PXLW - Earnings call transcript Q1 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to Pixelworks, Inc.

First Quarter 2022 Earnings Conference Call. I will be your operator for today's call. At this time, all participants are in a listen-only mode.

Following management's prepared remarks, instructions will be given for the question-and-answer session. being replay is business. call conference recorded for for This call to Brett Relations. I like the over Investor would now Group, turn to Shelton Perry of

Brett Perry

the you, earlier The and the XXXX. Pixelworks’ CEO, financial joining the DeBonis; you to company’s and on and supplement Officer, Good information today today’s Todd call call. press first Haley conference Financial Aman. is the President With in me of for release Thank for of Pixelworks' is announcing Chief Gigi. purpose issued afternoon, provided results today's quarter thank call

other Before various actual our results, and we begin, the to XX, Form I belief economic circumstances the XX-K including from not would our made that this to forward-looking a materially. XXXX. financial annual report on subsequent obligation a today, company like of statements year statements The call release, company’s press trends, statements may uncertainties XXXX, ended to Please as Tuesday, no XX, to any market today. competitive SEC refer reflect remind subject differ all of historical that after results. are position May for to could materially events undertakes statements occurring of actual remarks you differ make December those factors and description for this are such filings to or cause today’s update that forward-looking and risks on number future constitute based we about forward-looking and All are projected cause that on statements forward-looking to call, These on facts statements. results and

and cash exclude provide believe these operating measures non-GAAP intangible conference to measures in and compensation include management Additionally, accordance investors measures of measures The results stock-based terms, expense. measures operating a Non-GAAP operating loss and consolidated assets, share. a meaningful gross non-GAAP will to release these the our call margin, performance. management company caution throughout acquired Also GAAP results statements not including we underlying note during conference, on and amortization We with consider core and uses and net to as discussions financial of expense, loss. these and and GAAP. per internally company’s statements net refer during certain release loss superior this company's information nor dynamics. press company's flow loss simply non-GAAP net assess press We in this the substitute, the presented as Pixelworks, perspective financial Inc. in addition as to, net to attributable to

non-GAAP press additional reconciliations details GAAP issued to GAAP for refer pleasure and to to please loss of adjusted release the to ahead. Please remarks. opening his For net go call that, With company's it's Todd my today. net to turn the earlier loss over and EBITDA,

Todd DeBonis

line processors across of than all afternoon XX% everyone and revenue end had the Total better of revenue, the were sales results, sequentially the quarter another in our the visual good also that to and strong and year-over-year target results had guidance. a we bottom of hardware-based strong on together markets midpoint Gross last mobile we've into webcast. momentum year-over-year record. OpEx and to the with our at joining growth quarterly first to in us QX with first came start XX% profit the growing with Brett, of the phone and year continuing increased quarter. Thanks, Starting year exiting with great

status difficult by lockdowns, situation. subsidiary business addressing in the recent China has wanted how of the I this been headlines begin regarding Given and to Shanghai COVID our our operations related Pixelworks navigating

in our in Shanghai. exclusively multiple have that highlight China-based First, employees I offices to not we located are and provinces, want

a over and incredible great accommodate those Taiwan. restrictions imposed whether team office engagements, restrictions. by would we've projector partners over XX% our approximately universal. to potential fulfill customers. in challenges operations home facilities agility in sustained activities, due officials our in office R&D our that, the have To- date, little shipments weeks. in productive said specific emphasize organization not China our has deadlines local and supply from also there Having are a has products. Therefore, maintaining employees, region. which and has team dedication located And next-generation for our work to our The planned with and XXX and next I demonstrated and remotely to couple Our workforce. our employees. as operational ability supporting program have lockdowns remain on associated done working or The reopen best is job vary the working of number we our and of to a development local customers' chain the customer that or mobile all our reported to The no projects including often is impacts Pudong global on has employees of presented remaining today, been temporary on-track. done at any Pudong of These are in certain office to impact

through the We situation impacts during what daily a future been perseverance challenging of one that monitor remain any and the but to prepared potential get mitigate will on our continuing operations. together. I has our we day-to-day are to time, applaud team

