Earnings call transcript Q4 2022

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Operator

Good day, ladies and gentlemen, and welcome to Pixelworks, Inc.'s Fourth 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. This conference call is being recorded for replay purposes.

to Group, call Investor like Perry to now Shelton of Relations. would turn over the Brett I

Brett Perry

Thank you, are Andrew. Officer, joining CEO, today's Good DeBonis Haley afternoon and With Todd on thank Aman. me the Chief call and Pixelworks' and call. President Financial you for

in the of The of company's for fourth quarter provided financial call release issued supplement the is results purpose press to earlier XXXX. conference information today's Pixelworks today announcing the

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

including measures intangible well amortization certain non-GAAP management as share. as GAAP effect information measures the net expense, impact performance. will We measures press conference not discussions these dynamics. stock-based the expense, Additionally, and cash these gross of substitute assets provide GAAP. exclude adjustments call measures Non-GAAP for at operating in and compensation per in flow release loss, this believe a as financial tax acquired and core during consolidated margin, the loss company's to of truth of and the a non-GAAP operating terms, statements We to and results The company's these include into company and financial accordance underlying meaningful consider internally non-controlling investors assess interests. non-GAAP and uses to as perspective non-GAAP addition caution redeemable non-GAAP presented adjustments results with operating not-superior in measures of to

throughout and management note statements this press Also Inc. to net to attributable simply loss. as company's release we call, conference loss during net the refer Pixelworks,

GAAP EBITDA of For additional a please and loss to non-GAAP today. company's release loss press and details refer adjusted reconciliation to net net earlier the GAAP to issued

his to ahead. that, With call remarks. to it's my go now Todd over for opening the pleasure turn Please

Todd DeBonis

participating with you, morning up I've from Brett, and Shanghai. the call. you I'm to and on customers. in good Thank joining a be team the today afternoon to catching been recently our pleased those

Let observations the me China. here start last that I've made over with a few weeks in two

are employees, recovering, and mid-November, a China of at First the with a not including of rollback spent policies COVID that very might strict making December people realize terms is nearly of in the employees COVID all here, what in it majority weak then with many month productivity. of China's throughout home

Chinese witnessed again. locally in that of increased turn is people enthusiastic of normalization the and it the personally holiday, and back about readily normal, New and year spending traveling getting the that engagement began calendar having of Lunar the consumer apparent tailend until wasn't to real productivity the recent Year It return are the

environment. as overall global business these as the level, positive are signs for macroeconomic a China-based our for not At families, encouraging but also and only employees their well high and Pixelworks'

up midpoint of X% financial bottom year-over-year to lower of revenue Turning was line were slightly quarter, the macro to in team specific than guidance. recap our markets face and for top end both our and growing execute results, market as challenges. a to the continue of Total fourth well the our

revenue the year, end XX% this annual delivered over at total target full XXXX. the XX% Looking in year, we our growing and double-digit of was each following across prior growth and markets growth of our

During what semiconductor well served private this combined has visual most industry, technology China. Pixelworks' solid challenging capital been the a for growth in processing, of period local here has with and of markets history us the leadership in

our was interest approximately December, early February. $XX.X the closed we Pixelworks' exchange in well agreement Shanghai and over equity generated as million in fully strategic funded funded the latest Shanghai for another by completed in take two The capital proceeds subsidiary. which In to X% late investors in previous just which as employees was investment in subsidiary, to investment, equivalent

and a US hold third round of strategic today skeptical would private interest at of $XXX continues subsidiary Inc. we that first when XX%. in approximately investors million more some I the this announced Recalling majority Pixelworks' were Shanghai XXXX, October in to placement than Pixelworks highlight the of equity valued that investment

advance Collectively, investments testament in as also listing are the future later capitalized have to our fund as served as as applying of Pixelworks' growth local of well China, a These value properly growth technology initiatives to this transactions year. ongoing these the Shanghai strategic opportunity of well a Pixelworks recognized the for in business.

in as in markets starting demand fourth end consumer quarter. inventory industry-wide with in to in with the continued resulting the revenue expected, mobile correction China coupled lower softer play and the smartphones to mobile, Shifting out

our conference we've reducing last call, normal our visual to channel on our ICS discussed of kept processor inventory back while lean inventory internal As levels.

