10,235 |
|
|
|
9,288 |
|
|
|
37,076 |
|
|
|
38,873 |
|
Gross
profit |
|
|
10,905 |
|
|
|
11,237 |
|
|
|
9,160 |
|
|
|
39,478 |
|
|
|
41,764 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
Research
and development (3) |
|
|
6,673 |
|
|
|
5,322 |
|
|
|
6,695 |
|
|
|
22,881 |
|
|
|
21,427 |
|
Selling,
general and administrative (4) |
|
|
5,310 |
|
|
|
5,070 |
|
|
|
5,068 |
|
|
|
19,953 |
|
|
|
20,450 |
|
Restructuring |
|
|
429 |
|
|
|
414 |
|
|
|
439 |
|
|
|
1,464 |
|
|
|
1,920 |
|
Total
operating expenses |
|
|
12,412 |
|
|
|
10,806 |
|
|
|
12,202 |
|
|
|
44,298 |
|
|
|
43,797 |
|
Income
(loss) from operations |
|
|
(1,507 |
) |
|
|
431 |
|
|
|
(3,042 |
) |
|
|
(4,820 |
) |
|
|
(2,033 |
) |
Interest income
(expense) and other, net (5) |
|
|
(82 |
) |
|
|
(112 |
) |
|
|
(919 |
) |
|
|
647 |
|
|
|
(1,647 |
) |
Income
(loss) before income taxes |
|
|
(1,589 |
) |
|
|
319 |
|
|
|
(3,961 |
) |
|
|
(4,173 |
) |
|
|
(3,680 |
) |
Provision (benefit) for
income taxes (6) |
|
|
52 |
|
|
|
88 |
|
|
|
(409 |
) |
|
|
448 |
|
|
|
493 |
|
Net
income (loss) |
|
$ |
(1,641 |
) |
|
$ |
231 |
|
|
$ |
(3,552 |
) |
|
$ |
(4,621 |
) |
|
$ |
(4,173 |
) |
Net income (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.04 |
) |
|
$ |
0.01 |
|
|
$ |
(0.10 |
) |
|
|
(0.13 |
) |
|
|
(0.13 |
) |
Diluted |
|
$ |
(0.04 |
) |
|
$ |
0.01 |
|
|
$ |
(0.10 |
) |
|
|
(0.13 |
) |
|
|
(0.13 |
) |
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
36,736 |
|
|
|
36,195 |
|
|
|
34,359 |
|
|
|
35,959 |
|
|
|
31,507 |
|
Diluted |
|
|
36,736 |
|
|
|
37,993 |
|
|
|
34,359 |
|
|
|
35,959 |
|
|
|
31,507 |
|
—————— |
|
|
|
|
|
|
|
|
|
|
(1) Includes deferred
revenue fair value adjustment |
|
$ |
— |
|
|
$ |
52 |
|
|
$ |
68 |
|
|
$ |
52 |
|
|
$ |
93 |
|
(2) Includes: |
|
|
|
|
|
|
|
|
|
|
Amortization of acquired intangible assets |
|
|
298 |
|
|
|
298 |
|
|
|
298 |
|
|
|
1,192 |
|
|
|
497 |
|
Stock-based compensation |
|
|
93 |
|
|
|
87 |
|
|
|
64 |
|
|
|
324 |
|
|
|
243 |
|
Inventory
step-up and backlog amortization |
|
|
17 |
|
|
|
97 |
|
|
|
949 |
|
|
|
475 |
|
|
|
1,965 |
|
(3) Includes
stock-based compensation |
|
|
635 |
|
|
|
609 |
|
|
|
527 |
|
|
|
2,466 |
|
|
|
1,648 |
|
(4) Includes: |
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
910 |
|
|
|
762 |
|
|
|
556 |
|
|
|
2,893 |
|
|
|
2,352 |
|
Amortization of acquired intangible assets |
|
|
101 |
|
|
|
101 |
|
|
|
101 |
|
|
|
404 |
|
|
|
168 |
|
Acquisition and integration |
|
|
— |
|
|
|
— |
|
|
|
(45 |
) |
|
|
— |
|
|
|
2,460 |
|
(5) Includes: |
|
Fair
value adjustment on convertible debt conversion option |
|
|
— |
|
|
|
— |
|
|
|
621 |
|
|
|
— |
|
|
|
743 |
|
Discount
accretion on convertible debt fair value |
|
|
— |
|
|
|
— |
|
|
|
124 |
|
|
|
69 |
|
|
|
196 |
|
Gain on
debt extinguishment |
|
|
— |
|
|
|
— |
|
|
|
(29 |
) |
|
|
(1,272 |
) |
|
|
(29 |
) |
(6) Includes benefit
related to tax reform |
|
|
— |
|
|
|
— |
|
|
|
(343 |
) |
|
|
— |
|
|
|
(343 |
) |
|
|
PIXELWORKS, INC.
