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,

2023

2023

2022

2023

2022

Reconciliation of GAAP and non-GAAP gross profit

GAAP gross profit

$                 6,882

$                 5,484

$                 8,796

$               16,733

$               26,907

Stock-based compensation

21

22

(47)

67

20

Amortization of acquired intangible assets

—

—

—

—

72

Total reconciling items included in gross profit

21

22

(47)

67

92

Non-GAAP gross profit

$                 6,903

$                 5,506

$                 8,749

$               16,800

$               26,999

Non-GAAP gross profit margin

43.1 %

40.5 %

49.8 %

42.4 %

50.7 %

Reconciliation of GAAP and non-GAAP operating expenses

GAAP operating expenses

$               14,528

$               11,975

$               13,527

$               41,241

$               40,716

Reconciling item included in research and development:

Stock-based compensation

452

527

565

1,470

1,795

Reconciling items included in selling, general and administrative:

Stock-based compensation

779

710

776

2,140

2,223

Amortization of acquired intangible assets

—

—

—

—

18

Total reconciling items included in operating expenses

1,231

1,237

1,341

3,610

4,036

Non-GAAP operating expenses

$               13,297

$               10,738

$               12,186

$               37,631

$               36,680

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

GAAP net loss attributable to Pixelworks Inc.

$               (6,999)

$               (6,037)

$               (4,496)

$             (22,432)

$             (14,096)

Reconciling items included in gross profit

21

22

(47)

67

92

Reconciling items included in operating expenses

1,231

1,237

1,341

3,610

4,036

Tax effect of non-GAAP adjustments

—

—

1

—

(3)

Non-GAAP net loss attributable to Pixelworks Inc.

$               (5,747)

$               (4,778)

$               (3,201)

$             (18,755)

$               (9,971)

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

$                 (0.10)

$                 (0.09)

$                 (0.06)

$                 (0.34)

$                 (0.18)

Non-GAAP weighted average shares outstanding - basic and diluted

56,410

55,917

54,826

55,917

54,120

*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.