excess dynamics the pace new other models largely rescheduling the as various launches, has qX, down smartphone For of and programs a Pixelworks certain cancelling component prioritized they've slowing working of in market the OEMs derivative with mobile current inventory. impact

smartphone in solid Although the the launches still spar gap smartphone in business in our had a over paused of overall growth, mobile very our temporarily NextGen of OEM year models spite weaker has market. quarterly

was XXXX, up XX% XXX% over For the over revenue which was year XXXX. mobile full up

our to include XX our smartphone in processing incorporated nearly brands With XX, customers the premium continue of all their and OEMs in one solutions handset visual in models tier mobile newly launched China. affiliate

models has I'm one engagement line-up and originally for level mobile with tier of XXXX. we a the been deep visual a penetration collaborative our to uniquely from these targeted, taking of ones ongoing in as processor announce tier to initiatives expanded customers will despite little commitment confident our strategic differentiated deliver a maintaining Underpinning visual our as or more fourth performance display ecosystem. than longer well the cultivate And

previous As first with ever we've multiple for leading ecosystem collaboration comprehensive PA included are studios, series made breaking and designed ground the to gaming of last design efforts expect top and champion over gaming. This coming release in engine over mobile the direct our platforms to we accelerator engaged rendering yield the our multiple year support which visual that a highlighted achievements of our the year in on calls, additional mobile XX processor. to specifically a gains

our with As in latest smartphone Media Pro X,XXX to recent example November, Tech efforts software chipset. most visual the into broad incorporate an processing their expanded of ecosystem collaboration Pixelworks' we announced density XG

frame flagship gaming the enabling adoption will of displays, rate collaboration models This that technical of new cooperation delivering experience X,XXX of high on mobile improve specifically gaming and further are ensuring Density built content. targeted next broader a smartphones capable precision market rate gen color serve to and true frame This platform gaming the experience. and the ongoing high encourage

announced and in of mobile smartphones racing incorporating December, series few mobile iQOO XX upgraded a Gen recently X built Briefly highlighting these were Each Plus wins; launched Snapdragon Qualcomm's, on Neo the rate X visual our of recent engine refresh edition late Honor both Hertz ADGT Pixelworks' XXX plus Pixelworks' motion released phones XX technology. platform, leveraging X patented they support are and while processor.

are to rate other all gaming provide a of dimensions effect which HDR and experience. tailored frame superior visual enhancement multiple enhancement, of high

for January, first processor. simultaneously and newest OnePlus OnePlus flagship curve launched meaning rates supporting latest In XX excellence to inch visual mobile of series. redefines platform, real sports Gen eye-catching hertz. phones our The up refresh the with LTPO XX of Pixelworks' smartphone, It's smartphone Generation with Snapdragon visual of incorporating XX OnePlus X this launched X on mobile the gaming. while technology, XX the X.X one Built its XK display, XXX XX the the

kind our together with rate on smartphone XX technologies flagship Following in and super this leverages core XK high this its power new in-depth OnePlus ultra resolution. features low simultaneous the for frame collaboration for in with of low latency chipset the first resolution engine motion display

followed ACE X refresh and OnePlus up chipset. smartphone, on comes the week, XXX screen a built this X plus ACE amoled K Snapdragon is Earlier with platform Gen also OnePlus OnePlus rates hertz. X a of to an the X.X supporting incorporated X up mobile The with RXX launch

always with OnePlus calibration. and OnePlus is engine new engine smartphones, ultra-low now of ultra XX's leading This latency for been low model resolution, industry similarly in low popular Pixelworks' XX HDR a features power Also X and super together the motion have the ACE both latency mobile XXX gains. optimized technology color and over noteworthy that most motion the our on

rate. shown in to high our in and entertainment's also developments Way newly frame can Avatar The theaters in sequel true This distributed XK long Water. light as following high platform, globally Cameron's of of September, X confirm the HDR Avatar utilized to Avatar motion motion of was latest TrueCut James uniquely frequently that referred Century released by the grading awaited cinematic XXth the now was Turning storm I to frame rate release Pixelworks' in

When Whether X.X sales than is from of ranking world I experienced billion, it realize surpassed amazing. TrueCut people the first among personally in of gross they all of motion. around gross five it now of millions movies the time have looked, months. box or tens Equally less not the film office that two highest had top

praised expanded supporting remastered highly paving. adoption motion ecosystem TrueCut be place in as Most The re-release Titanic the importantly, will way XK this also high month. in release successful industry capable capable featured cinematic there extremely for that global of in announced of later previously this a of prove frame HDR and is rate

the on of titles global to by TrueCut entertainment theatrical assembling These platform. We XXXX home interest a motion titles growing have together by the momentum building strong aim of critical heightened high profile three in awareness our mass and a significantly continue ecosystem.