RECONCILIATION OF GAAP AND
NON-GAAP
FINANCIAL
INFORMATION * (In thousands, except per
share data) (Unaudited) |
|
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
2018 |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Reconciliation
of GAAP and non-GAAP gross profit |
|
|
|
|
|
|
|
|
|
|
GAAP gross profit |
|
$ |
10,905 |
|
|
$ |
11,237 |
|
|
$ |
9,160 |
|
|
$ |
39,478 |
|
|
$ |
41,764 |
|
Amortization of
acquired intangible assets |
|
|
298 |
|
|
|
298 |
|
|
|
298 |
|
|
|
1,192 |
|
|
|
497 |
|
Stock-based
compensation |
|
|
93 |
|
|
|
87 |
|
|
|
64 |
|
|
|
324 |
|
|
|
243 |
|
Inventory step-up and
backlog amortization |
|
|
17 |
|
|
|
97 |
|
|
|
949 |
|
|
|
475 |
|
|
|
1,965 |
|
Deferred revenue fair
value adjustment |
|
|
— |
|
|
|
52 |
|
|
|
68 |
|
|
|
52 |
|
|
|
93 |
|
Total
reconciling items included in gross profit |
|
|
408 |
|
|
|
534 |
|
|
|
1,379 |
|
|
|
2,043 |
|
|
|
2,798 |
|
Non-GAAP gross
profit |
|
$ |
11,313 |
|
|
$ |
11,771 |
|
|
$ |
10,539 |
|
|
$ |
41,521 |
|
|
$ |
44,562 |
|
Non-GAAP gross profit
margin |
|
|
55.1 |
% |
|
|
54.7 |
% |
|
|
56.9 |
% |
|
|
54.2 |
% |
|
|
55.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of GAAP and non-GAAP operating expenses |
|
|
|
|
|
|
|
|
|
|
GAAP operating
expenses |
|
$ |
12,412 |
|
|
$ |
10,806 |
|
|
$ |
12,202 |
|
|
$ |
44,298 |
|
|
$ |
43,797 |
|
Reconciling item
included in research and development: |
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
635 |
|
|
|
609 |
|
|
|
527 |
|
|
|
2,466 |
|
|
|
1,648 |
|
Reconciling items
included in selling, general and administrative: |
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
910 |
|
|
|
762 |
|
|
|
556 |
|
|
|
2,893 |
|
|
|
2,352 |
|
Amortization of acquired intangible assets |
|
|
101 |
|
|
|
101 |
|
|
|
101 |
|
|
|
404 |
|
|
|
168 |
|
Acquisition and integration |
|
|
— |
|
|
|
— |
|
|
|
(45 |
) |
|
|
— |
|
|
|
2,460 |
|
Restructuring |
|
|
429 |
|
|
|
414 |
|
|
|
439 |
|
|
|
1,464 |
|
|
|
1,920 |
|
Total
reconciling items included in operating expenses |
|
|
2,075 |
|
|
|
1,886 |
|
|
|
1,578 |
|
|
|
7,227 |
|
|
|
8,548 |
|
Non-GAAP operating
expenses |
|
$ |
10,337 |
|
|
$ |
8,920 |
|
|
$ |
10,624 |
|
|
$ |
37,071 |
|
|
$ |
35,249 |
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of GAAP and non-GAAP net income (loss) |
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss) |
|
$ |
(1,641 |
) |
|
$ |
231 |
|
|
$ |
(3,552 |
) |
|
$ |
(4,621 |
) |
|
$ |
(4,173 |
) |
Reconciling items
included in gross profit |
|
|
408 |
|
|
|
534 |
|
|
|
1,379 |
|
|
|
2,043 |
|
|
|
2,798 |
|
Reconciling items
included in operating expenses |
|
|
2,075 |
|
|
|
1,886 |
|
|
|
1,578 |
|
|
|
7,227 |
|
|
|
8,548 |
|
Reconciling items
included in interest expense and other, net |
|
|
— |
|
|
|
— |
|
|
|
716 |
|
|
|
(1,203 |
) |
|
|
910 |
|
Tax effect of non-GAAP
adjustments |
|
|
237 |
|
|
|
(181 |
) |
|
|
(157 |
) |
|
|
— |
|
|
|
— |
|
Benefit related to tax
reform |
|
|
— |
|
|
|
— |
|
|
|
(343 |
) |
|
|
— |
|
|
|
(343 |
) |
Non-GAAP net income
(loss) |
|
$ |
1,079 |
|
|
$ |
2,470 |
|
|
$ |
(379 |
) |
|
$ |
3,446 |
|
|
$ |
7,740 |
|
Non-GAAP net income
(loss) per share: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.03 |
|
|
$ |
0.07 |
|
|
$ |
(0.01 |
) |
|
$ |
0.10 |
|
|
$ |
0.25 |
|
Diluted |
|
$ |
0.03 |
|
|
$ |
0.07 |
|
|
$ |
(0.01 |
) |
|
$ |
0.09 |
|
|
$ |
0.23 |
|
Non-GAAP weighted
average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