end a review to primary activity across of our markets. Turning

mobile customers launch business another XX% Our strong smartphones increasing of quarter year-over-year. several and by revenue X had Tier the notable with

with excellent and relationship processor best collaboration are call. the technology. application to also based Pixelworks' MediaTek's extend our Also sequentially, sales flexibility our on architecture as X color series opportunity OPPO AP. as our to to This built or able patented released was first software. different Two OPPO, individual which of of addition newly increased Qualcomm platform, high-efficiency to on the models previously achieving February, Demensity first open of utilize the MediaTek all choice processor calibration models while last the to XX that utilizing launched increased with customers. provides XG Find of Briefly introduction the included milestone X incorporate indicated of XX win configurations hardware in a leverage model, Pixelworks' the Find smartphone Dimensity OPPO Tier In long-standing a different were growth. of we seventh while world's third visual mentioned, series a OEM. Snapdragon digital MediaTek's notable in unique As February, smartphones, third our XXXX series mobile XX our an wins The satisfy X.Xx a cases Demensity highlighting platform quality previously for use several served quarter hardware smartphone consecutive partner, conference the our marking platforms of confirm name announced since with

in of wins Pixelworks X Following smartphones, advanced with Series the visual Magic models ultimately Both MAGIC Honor Shinzen XX+ processor. launch Honor’s the with Edition. the X engagement series Pro+, and incorporating initial on X Pro the X this in MAGIC resulted

In brands, company's of the performance aim words, addition with to to reshape the the being and they market Honor one market. flagship to In high-end seeks actively enjoyment. the visual fastest-growing in position own premium itself excellent powerful

to aspirations. Our achievement be to XXs processor Honor's critical + in these visual proved

Series Realme and overall that brand utilize the This unique visual quality, could in value first our As superior consumption. OPPO's GPU of power reduce also architecture visual technology. GT only win system for processor. enabling In the our Realme they distributed a Neo affiliate offload but the not the X, processing smartphone to visual Realme recognize March, launched represented XX also incorporating XXs

smartphone Additionally, MediaTek was to visual Dimensity it hardware-based first platform. on ever device built technology XXXX Pixelworks' processing the incorporate in a

cutting-edge in adjust devices the and device AP momentum visual technologies, processor-based processing and feature and processor. utilizes also built and of visual our software-only of is our April, focused OnePlus was MediaTek's design choose performance other of with the XX+ both launch combined launched The display our wins now recognition we advanced XG as E-sport filter high-performance with latest AP smartphone Pixelworks' capabilities. NeoXs iQOO successful of MediaTek The these commercially its continued and Pro these Collectively, premium filters dedicated ACE contrast, which process mobile received ACE technology. hue official full the first XX differentiating the upon customized Enabled across enhance ongoing tournaments. platforms. used to XXXX incorporates Neo provide Vivo in of latest number the utilized experience. expanded with solutions with it smartphone our the the and smartphone that XX Legends the personalize independently its with of Vivo, on is leadership end upon the and by incorporating including for with for X Most gaming brightness. ACE League series. result, as built Neo the multiple both well quality and advanced configuration. Qualcomm MAX with collaboration our and a design its processor their League, own saturation, a market based gaming and display OnePlus light launched flagship iQOO XXXX designs As NeoX Pixelworks been also options and In win successfully extended is platforms. Elite to the have X, Together technology designated processor Vivo OnePlus which partnership and our Professional effects, mobile OnePlus mobile for incorporating leveraging solidifying underscore filters League phone capability recently, TSMC's filters and the immersive users X-nanometer and extensive visual performance iQOO platform, X, traction this Peace Tier the for OnePlus gaming further visual suite a visual our to as predecessor, smartphone on specific appearance smartphones games, This ever success iQOO Unique

and performance, making campaigns. mobile centerpiece leading these their are display visual marketing Additionally, device customers of quality a

always forward Tier the are upon and highlight based to us replicate pixels. Although using brands X and attribute that choosing cannot simply features without they differentiated they customers capability by going name, to don't performance