very year improvement projector projector, of projector as revenue the in significant increasing customers chains. fourth response in to XX% see to business with speaking, over the remained environment. the XX% full the up year half GA was relatively their OEMs have back through quarter year than more Shifting to orders year supply the continued our placed demand in for tight revenue supply Generally gradual steady

global components However, to they macro their moderate trends and yet orders consensus supply fully the years pricing Combined with among until XXXX the on market of has expectations growth, two end and roughly to lead been better consecutive demand and current have XX% certain customers times normalize. visibility these have into entering

specific customer. our team milestone I'm Pixelworks pleased in project quarter, the to that largest to More on a our projector report significant fourth completed with the successfully co-development

As result new activity be and milestone, on chip recognized the we an credit r track this D the associated year. available project this this currently reducing expect for of remaining the our co-development with of end and this All we production OPEX quarter. remains a to for SSC at

life, Briefly of implemented we historically end niche following video in the my on IC have products legacy group comments applications. sold last delivery a of related very to quarter we

packaging difficult materials supply As typically unique making discussed, and lower previously them and increasingly applications for volumes, unit require efficiently. source to these

in to the non-strategic customer a contribution forward. for video contributed We will on revenue the The last orders EOL revenue. purchase received time of increase these lower products which quarterly from response going fourth delivery the sizable one-time solid quarter,

inefficiencies it our However, will of reallocation and productive operational eliminate, a enable and team also resources. eliminate more

we ICS relatively selective in which us. Although as well to in going small our forward, legacy for address OTA a consumer in market of Japan devices sell we as will transcoder and applications will market a continue and the series

the couple good team mitigating headwinds the job done over a specific industry the has impacts macro of of quarters. of summary, In both past and

organization the Although executing to we now well expect market entire continue initiatives. longer the capitalized term quarter, our strategic current on challenging is conditions in to remain

the expand motion TrueCut our gaming, ecosystem aggressive roadmap includes support and including of ongoing mobile visual processor This in further to efforts an platform.

well to positioned of continue design inventories apply market our design XX processor. our to we While for recovery pipeline channel our the growing listing, currently support with pixel activities for this a we market are and and visual work ends a we mobile prepare seen subsidiary for Shanghai star believe and

new in a of we second are in to addition, and processor this In in introduce year the target year. sample QX new this mobile our projector visual of half SSC

potential strategic we existing prospective adjacent evaluating continue all represent and resume quarters coming momentum markets can together. achieve Lastly, interest we renewed for both firmly engagements also inbound I our growth of the field that multiple expanded the believe trajectory growth recent to that and license in taking spanning and new significant our in agreement are opportunities XXXX.

I'll hand the Haley, financials our first the review With and that, quarter. the provide to guidance call for

Haley Aman

$XX.X you. Thank Revenue XXXX of quarter million. Todd. for was the fourth

Our revenue by of year top related driven increased sales contribution results continued primarily delivery line in in life products. year quarter to combined the of growth projector the were increase in with video end an market from over

purchase for breakdown total revenue products. revenue approximately X to revenue X.X Video million. orders quarter life the was projector mobile of reflecting of fourth from quarter. end million, quarter follows, the from of $X.X The fourth million, the as the was time in approximately approximately specific increased in delivery representing fourth revenue XX% Revenue in last was

O quarter, the market. sales quarterly delivery anticipate Following L fourth we revenue contribution the video from lower E the in into

beginning such, contributions will of video into projector XXXX, I and gap. just enterprise single non home quarter first revenue the a category delivery with group called and breakout that As revenue the from provided market