36,736 |
|
|
|
36,195 |
|
|
|
34,359 |
|
|
|
35,959 |
|
|
|
31,507 |
|
Diluted |
|
|
38,320 |
|
|
|
37,993 |
|
|
|
34,359 |
|
|
|
37,819 |
|
|
|
33,668 |
|
|
|
|
|
|
|
|
|
|
|
|
*Set forth above are reconciliations of the non-GAAP
financial measure to the most directly comparable GAAP financial
measure. The non-GAAP financial measure disclosed by the company
has limitations and should not be considered a substitute for, or
superior to, the financial measure prepared in accordance with
GAAP, and the reconciliations from GAAP to Non-GAAP actuals should
be carefully evaluated. Please refer to "Non-GAAP Financial
Measures” in this document for an explanation of the adjustments
made to the comparable GAAP measures, the ways management uses the
non-GAAP measures, and the reasons why management believes the
non-GAAP measures provide useful information for investors. |
|
|
PIXELWORKS, INC.
RECONCILIATION OF GAAP AND
NON-GAAP EARNINGS PER SHARE
* (Figures may not sum due to rounding)
(Unaudited) |
|
|
Three Months Ended |
|
Twelve months Ended |
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
2018 |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
Dollars per share |
|
Dollars per share |
|
Dollars per share |
|
Dollars per share |
|
Dollars per share |
|
Basic |
|
Diluted |
|
Basic |
|
Diluted |
|
Basic |
|
Diluted |
|
Basic |
|
Diluted |
|
Basic |
|
Diluted |
Reconciliation
of GAAP and non-GAAP net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss) |
$ |
(0.04 |
) |
|
$ |
(0.04 |
) |
|
$ |
0.01 |
|
|
$ |
0.01 |
|
|
$ |
(0.10 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.13 |
) |
Reconciling items
included in gross profit |
|
0.01 |
|
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.04 |
|
|
|
0.04 |
|
|
|
0.06 |
|
|
|
0.05 |
|
|
|
0.09 |
|
|
|
0.08 |
|
Reconciling items
included in operating expenses |
|
0.06 |
|
|
|
0.05 |
|
|
|
0.05 |
|
|
|
0.05 |
|
|
|
0.05 |
|
|
|
0.05 |
|
|
|
0.20 |
|
|
|
0.19 |
|
|
|
0.27 |
|
|
|
0.25 |
|
Reconciling items
included in interest expense and other, net |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.02 |
|
|
|
0.02 |
|
|
|
(0.03 |
) |
|
|
(0.03 |
) |
|
|
0.03 |
|
|
|
0.03 |
|
Tax effect of non-GAAP
adjustments |
|
0.01 |
|
|
|
0.01 |
|
|
|
(0.01 |
) |
|
|
(0.00 |
) |
|
|
(0.00 |
) |
|
|
(0.00 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Benefit related to tax
reform |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.01 |
) |
|
|
(0.01 |
) |
Non-GAAP net income
(loss) |
$ |
0.03 |
|
|
$ |
0.03 |
|
|
$ |
0.07 |
|
|
$ |
0.07 |
|
|
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
|
$ |
0.10 |
|
|
$ |
0.09 |
|
|
$ |
0.25 |
|
|
$ |
0.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Set forth above are reconciliations of the non-GAAP
financial measure to the most directly comparable GAAP financial
measure. The non-GAAP financial measure disclosed by the company
has limitations and should not be considered a substitute for, or
superior to, the financial measure prepared in accordance with
GAAP, and the reconciliations from GAAP to Non-GAAP actuals should
be carefully evaluated. Please refer to "Non-GAAP Financial
Measures” in this document for an explanation of the adjustments
made to the comparable GAAP measures, the ways management uses the
non-GAAP measures, and the reasons why management believes the
non-GAAP measures provide useful information for investors. |
|
|
PIXELWORKS, INC.