readily expand on were the solutions Unity and available content studios This VSP. collaboration with immersive now strategy game rate April, a positions ecosystem establishing beneficial our that with mobile in solution. objectives leading technology active we our call engagement that default also fully platform. have high been designation, means direct we and announced of that to mobile growth that rendering we of making active was the engine previous testing One Unity game Pixelworks our now on developers time, to as part cultivate more further mutually mobile engine ecosystem we platform. for a verified rate accelerator Together vetted utilize game highlighted that studios this the of a gaming. Pixelworks At an gaming In high has increased an as with a or its is and Unity's partner optimized, frame frame and SDK

designed two customers stages visual engaged in, to advanced performance. redefine in launched the specs XX more we the processor, GPU potential models specifically we partners our unique was gaming on this be Since believe and our for to industry TrueCut. optimized We Shifting to developers XX of optimal of launch of formal to in the to content in available animation, continued a that vectors will joining combination lead capabilities now to the ecosystem. for mobile frame advanced ecosystem half temperature and has incorporated XX of preprocessing and visual the steady that's cultivate our our efficiently smartphone visual incorporate operating accelerator utilizing standard completely out full ongoing and design extend year. newest rate and lowering and rendering gameplay including into advantage studios mobile the supporting precisely progress will expect and game foundational the the to first we've rendering engagement our We've by Motion accelerator evaluation buy-in while December, had recently platform. and XX devices. have from second currently enable for and our reminder, mobile and ability generation platform of and the smooth the take motion elevate offloading the of efforts of to in With processor TrueCut ecosystem, deliver build our This multiple simultaneously a and length demonstrated the processor As and developers processor. the named

entertainment in January manufacturer. On TCL announced as as April, a ecosystem with first at the the industry, a device device partner global mastering, distribution Pixelogic the joined in major is Pixelogic content platforms. endorsed studios localization CES we late certified for leading Motion TrueCut in side, for provider services and and TrueCut many ecosystem. content Motion digital and of Then CinemaCon media conjunction the including and

process streaming CinemaCon. with and recently for ecosystem Motion their Pixelogic, production Hobbit, the from our With platform expressed As TrueCut a permission for In industry part certified provide to Motion. partnership TrueCut showcased remastered standard Pixelogic of theatrical new from participants selected and we partner, at the titles Motion TrueCut customers. demonstrated we will company, clips as mastering existing with

exclusively like the theatrical this these are showed working XXXX. it how later TrueCut we We was a production titles title believe Hobbit. frame ecosystem to for actively encourage as additional Motion release can will cinematic on that While content, year. multiple rate we to planned are initial a go look demonstration, growth this a bring titles into and that high Specific

recent began ability Turning XXXX quarters. continued End first is play to the in market to projector supply of all demand outpace the continuing has out generally source of recovery in in half projector business. necessary The the OEM's to components to XXXX.

from seen some order Projected in effectively usually revenue flat patterns first we linear fourth of the contrast we've the first quarter, traditional result more times quarter compared the customer As sharp seasonality lead a a become quarter see. for to was some in quarter-to-quarter. components, longer

evidence in Pixelworks' further of the of As to supply first first Specific customers. quarter to the remained reported ability market, doubled the projector year-over-year revenue matched levels Capacity has quarter and ongoing revenue in the pre-pandemic projector nearly XXXX. tight. recovery

new with projector XXXX, work acknowledge the going projector to ramp for closely to we we toward modest great customer next-generation a in together demand. supply from development record visual ecosystem The However, will highlighted our market. the I to growth both feedback A this and of second well significant customer. project continue first constraints partners and of the quarter is the customer year-over-year. also the achievement with the back-end and Once continued fulfill double-digit foundry in largest remains our milestones on projector both mobile XXXX. begin schedule. processors, by Separately, In with want activity complete production for TrueCut, in quarter, It latest our and the improvement in growth towards mobile expectations continued our co-development top-line supports SoC year, end late had of is our component for briefly summary, to half of strong year. recovery

challenges. our portion execution despite solid the team of Finally, with a dealing lockdown COVID

primarily expect I'll to our for for to forward record we are by positioned allocation second the be deliver the what driven a the Looking to financials to our quarter, comfortably turn revenue secured review bookings and considerable we capacity Haley with the second sequential to over growth, business. and now quarter double-digit provide quarter. call guidance mobile detailed