Gross the of to in last to fourth in and in operating quarter XX.X% quarter XX.X% compared third XXXX XXXX, XXXX XX% XX.X were in quarter compared XXXX. the in non-GAAP fourth and the of million was profit expenses million fourth quarter quarter $XX million to $XX.X margin the the fourth quarter of compared of

credit as R&D, previous our which quarter next for on result a milestone to recognized we our to during on fourth our agreement completed co-development $X.X indicated we million total a expenses call and As reduced operating related the quarter, the basis. non-GAAP the conference a

of to of loss fourth Fourth loss was in net quarter, million loss prior loss of net Adjusted XXXX of quarter $X.X loss or a and share million and $X.XX a $X.XX loss of million or quarter negative a quarter last or million quarter the approximately $X.XX for in a a a fourth per million a the in per $X $XXX,XXX a XXXX. fourth net compared of $X.X of compared XXXX. was the of per quarter to share $X.X EBITDA XXXX $X.X negative negative the share

sale Shanghai subsidiary, cash in I'd announced from the end the with equity and interest cash balance million. the to most we Turning sheet, that equivalent ended point late to at the does quarter the December. balance quarter proceeds cash like of in out include $XX.X we recent of not our which

company's quarter this transaction after As end the and the cash Todd will closed XXXX. balance the be mentioned, first quarter we proceeds of successfully the reported included of in for the

current Shifting based normal backlog, quarter. trends quarter to guidance expect and we for the weaker our first in expectations first than current on order of a XXXX,

seasonality projector inventory historical the projector quarter. In first existing addition also continue through work expecting to we to in are the to in customers market,

point be Also, of smartphone between quarter $X the to expect trough as the million the to by the first total year. a in quarter year second the beginning revenue Todd revenue return the growth mentioned, will in and year in in the an to we year quarter, We correction reflect recover million. to be the believe market. half first followed that, this for anticipated we over anticipate low inventory With second the XX the of quarter of in range with

lower reflects range historical to absorption XX%. Non-GAAP and the of our as margin gross to ICS is we revenue range post to expected associated total anticipated This recover, first rate gross in profit sales product low the in between margin reduced and margin return expect and be XX% targeted revenue quarter unit fifties. mix with

million range million expenses $XX.X non-GAAP and operating a first quarter the basis. $XX.X We on to between expect in

benefited project. the million related fourth our $X.X to credit R&D quarter in a from a operating co-development As milestone reminder, to expenses

at to Excluding would flat anticipated quarter to down this first operating the compared credit expenses the midpoint be quarter. approximately fourth

look remarks first quarter a between of a expect our per $X.XX share your to completes share. we and Lastly, loss and prepared per That we range taking questions. EPS loss non-GAAP to $X.XX forward of

and Operator, Thank q session. please with you e the proceed

Operator

our from the [Operator line Needham Rajiv comes Gill Company. first instructions] And of question &

Rajiv Gill

you taking appreciate I my thank for it. questions. Yes,

and terms bit I'm smartphone inventory the you're Chinese now. of commentary the is just in qX. the could that elaborate in you a you're, further terms in will in Just wondering indicating little in channel where of bottom if it maybe right wondering,

second on kind on growth China from based this any the starting about segment? talked that? You kind on to of issues in feedback Is the quarter. any you're plan getting questions the Are mobile for they of customers? Just

Todd DeBonis

getting case, particular lean. you're feedback of like think I exposed different there, kinds keep are Rajiv from we that So, we all companies are our in all

the to keep channel thing inventories. eye So an is next on then the

Our mobile, qX, reasonably was came for, well channel a inventories that part down in they mobile for qX. in quarter of QX but revenue for peaked in and down

our would in We levels will inventories QX, ramp down back normal see are half suggest the to year. back see in we're either the the of today, quarter but as another I to of going mobile or given

lean. They're

I I older a Now, of older that launches processor, the out processes. phone them have one levels from the more LE would say is mixed see inventory the customer bag. overbought customer you'll

customers we're ramping they rest on would levels digest inventory that that inventory, And normal They're our inventory probably they as through they're mm, get customer the of that right? say leaning I are if have will inventory. at They today. QX those don't working But that inventory, but new they through QX. early the processor, on into inventories. are inventory, They'll that probably sitting

out you've some, already models seen some So, example, of OnePlus come for them.

our, together, our I You'll them. related. right? were out to whole are all put if probably of suggest XX, see They below not normal. back mobile normal They're inventory on So or sitting thing would XX come models of the more you inventories

layer how growth there depend are launches QX, well been the And one from us we and these the They launches more with OnePlus granularity the then in received. have so volume forward, of will have new QX to you launches. in on going of two weeks. first QX, two two phone their forecast the weeks, phone first those uptick so purely successful give probably And