RECONCILIATION OF GAAP AND
NON-GAAP GROSS PROFIT
MARGIN * (Figures may not sum due to
rounding) (Unaudited) |
|
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
2018 |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Reconciliation
of GAAP and non-GAAP gross profit margin |
|
|
|
|
|
|
|
|
|
|
GAAP gross profit
margin |
|
53.1 |
% |
|
52.3 |
% |
|
49.7 |
% |
|
51.6 |
% |
|
51.8 |
% |
Amortization of
acquired intangible assets |
|
1.5 |
% |
|
1.4 |
% |
|
1.6 |
% |
|
1.6 |
% |
|
0.6 |
% |
Stock-based
compensation |
|
0.5 |
% |
|
0.4 |
% |
|
0.3 |
% |
|
0.4 |
% |
|
0.3 |
% |
Inventory step-up and
backlog amortization |
|
0.1 |
% |
|
0.5 |
% |
|
5.1 |
% |
|
0.6 |
% |
|
2.4 |
% |
Deferred revenue fair
value adjustment |
|
— |
% |
|
0.2 |
% |
|
0.4 |
% |
|
0.1 |
% |
|
0.1 |
% |
Total
reconciling items included in gross profit |
|
2.0 |
% |
|
2.5 |
% |
|
7.4 |
% |
|
2.7 |
% |
|
3.5 |
% |
Non-GAAP gross profit
margin |
|
55.1 |
% |
|
54.7 |
% |
|
56.9 |
% |
|
54.2 |
% |
|
55.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
*Set forth above are reconciliations of the non-GAAP
financial measure to the most directly comparable GAAP financial
measure. The non-GAAP financial measure disclosed by the company
has limitations and should not be considered a substitute for, or
superior to, the financial measure prepared in accordance with
GAAP, and the reconciliations from GAAP to Non-GAAP actuals should
be carefully evaluated. Please refer to "Non-GAAP Financial
Measures” in this document for an explanation of the adjustments
made to the comparable GAAP measures, the ways management uses the
non-GAAP measures, and the reasons why management believes the
non-GAAP measures provide useful information for investors. |
|
|
PIXELWORKS, INC.
RECONCILIATION OF GAAP AND
NON-GAAP
FINANCIAL
INFORMATION * (In thousands)
(Unaudited) |
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
2018 |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Reconciliation
of GAAP net income (loss) and adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss) |
|
$ |
(1,641 |
) |
|
$ |
231 |
|
|
$ |
(3,552 |
) |
|
$ |
(4,621 |
) |
|
$ |
(4,173 |
) |
Stock-based
compensation |
|
|
1,638 |
|
|
|
1,458 |
|
|
|
1,147 |
|
|
|
5,683 |
|
|
|
4,243 |
|
Restructuring |
|
|
429 |
|
|
|
414 |
|
|
|
439 |
|
|
|
1,464 |
|
|
|
1,920 |
|
Amortization of
acquired intangible assets |
|
|
399 |
|
|
|
399 |
|
|
|
399 |
|
|
|
1,596 |
|
|
|
665 |
|
Tax effect of non-GAAP
adjustments |
|
|
237 |
|
|
|
(181 |
) |
|
|
(157 |
) |
|
|
— |
|
|
|
— |
|
Inventory step-up and
backlog amortization |
|
|
17 |
|
|
|
97 |
|
|
|
949 |
|
|
|
475 |
|
|
|
1,965 |
|
Deferred revenue fair
value adjustment |
|
|
— |
|
|
|
52 |
|
|
|
68 |
|
|
|
52 |
|
|
|
93 |
|
Fair value adjustment
on convertible debt conversion option |
|
|
— |
|
|
|
— |
|
|
|
621 |
|
|
|
— |
|
|
|
743 |
|
Benefit related to tax
reform |
|
|
— |
|
|
|
— |
|
|
|
(343 |
) |
|
|
— |
|
|
|
(343 |
) |
Discount accretion on
convertible debt fair value |
|
|
— |
|
|
|
— |
|
|
|
124 |
|
|
|
