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

Three Months Ended

Twelve Months Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2021

2021

2020

2021

2020

Reconciliation of GAAP and non-GAAP gross profit

GAAP gross profit

$            8,873

$             7,985

$            4,385

$          27,693

$          20,185

Amortization of acquired intangible assets

218

218

298

899

1,192

Stock-based compensation

26

(138)

87

43

432

Restructuring

-

7

-

173

Total reconciling items included in gross profit

80

392

942

1,797

Non-GAAP gross profit

$             8,065

$            4,777

$          28,635

$          21,982

Non-GAAP gross profit margin

55.0 %

53.1 %

49.6 %

52.0 %

53.8 %

Reconciliation of GAAP and non-GAAP operating expenses

GAAP operating expenses

$          12,600

$           11,889

$          11,286

$          47,695

$          46,921

Reconciling item included in research and development:

Stock-based compensation

623

549

669

2,363

2,943

Reconciling items included in selling, general and administrative:

Stock-based compensation

940

1,146

1,000

3,678

4,296

Amortization of acquired intangible assets

53

53

76

219

304

Restructuring

-

-

19

-

2,041

Total reconciling items included in operating expenses

1,616

1,748

1,764

6,260

9,584

Non-GAAP operating expenses

$          10,984

$           10,141

$            9,522

$          41,435

$          37,337

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

GAAP net loss attributable to Pixelworks Inc.

$          (3,291)

$           (4,073)

$          (6,439)

$        (19,821)

$        (26,529)

Reconciling items included in gross profit

244

80

392

942

1,797

Reconciling items included in operating expenses

1,616

1,748

1,764

6,260

9,584

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

(17)

(9)

-

(26)

-

Tax effect of non-GAAP adjustments

9

7

144

-

-

Reconciling items included in total other income, net

-

-

(796)

-

(796)

Non-GAAP net loss attributable to Pixelworks Inc.

$          (1,439)

$           (2,247)

$          (4,935)

$        (12,645)

$        (15,944)

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

$            (0.03)

$             (0.04)

$            (0.11)

$            (0.24)

$            (0.39)

Non-GAAP weighted average shares outstanding - basic and diluted

53,293

52,768

43,735

52,509

40,712

*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.