Rajiv Gill

I appreciate all that color. you. Todd, thank

Just can terms OnePlus you been in their and staying mentioned uptick forecast. the of of on what's the of the I forecast topic the customer China, kind if feedback

that's when China somewhere they're bag, you then kind forecast the their kind because felt to forecast I customers of at forecast? is mixed at going their kind Or there even look rebuild general, cautious but of you of and maybe more being conservative appreciate as last what do it's looking in be they in XXXX, When year? XXXX for kind that of, a how and their think about or handset a they're happened of

Todd DeBonis

ordering and too cautious. personal Their are My hard forecasts their cautious. patterns expectation is

going think the back demand in half get they're upside bit I to on year. the of the of

Rajiv Gill

the kind more And there's consumer, be relatively a China. that folks bit seeing of there Or talked would of a what going an that's still to of guess to on based and Chinese normal going and get China interesting, economy describe, well. soon? there from conversations to to there? you things there as and your about you're with you expectation how back and then vantage the caution is talking employees Is your kind anecdotally in little the I reopening are and point,

Operator

continue Rajiv. please -- standby. [Operator technical standby. Please having we some instructions] Please and difficulties, I Todd see have

Todd DeBonis

there? is all still still Rajiv Is right,

Rajiv Gill

Yes, I'm okay.

Todd DeBonis

know I So where off. don't I dropped

talking think soft. that OEM that which abnormal markets I is -- was inventory I older about dropped digest they and somewhere. customers end off phone to think were their do had technology I behavior, I

caused hard cautious. still forecasts So their pattern Their ordering and is right? to this cautious, them be

can general, one these they're would dialogue trying and warming but it The still all up, though, in to they're OEMs. it them been case, particular my I see I collectively upticking, cautious. tier has they're really In gauge, phones, say four

would others, China. volume suggest markets some of exposed I are to their than more XX% the So comes collectively, to international but

went around, main them, main driver not, driver and to out for ready what figured are if for get their to And from they're busy. I it the not, so last shot just I be it's the they're they walk resume People you They just ready are the sentiment. would shell -- XX for through it's lives. they're and they their would, is months. And,

come you'll some think start I And to the see back. consumer

I've that weeks I sort think to in the of of tier talked be cautious. I've four sup, ones three are are already OEMs to them think warming two they, the two first the they'll I the And of phone been up here bullish. that.

sanguine, is right? One of them

mixed It's color.

they're if I uptick seeing think going change is don't what business. term about it's what, think sustainable, know. in to but They they're a don't it's that know they near I worried

Rajiv Gill

relative In think Is of terms the that history? the, holding, of we're levels? the are to customers of you bare bone do to handset any inventory kind components way at quantify Chinese there that

Todd DeBonis

I right? the, said, I vendors, here into suppliers with, mobile other in the friends like for that, industry also Well, different phones. have over that the many met I've situation, different represent supply chain

inventories And, with nights he channel six are and and ago and, are to the months. two six at large a and I supplier customer months their into had still represents he, their inventories another at eight dinner a market gentleman

XX in of customer And or in situation, ramping that call and customer of that particular supplier's depending months days inventory. three I would months maybe of normal you're so if channel not inventory, inventory, four particular,

long ways a normal. they're from So,

forecast. Appreciate same the we is a back channel is bloated, normal question in is it say But, in much using I little aggregate, is, those inventory all numbers. for still the QX? have same color -- the customer our would does is QX using us inventory our why those how which bounce

is your the short look term is so Pixelworks there's adopted is, market customers the processor be initiative and what support use reinforce and processor of and in term, having cautiously of I strategic your by the optimistic. to the then the at those exposure by It, have telling us? come customers If long of the in visual features. your then that use your it's okay, widen And ecosystem more program, visual

the of the our is half intact. back absolutely If year, I look at strategy

that within had expand expand our models we ecosystem and previously our solution. customers and customers, partners announce the supported the will not will We

normalize, our for market really of half the So comes back in I'm, year bullish I'm to I'm the back case, bullish. if the

Operator

Thank from ROTH you. question Suji of Desilva next Capital. And our line the comes with

Suji Desilva

Todd. Hi

how XX an hard, just in do that have get any So of up little many question answer maybe Todd, crossover far there but to the this moving idea to out you question's to unit able would that how for a or is are too parts idea be that? ramp

Todd DeBonis

ship that XX. meaning XX today we're shipping Well to than XX Me more we more than XX.