Haley Aman

the $XX.X XXXX. in $XX.X first and you, quarter fourth XXXX of of Thank for essentially of an with first XX% was $X.X Revenue quarter increase the of flat quarter the million, representing million from in Todd. XXXX million

the revenue of revenue driven XX% was market previously projector XXXX, wins demand. the first The all record. was the quarterly company's Todd projector significantly and in Revenue reflecting sequentially mentioned, approximately We market revenue benefited year-over-year, approximately of and revenue. margin compared the in highlight highlighted solutions than ongoing increased first and $X.X in traditional flat by like market. across $X.X As end as in the increase was QX revenue XX.X% a demand million, quarter. more in from was the continued from recovery the and the quarter results the revenue profit sequentially higher mobile was in quarter that Delivery down first of $X.X quarter X% design quarter the to above processors million which top-line target customer quarter XXXX. over fourth that customers our to visual XXXX compared from reflected sequentially XX% of to first of The breakdown Video significant seasonality. ongoing display licensing recovery from new was and strong million, year-over-year markets, growth software in mobile mobile XX% by follows; of the XX% total XX% in contribution XX.X% to gross representing year-over-year was grew and mobile of expansion from digital end up in first Non-GAAP and would

mitigate quarter first basis, XXXX of a non-GAAP was a on share first million XXXX. our were Non-GAAP $X.XX non-GAAP me, -- ongoing margin quarter material to $XX.X efforts On a expenses to first the reflected basis, compared the to pass-through XXXX last quarter and quarter First or first in net loss higher customers. million revenue gross operating $XX million $XX.X costs million excuse in loss a $X.X of loss $X.XX share both in of or quarter quarter compared a and $X.X the to net of or quarter per million quarter of prior a and the of a loss loss first in loss per $X.XX $X.X net for million $X.X EBITDA share quarter million the first negative million compared $X.X in Adjusted XXXX a quarter negative first and the XXXX. $X.X negative was quarter of the of a in of million XXXX. XXXX fourth to of per

Turning the the and our and to of sheet. balance of to current quarter Shifting quarter ended cash million. for the $XX.X second equivalents XXXX. guidance with expectations We cash

contribution top We of total in anticipate revenue expect a is XX%. by million between $XX in range, growth anticipated in mobile second quarter new from second quarterly we the be growth of gross At midpoint this to representing margin sequential with mobile anticipated the line driven record. quarter with be be and XX% range to $XX and and Non-GAAP primarily continued the a to revenue million. between

chip gross quarter. is compared recent larger to the quarter as expected most margin a revenue reflect of mobile Second mix to

projector combination of of a both and $XX previous million operating second basis. of the to reflect second planned expect for chip mobile chip. timing non-GAAP a anticipated and hiring quarter, on expenses a and in between simultaneous expense the quarter Compared development expenses a to related We operating to $XX quarter, range million the

due our uneven XXXX recognition co-development an timing expenses to with the to operating existing of throughout associated be We with our customer. the credits projector of the agreement expect

a between EPS completes look a Lastly, a And we Operator, remarks. prepared loss few we and loss of with $X.XX of our you. per taking $X.XX the proceed share session. quarter in non-GAAP to your a Thank be That of expect Q&A share. forward range second to questions. please per of

Operator

first [Operator roster. the question comes Chris on line Instructions] Our

Our of Desilva line first Capital. Suji the question comes Roth from from

Your now open. is line

Suji Desilva

Haley. Hi, Todd. Ho

a just lockdowns, obviously, you the talked limiter. So clarify, to the the offices about Todd, and China lot

smartphone you've customer demand steady or patterns just seen, In demand China this the ordering the more cautious seen terms of whether whether you can the the end in China, talk you've order the for through through about remains lockdowns?

