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,

2021

2021

2020

2021

2020

Reconciliation of GAAP and non-GAAP gross profit

GAAP gross profit

$                  7,985

$                  7,111

$                  3,976

$                18,820

$                15,800

Amortization of acquired intangible assets

218

218

298

681

894

Stock-based compensation

(138)

76

117

17

345

Restructuring

-

-

166

-

166

Total reconciling items included in gross profit

294

581

698

1,405

Non-GAAP gross profit

$                  7,405

$                  4,557

$                19,518

$                17,205

Non-GAAP gross profit margin

53.1 %

52.7 %

55.6 %

50.7 %

55.1 %

Reconciliation of GAAP and non-GAAP operating expenses

GAAP operating expenses

$                11,889

$                11,567

$                12,113

$                35,095

$                35,635

Reconciling item included in research and development:

Stock-based compensation

549

610

820

1,740

2,274

Reconciling items included in selling, general and administrative:

Stock-based compensation

1,146

820

913

2,738

3,296

Amortization of acquired intangible assets

53

53

76

166

228

Restructuring

-

1,430

-

2,022

Total reconciling items included in operating expenses

1,748

1,483

3,239

4,644

7,820

Non-GAAP operating expenses

$                10,141

$                10,084

$                  8,874

$                30,451

$                27,815

Reconciliation of GAAP and non-GAAP net loss attributable to
Pixelworks, Inc.

GAAP net loss attributable to Pixelworks Inc.

$                 (4,073)

$                 (4,382)

$                 (8,139)

$               (16,530)

$               (20,090)

Reconciling items included in gross profit

80

294

581

698

1,405

Reconciling items included in operating expenses

1,748

1,483

3,239

4,644

7,820

Impact of non-GAAP adjustments to redeemable non-controlling interest

(9)

-

-

(9)

-

Tax effect of non-GAAP adjustments

7

4

(137)

(9)

(144)

Non-GAAP net loss attributable to Pixelworks Inc.

$                 (2,247)

$                 (2,601)

$                 (4,456)

$               (11,206)

$               (11,009)

Non-GAAP net loss attributable to PIxelworks Inc. per share - basic and diluted

$                   (0.04)

$                   (0.05)

$                   (0.11)

$                   (0.21)

$                   (0.28)

Non-GAAP weighted average shares outstanding - basic and diluted

52,768

52,283

40,766

52,245

39,697

*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.