Suji Desilva

But you already are.

Todd DeBonis

Yes.

Now, last you XX, nine think of we predominantly got last way to processors, I that. more in customers had us they going and which up were to consume remember, than ramp collectively XX, something year, this. shipped XX, and units, at we're year telling, between the million all beginning telling the like of We XX

capacity was That limited.

Okay.

into some of Of purchases. them so their -- held bullish back year, customers course they the were the aggressive those and for coming not of half accountable we overbought, were they

they're through of customer, the one some those right. particular that's on burning them are of some, in So those XX, sitting customers, there's

as they it's already we've But I the far just it's different point an as as, than would flagship we have in programs, like ongoing not people some some point we customers, still XX if premium start there's models announced already that us. the on crossed at within with because we've say XX. talking customers basis, cost and usually expand debt, putting it's And, at but it's a new and

many And so only so models. flagship premium there's

to premium. expand, sometimes sensitive. to And in mid-market into those very So price that models lower push have down Right. you means they're to

in back, see So successful I you could. very XX uptick think an uptick see but we're it could volume. an will there, don't cross if you it

Suji Desilva

Okay.

And the like going in pricing XX do Sounds shipped that, Is about abruptly customer's think still the XXs lot what absorb Todd it. already of XX? on and a to it? two you is

Todd DeBonis

been wouldn't XX. significantly say, okay XX. than say higher I between, XX% and say it's quite we've would would it's higher XX% aggressive, but I I

Suji Desilva

reference that And Great. weren't last licensing licensing, wondering there. you if was sorry, TrueCut, licensing or on whether core video the marks somehow. I'm other in specific or talked you opportunities go if about to prepared there TrueCut my projector opportunity, ahead. I'm question's And

Todd DeBonis

No, go Finish. ahead. Go ahead.

Suji Desilva

it's revenue off. there there. formalize Sorry. sort with Yep. success and movie okay the coming true. if opportunity it's is it's If to so in If Cut pipeline you the, of Cut. forth the

Todd DeBonis

Okay.

So, to on the clear was that we make sure to up call not TrueCut. that reference everybody for a

a model for HDR for business use to they and is to XK Our our the licensing creators they the releases. high that so can rights to With cinematic model have rate it's create content that frame that support content theatrical technology engagement, service distribute content.

So licensing beyond for engagement. theatrical initial further the releases there's no

entertainment, to the But use right have frame distribute that high don't content they home with. for that motion rate they TrueCut

to and have device rights manufacturers display the the to the distributors, motion be streaming have model would TrueCut have whether the rate the have distribute So business to content. motion the and TrueCut they is rights high content, companies, TrueCut to ecosystem etcetera, support frame rate, frame motion, high

model there on people everybody was seen don't lot questioning the TrueCut, I wanted sure I've to to people of make I statement but business What model. I understood understand take to the Because nothing think opportunity it a the with TrueCut. from previous with had referring business was where do the

Well, to I not analysts all revenue business model I've right asked that's model the the just now. from explained. TrueCut

Now we is major not you're to companies support really I clearly just don't which releases, a distributors are model getting streaming revenue. until large a we some revenue, at looking from just because big theatrical it want gain

a we on distributor, to the very guys show If it. they TrueCut to point phones, then Once adding excited other I'll device that it can, XD motion to material, especially their start be devices, about devices visual it's have you devices, have and where using the are model signed can high newest OEMs frame illustrate rate TVs, content their devices that content. whether to gets

want ahead I guys further model just it more. a that ecosystem. didn't, we're to you it we happens, with that I of about bit just Once We'll get talk So have the to going a to part lot little to distribution it. don't have until model

companies this several is we at to I what are on mobile to is that said, clear that people working stay me that, for remarks by future. to was market. address referring in for silicon foreseeable prepared approached the now in approach architecture But solutions here the there gaming have China And distributed was that it been least to

them accelerator want would our now the radar engaged of they us to if with we And rendering licensing architecture. they've with support see

