Pixelworks (PXLW) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $8.5 million, down 37% year-over-year, mainly due to mobile business headwinds and inventory correction at a major OEM, but at the midpoint of guidance.

• Gross margin improved to 51% in Q2 2024, up over 1,000 basis points from Q2 2023, reflecting higher ASPs and lower costs in Mobile.

• Operating expenses and net loss were better than the midpoint of guidance, aided by a 16% workforce reduction and cost containment actions.

• The company continues to pursue a STAR Market listing for its Chinese subsidiary PWSH, though market conditions remain unfavorable.

• Sequential revenue growth is expected in Q3, with signs of improvement in mobile and continued stability in home and enterprise.

Financial highlights

• Q2 2024 revenue: $8.5 million (mobile: $2.1 million, home & enterprise: $6.4 million).

• Non-GAAP gross margin: 51%, up from 50.7% in Q1 2024 and 40.5% in Q2 2023.

• Q2 2024 GAAP net loss: $10.1 million ($0.17/share); non-GAAP net loss: $7.7 million ($0.13/share).

• Adjusted EBITDA: -$7 million (Q2 2024).

• Cash and equivalents: $37.8 million at quarter end, down from $47.5 million at 2023 year-end.

Outlook and guidance

• Q3 2024 revenue expected between $9 million and $10 million.

• Q3 non-GAAP gross margin expected between 49% and 51%.

• Q3 non-GAAP operating expenses expected between $12 million and $13 million.

• Q3 non-GAAP EPS expected to be a loss of $0.11 to $0.14 per share.

• Management expects existing working capital to be adequate for at least the next twelve months.