Todd DeBonis

certainly we We've with was – where they are would of reached I where year would also gaming we've as was model convicted If go lot technology they not I is no say, it's something want a target lineup, a requirement, seen proposition much our it But on. sure. to hesitate, a customers visual We're it how every speculating to I demographic their and in is to there's their they're a certain in time where configure points model in longer, come say what want now. price as we point churn this -- pretty performance would value proven after. mobile for want lineup, say, they a discussion. last

the my seen biggest would supply is us, say, So still patterns I've I change the would for issue. stronger I still than orders – I are -- say yes, order

Suji Desilva

Qualcomm And a us then, -- pairing market can that you of about specifically MediaTek kind does you, that Just versus up already the help, the footprint understand basebands. or definitely Okay. with talk of help open just a That typically newer have? there. broadening What Todd. is for you color up

Todd DeBonis

focus last conscious versus It's two performance. MediaTek over to so Well, made flagship just Qualcomm. also has, on it's -- effort MediaTek years, a the not

the APs. are quality market imagine, the on on lower margin that in quality -- MediaTek ambitious at or flagship APs, is you the As very is can Qualcomm's end area. particular profit margin after volume going share high-performance

in, look either in the And phones at we're that the we're said, you sub-flagship flagship so with or that if series.

perfect a for think collaborate. I to combination it's so and MediaTek And ourselves

with they've lower So ASP. the of are been programs higher at we've volume MediaTek slightly the been some than in of Qualcomm a for because us, some the --

expect over So food two years. but the I next to those move up guys chain the

Suji Desilva

but think That's comments I helpful could to understand. And in clarify for as down you of know expect category the had mobile kind being was the that perhaps -- you Haley, you a sequentially, the the was sequentially. help grow it segment dynamics understand up, mobile/TrueCut again the overall talked I mobile just about of to Haley. And you about second quarter? question us

Haley Aman

Well, continue noted what yes, sales mobile I trend we that and I into are QX. sequentially, expect is our that hardware up to think in

Suji Desilva

Okay. just curious it's I'm Great. sequentially, And the what was because there? declined offset

Haley Aman

Decline sequentially?

Suji Desilva

was $X.X mobile/TrueCut and million in... in The XQ $X.X million

Haley Aman

Okay.

deal, fourth the So base yeah, which mobile. Iris quarter, it the Soft consider included in we

is But hardware did Soft on the why So which for it's mobile QX. total mobile. chip grew include the grew, bumped QX making we're hardware quarter in like a QX license sales mobile in Iris distinction sales, that This side. -- Iris, up this Soft the

Suji Desilva

habit inclusion into was about wins in second Great. there where lastly, And model and a factor the Thanks. TrueCut how motion your bigger then and and -- in. Can you the update going Clearly, that Todd, role revenue play titles? going you're to clarify the you're half seeing in that or a those clarification you pictures customer forward. then some talked

Todd DeBonis

long a right go That's now. going probably question, that -- that's which answer Yeah. I'm not to a long into to

marquee but to -- leases. I'll consider Suji. is important take we be very us So for theater what question, this. would give It you tied But to

delivered was be in high theatrical things and the about one gave Cameron theaters get high-frame-rate, announcing demoing, that there besides Avatar announcement ready Pyxilogic of frame So a high cinematic Lightstorm new Technologies. Landau releases. James rate have of was us by the the relationship theaters versions for rate at upcoming habit to an with the CinemaCon, frame our video happened and there to that a just Jon and the was X

but towards industry this up higher HDR higher releases companies resolution, it see of where upgrading is them, theater content So theatrical all to all really starts the and many this reason able setting movie be theaters, to are bring not to move the to because as frame tone I the you're of their is show going them, out. this rate, remaining actually the come

this now is theatrical follow to merge been pushing for think that releases, both we streaming trend starting the So right we a going releases. the to have and while, it's

very So if I'm -- very it's our all think very technology trend for TrueCut but it's Motion this I understand not sure important think this, of indispensable. you see important investors hit, I becomes

Suji Desilva

Okay, great.

Todd DeBonis

And talk so about there. probably I'll that's what

Okay?

Suji Desilva

That's Todd. Okay. Thanks Thanks everybody. helpful.