We this, ecosystem in devices more it our on the get the with to to IP who market are studios optimize that that is, in games the but are their if enter willing the if, because business, it the support work more not to more market, strategy hardware. in depending and the gaming devices the overall the that supports

a cycle. It's virtuous

could And technology a market just make out license our our standpoint but two, take from out a of that the I the the the if financial in market out devices we air have there lot of momentum, additive of so I, devices don't two there. somebody it putting we of to long licensing, taking One may it's for air that without the things. more does momentum, sense us, term, not there's but the it want to if more

following be to bigger The phones people. want the those one year, to is talked are, we thing How more to number next That's cetera. the, going with your they us. tomorrow, the today, content year, numbers on the many processor the support et

Operator

you. the And from Craig-Hallum. with comes question Thank our Richard Shannon of next line

Richard Shannon

good you Hi Haley. to Thanks morning questions my for Todd. taking and Todd,

language your I half to how year. some I the think see second of here want about of specifically here. on Let's to the sure heard make

does mean year second that second first is each bottom and in is, said year? of the half quarter, growing just you're the growth hear you correctly so quarter And and the collectively half? think the did second year the in quarter expecting that or and the of you I in I

Todd DeBonis

business. growth we year over for for sure So expect year the still, projector. mobile I'm

I seen. a back but to it to growth? that's you'll think the the think in see I qX, over dip be strong half. it'll it come back back Does year where point come year yet in shows

see this video won't of of big second over then, And delivery. video did life and with delivery, because year, half this the you end year year growth we in

Okay.

year corporate strong growth over year in year growth over is mobile Now, half. see if the you'll the second year enough,

Okay.

clear. I entire So specific that across comment wasn't company, just want be segments. across it's to the

Yes, specifically. you'll we enough exiting expect back the growth. which year, be in mobile year half the year-over-year I see made of that comment think is corporate the the think gonna I I Haley I Hay that mentioned strong growth growth the

Richard Shannon

Okay, that's helpful.

distribution this we how So year, think the of the how the you do think half the, through you we progresses? how do as do how into revenues of do, second mobile get

games tier about, the You've this, my in next the I targets is next to How your expecting do all seven. we here uptake entirely and you notes. sorry, accelerator scrolling the gaming is in on this we how top series one think mobile comments Expect tier our of driven by hopefully rendering supporting and are collect I'm correctly broad a yield in China? up by talked specifically have

Todd DeBonis

it's I would say not driven entirely gaming. by

that will out have model now go China So, many for the of that and many, but skew do they a win, globally, the right market OEMs models will we're things doing is of than one internationally. different some they we the of

how will guys are you go utility is, the, give upgrade to these at mobile should their their phones and and you trying phones, flagship money marketing new market if are look and that We premium new you why spend gaming your they're really the phone. gaming,

trying mobile demographic depending either bring we you, internationally. utility the feature first consuming improve on also what China, then, as that which to the camera is or down social be targeting content, on they're targeting, far which would bring model and the list biggest is further as utilities they in and you. And second they're And you the video gaming and the key the

against which Samsung. this butt they've get take many China China it markets their the up into and is built who differentiation these because against that's in them unique they do markets, mobile trying about to market Android, we're expertise that because, up OEMs models, these in talking to is differentiates and international international What what internationally of they and butt I'm

is all and is king. four tier because content of because where those significant of mobile ones gaming this So us, a just differentiation but not advantage, this gives

have games, I I'm Tencent many processor deal what's manufacturers gaming so impact, their giving market And so of models, of by on mentioning, going with Dance effort optimized multiple game studios Many content a East in with their our if just, great those that to internationally. they net Genson China in their developing and content studios visual those of of that has here games. putting are many

trying to we are to do that. So start convince the OEMs mobile to

So them international convincing that's, models. that's then another, the it's not get just getting let's into into models, to but

gaming? is up, reason, the that just that mobile Suji Now said, you I bring is reason all

they, quality consumption recognize they internationally the of on than the China. of content clearly in that the the things One that is is higher rank video they,

improvements their they video ask to long on content And for video so form consuming us provide phone.

frame lot, of the we conversion is a in way a to the This one a put we high have do not TrueCut And phone. rate motion. haven't is on highlighted XX cinematic features we

content content makes Okay. converts the and rate frame TrueCut at motion the high source. it

do rate cinematic high we on a content is feature do the what But have conversion frame phone. to

specifically And more we're that reason said, so consumer. gaming yes, targeting gaming, with the of our mobile gaming, performance Chinese mobile in international we the that the the using for mobile really are gaining and into processor China. to pushing expand that in ecosystem But ecosystem models momentum here with all is

Richard Shannon

Okay.