69 |
|
|
|
196 |
|
Acquisition and
integration |
|
|
— |
|
|
|
— |
|
|
|
(45 |
) |
|
|
— |
|
|
|
2,460 |
|
Gain on debt
extinguishment |
|
|
— |
|
|
|
— |
|
|
|
(29 |
) |
|
|
(1,272 |
) |
|
|
(29 |
) |
Non-GAAP net income
(loss) |
|
$ |
1,079 |
|
|
$ |
2,470 |
|
|
$ |
(379 |
) |
|
$ |
3,446 |
|
|
$ |
7,740 |
|
EBITDA
adjustments: |
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
$ |
873 |
|
|
$ |
933 |
|
|
$ |
863 |
|
|
$ |
3,555 |
|
|
$ |
3,577 |
|
Interest expense and
other, net |
|
|
82 |
|
|
|
112 |
|
|
|
203 |
|
|
|
556 |
|
|
|
737 |
|
Non-GAAP provision
(benefit) for income taxes |
|
|
(185 |
) |
|
|
269 |
|
|
|
91 |
|
|
|
448 |
|
|
|
836 |
|
Adjusted EBITDA |
|
$ |
1,849 |
|
|
$ |
3,784 |
|
|
$ |
778 |
|
|
$ |
8,005 |
|
|
$ |
12,890 |
|
|
|
|
|
|
|
|
|
|
|
|
*Set forth above are reconciliations of the non-GAAP
financial measure to the most directly comparable GAAP financial
measure. The non-GAAP financial measure disclosed by the company
has limitations and should not be considered a substitute for, or
superior to, the financial measure prepared in accordance with
GAAP, and the reconciliations from GAAP to Non-GAAP actuals should
be carefully evaluated. Please refer to "Non-GAAP Financial
Measures” in this document for an explanation of the adjustments
made to the comparable GAAP measures, the ways management uses the
non-GAAP measures, and the reasons why management believes the
non-GAAP measures provide useful information for investors. |
|
|
PIXELWORKS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (In
thousands) (Unaudited) |
|
|
December 31,
2018 |
|
December 31,
2017 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
17,944 |
|
$ |
27,523 |
Short-term marketable securities |
|
6,069 |
|
|
— |
Accounts
receivable, net |
|
6,982 |
|
|
4,640 |
Inventories |
|
2,954 |
|
|
2,846 |
Prepaid
expenses and other current assets |
|
1,494 |
|
|
1,328 |
Total
current assets |
|
35,443 |
|
|
36,337 |
Property and equipment,
net |
|
6,151 |
|
|
5,605 |
Other assets, net |
|
1,132 |
|
|
1,338 |
Acquired intangible
assets, net |
|
4,208 |
|
|
5,856 |
Goodwill |
|
18,407 |
|
|
18,407 |
Total
assets |
$ |
65,341 |
|
$ |
67,543 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
2,116 |
|
$ |
1,436 |
Accrued
liabilities and current portion of long-term liabilities |
|
14,823 |
|
|
16,387 |
Current
portion of income taxes payable |
|
263 |
|
|
445 |
Total
current liabilities |
|
17,202 |
|
|
18,268 |
Long-term liabilities,
net of current portion |
|
1,017 |
|
|
1,487 |
Convertible debt |
|
— |
|
|
6,069 |
Income taxes payable,
net of current portion |
|
2,299 |
|
|
2,282 |
Total
liabilities |
|
20,518 |
|
|
28,106 |
Shareholders’
equity |
|
44,823 |
|
|
39,437 |
Total
liabilities and shareholders’ equity |
$ |
65,341 |
|
$ |
67,543 |
|
|
|
|
|
|
Contacts:
Investor ContactShelton Group Brett PerryP:
+1-214-272-0070 E: bperry@sheltongroup.com
Company ContactPixelworks, Inc.Steven MooreP:
+1-408-200-9221E: smoore@pixelworks.com
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