Pixelworks Reports Third Quarter 2015 Financial Results

The forward-looking statements contained in this release speak as of the date of this release, and we do not undertake any obligation to update any such statements, whether as a result of new information, future events or otherwise.


PIXELWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2015			2015			2014			2015			2014
Revenue, net	$	16,570		$	15,078		$	17,111		$	46,040		$	45,818
Cost of revenue (1)		8,292			7,844			8,545			23,561			21,596
Gross profit		8,278			7,234			8,566			22,479			24,222
Operating expenses:
Research and development (2)		6,145			6,105			6,634			18,568			18,906
Selling, general and administrative (3)		3,334			3,584			3,900			10,805			11,658
Total operating expenses		9,479			9,689			10,534			29,373			30,564
Loss from operations		(1,201	)		(2,455	)		(1,968	)		(6,894	)		(6,342	)
Interest expense and other, net		(105	)		(105	)		(123	)		(317	)		(375	)
Loss before income taxes		(1,306	)		(2,560	)		(2,091	)		(7,211	)		(6,717	)
Provision (benefit) for income taxes		(63	)		236			209			192			472
Net loss	$	(1,243	)	$	(2,796	)	$	(2,300	)	$	(7,403	)	$	(7,189	)
Net loss per share - basic and diluted	$	(0.05	)	$	(0.12	)	$	(0.10	)	$	(0.31	)	$	(0.32	)
Weighted average shares outstanding - basic and diluted		25,735			23,539			23,007			24,210			22,629
_________
(1) Includes:
Stock-based compensation	$	52		$	42		$	61		$	147		$	191
Additional amortization of non-cancelable prepaid royalty		(14	)		—			4			(14	)		95
(2) Includes stock-based compensation		524			429			562			1,442			1,801
(3) Includes stock-based compensation		443			422			634			1,401			1,909


PIXELWORKS, INC.
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL INFORMATION *
(In thousands, except per share data)
(Unaudited)

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2015			2015			2014			2015			2014
Reconciliation of GAAP and non-GAAP gross profit
GAAP gross profit	$	8,278		$	7,234		$	8,566		$	22,479		$	24,222
Stock-based compensation		52			42			61			147			191
Additional amortization of non-cancelable prepaid royalty		(14	)		—			4			(14	)		95
Total reconciling items included in cost of revenue		38			42			65			133			286
Non-GAAP gross profit	$	8,316		$	7,276		$	8,631		$	22,612		$	24,508
Non-GAAP gross profit margin		50.2	%		48.3	%		50.4	%		49.1	%		53.5	%

Reconciliation of GAAP and non-GAAP operating expenses
GAAP operating expenses	$	9,479		$	9,689		$	10,534		$	29,373		$	30,564
Reconciling item included in research and development:
Stock-based compensation		524			429			562			1,442			1,801
Reconciling item included in selling, general and administrative:
Stock-based compensation		443			422			634			1,401			1,909
Total reconciling items included in operating expenses		967			851			1,196			2,843			3,710
Non-GAAP operating expenses	$	8,512		$	8,838		$	9,338		$	26,530		$	26,854

Reconciliation of GAAP and non-GAAP net loss
GAAP net loss	$	(1,243	)	$	(2,796	)	$	(2,300	)	$	(7,403	)	$	(7,189	)
Reconciling items included in cost of revenue		38			42			65			133			286
Reconciling items included in operating expenses		967			851			1,196			2,843			3,710
Tax effect of non-GAAP adjustments		65			(46	)		91			—			6
Non-GAAP net loss	$	(173	)	$	(1,949	)	$	(948	)	$	(4,427	)	$	(3,187	)
Non-GAAP net loss per share - basic and diluted	$	(0.01	)	$	(0.08	)	$	(0.04	)	$	(0.18	)	$	(0.14	)
Non-GAAP weighted average shares outstanding - basic and diluted		25,735			23,539			23,007			24,210			22,629

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