single is said potential you that think it here important? to other would business what forward? be your factor more from upside the going international XX you second your conclude phones naval So is factor of just single think Is for biggest fair it some you introduction happen that or mobile and

Todd DeBonis

two. There's Well, two. there's, there's

that's uptick So if market for in fourth tier an a we gain one, us.

an announced you if we yet, uptick. see then that's the one tier So us with one haven't announce

the on expanding volume targeting expand their get and models, done that what higher the work. to R&D from models customers they already just that's we specific international their, to their get the Second, domestic same their and d if r can to work from just China model, you leverage all you call model, higher,

a models, and us and usually to and their this with functionality customers are why customers pushing model. don't and on technology And of feedback model, we is features, want to the have know lower to get we they them a processor customers which display talking end particular gaming we come lower deal expand the then say, three, priced higher volume, are great demanding to it. had We've

but it are there volume to models, it that for on first are is to course these approach so companies whether come And of can and put exploring these, in no. answer they sell is higher cost their our me and want

ways, So two, the, doing the with existing expand expand targets those we're Expand one, then model international the are the customers. within the and line-up models same the customers, the three target right? Three.

Richard Shannon

to models, that it XX with last And that opportunity, Okay. XX or mostly any older even would expect you these would there, Todd would this, or point price be lower them doing of be

Todd DeBonis

Different They're lean different the driven. going discussions to with OEMs, cost cost. on they're very

I betting these they're a gonna lowest person, I if would I So was would, that to higher of volumes, say we try technology to have. cost the some go

nodes, we XXXX to leaps the, by how we're we're one up, which because not the forward the expensive. going we at to time can make see lower we're you is leap trying the make announced fundamental value, you have customers one, And some to the and be go noticeable. twofold, yet, do XX extract we two, more that our fundamental and moving improvement haven't but aggressive which between which more seen to such, another roadmap, But performance, actual it, on if these down, but putting look just It's in ASPs to same technology, more we visual XX process palatable. are see at will have more transistors tier of

Richard Shannon

Fair enough. any here me streaming That's how TrueCut you potential for the great haven't question engagement about anything, last feel The with quick like statement is going heard direct perspective, with Todd. I partners here.

any the any big other these to think characterize potential and of we maybe feedback year? enough looking close last other not gotten we're the, you and progress in theatrical from announcement, do guess, Avatar quarter then for sort have releases, and two the you've I this just releases how But about you're

Todd DeBonis

we've high major So, discussions about technology. with distributors had rate frame

have We content. by those want want are to to way, discussions. continue kick the but bullish off. more it they They They

to even they Now us helping by making studios actually to, rely they're on content. for introductions that

but discussions are ready say our announce streaming they do? I to to would and to it that so positive it, thing, to go a have where what do get once they're really, they point So they're the out

to Motion. streaming TrueCut customers market have to it value all They communicate to and have their the go they proposition of

proposition. that follow they that want value to sure content go they spend And with to got money, be when enough that so they all the through energy and

theatrical put lot theatrical pool extend They're release review like globally of high our of would theaters that XD put content of home to that we I of help they content a in Way more the time said a small and trying but it for already people the So us, rate anytime people. entertainment out thousands of content very more take don't they're minor. frame We distribution that group with were some it. spending to Water say all with technology to cultivate there's because of and becomes it, of

They also love help story XD immersive Cameron The it deliver which was And did they is high delivered. love the and that movie, that great rate majority they technology, frame to the brought the but movie. used love effects job, a technology that grand the story. of with people a love James the how

of that's expand theatrical a And that progress. use clearly rate be high technology has in the and content. helped more credible people that But us out to get bring in work trying to all frame

So no A work done. made. lot announcements to to be of be

appreciate Okay. detail. Well as you, am always, done. all Richard. Todd, all the I Thank you. I Thank

Operator

to call any for to Thank you. like the over back now would management closing remarks. turn I

Todd DeBonis

today another interesting general, would two in I couple arrived. unfolds. I'm than I than we see was get a I I Well today positive it expected. I for here times how then of say was the It's But longer ago more the year And weeks over here. rest weeks. call am of when to

evening. said you. the that but enjoy everybody So, Thank

Operator

conference Ladies this call. Thank today's and and may for now you participating concludes you gentlemen, disconnect.

Pixelworks (PXLW) 9 Feb 232022 Q4 Earnings call transcript