Operator

Thank you. [Operator Instructions] Our next question comes from the line of Richard Shannon from Craig-Hallum.

now Your open. line is

Richard Shannon

great. straightforward Todd, to ask Well, more Todd guess taking pretty and that coming titles the like Can of of for fact but that about a a you about where guys, titles simple license Thanks do you think I'll Haley said the I questions. go, think despite about or think is deemed as my out being talked all streaming Well, that's successful I these you these you that question, talk want case which later Tru, we we how implications multiple might with this see up? coming test we exactly studios if year. or signed

Todd DeBonis

implications Well, ahead what ourselves wouldn't I first, get on I mean, of the just are.

assume are these into go licenses that engagements. I'm have licenses formal would of way and customers of a TrueCut these content. their not of Motion but they TrueCut version the in see working believe the tool master say distribution the First titles all, I best we of to to demonstrate the and place that's with details going content, to providing value that these on we're their

Richard Shannon

great. right, All Okay.

relative X a here have in already follow-up on you within you to me two the are Tier engagement the topic expecting Honor. What mobile, customer, to of Tier in you funnel? terms Xs refer Let first

Todd DeBonis

Richard. for the me, Repeat question

Richard Shannon

with the over the X? Honor you've had two with the two What's next experience one your Tier to engagement years expected relative to first

Todd DeBonis

came a about them, okay? product them. I Huawei, the Well, Their excellence, and had quality typically to are our year, a to brand how so team they design is flagship probably I close mean, also top-tier think, engaged came team not which great deal The even strive I when with on is management with philosophy their flagship difference experience separated pursuing They phones. with been for how Honor of speak them. about far from

are. they Now

on engaged those And them with so models. we're

Richard Shannon

enough. Okay. Fair

Let's jump over to the XX processor.

I with half into I heard say the expecting the indirect think maybe that like relationship of there. guess any and launched phones the you year. if you'd first success second maybe the direct this in I to you're -- or tie

If order see be XX in to about we to that expecting see to rapid? should see of also and what to kind you're talk double adoption just relative the you to still something expect ASPs can to of more processes expect confirm prime I want of with XX earlier And the generations.

Todd DeBonis

Yes. is The ASP previous significantly higher generations. than

We in many in to in them. or are in how a resources design be evaluation take-up evaluations The several of simultaneously either engaged will get of models and what these combination stage. have and done early, capacity engage we

think -- same go digested that of of at XXXX gain known we not in fit momentum, is okay? with go a I through and to to was think by XXXX. start. I I quantity mean, look mean, back now were then being -- don't customers. all were it I -- processing add and of Pixelworks I a you back I and started XX it engage if we're these is XXXX, we in And to the motion value XX, couple when if definitely fully and -- features So launched proposition going that XX models first the

are and the So of go we curve XX again. have learning features that profound. two, And through don't functionality to

they're in Do want with as points, price Pixelworks on of the want targeting. previously not they lot to A demographic I about so how programs? much about about consolidate set, focus product right churn China question, to a is programs? lineup, and talked lot there now. So target of churn, but Suji's customers expand our Do feature they technology,

Richard Shannon

bit jump One question that out of I'll as towards we about little a you've has and year, OpEx got than this here a in Certainly, about what's talk a should you center think next there. of on point what here up we margin, for a do Okay. about couple line. point be in the I of thinking Haley, can lower of assuming model? on How quarters. going march kind going here, last understand me, the kind breakeven the last we model gross breakeven

Haley Aman

Yes.

think to little QX and I then elevated in QX QX. is kind OpEx uneven at levels as or this lumpy into said, QX in below and year, back I maybe down and So bit going of a so like --

XXXX, QX. staying the to this be OpEx probably QX would more around in going QX, of we into Margins So expect to where year. for guided probably range I

around breakeven think $XX I maybe of XXXX. million going So would into

Richard Shannon

Okay. me, Haley. all Perfect. Thanks for That's

Haley Aman

Thanks

Operator

Thank showing turn over would you. back like the management further I'm I At this for time, questions. no remarks. to closing call to

Todd DeBonis

All right.

you your of time today. you those call attended For so and Thank for attention. the who much

move We plan plotting our continue with with to execution. forward

thanks Bye-bye. So your for time.

Operator

This Thank conference call. for today's participating. you concludes

disconnect. You may now

Pixelworks (PXLW) 11 May 222022 Q1 Earnings call transcript