Fourth Quarter and Recent Highlights
- Total revenue increased 25% sequentially, driven by record mobile revenue
- Mobile revenue increased 44% sequentially to a record $11.9 million, driven by customers' newly launched IRX-certified smartphones
- Recently announced multi-year agreement with Walt Disney Studios to bring initial collection of TrueCut Motion™ graded titles to select home entertainment devices through the Disney+ streaming service
- Universal Pictures released Matthew Vaughn's newest film, Argylle, to select premium theaters globally in TrueCut Motion format, featuring Pixelworks' cinematic high frame rate technology
- OPPO affiliate, OnePlus, launched its OnePlus 12 and OnePlus 12 global version, both incorporating Pixelworks' X7 visual processor and end-to-end IRX image rendering accelerator solution, delivering unmatched visual performance for mobile gaming globally
- Pixelworks X7 Gen 2 visual processor featuring AI-based High Efficiency Super-Resolution (HESR) technology, debuted in OnePlus Ace 3 smartphone, enabling both 120fps and 1.5K super resolution with lower power
- HONOR 90 GT smartphone launched featuring Pixelworks' advanced X5 Plus visual processor and MotionEngine® technology to enable cinematic video quality and ultra-smooth mobile gaming
"Our fourth quarter results marked a strong finish to the year, which was highlighted by the continued momentum and significant growth of our mobile business," stated Todd DeBonis, President and CEO of Pixelworks. "Mobile revenue increased to a record for the quarter and the full year, representing more than half of total revenue. We also expanded fourth quarter gross margin by 170 basis points sequentially and delivered significant improvement in our bottom-line results.
"Our growth initiatives across our mobile business, along with TrueCut Motion have continued to gain increasing traction and generate tangible results. In mobile, smartphone customers and mobile gaming studios have embraced our IRX-branded gaming experience and certification program, as well as the visual performance benefits this end-to-end solution provides to the mobile gaming ecosystem. We also achieved a significant commercial milestone for our TrueCut Motion platform with the recent adoption of our cinematic high frame rate technology by two of the largest studios, Walt Disney and Universal Pictures. We believe this early commercial validation of TrueCut Motion by these respected leaders in entertainment will pave the way for expanded adoption, as filmmakers and studios increasingly seek to deliver a premium, high frame rate experience to audiences in theaters and at home.
"Looking ahead, we are entering 2024 with strong momentum across our visual processing solutions and IRX certification program in mobile, coupled with initial studio adoption of our TrueCut Motion platform. We expect to achieve another year of accelerated growth in mobile, driven by a combination of increased unit volumes and new product introductions. Complementing our anticipated growth, we are driving continued gross margin expansion as part of an established path to achieve quarterly non-GAAP profitability in the second half of the year."
Fourth Quarter and Fiscal Year 2023 Financial Results
Revenue in the fourth quarter of 2023 was $20.1 million, compared to $16.0 million in the third quarter of 2023 and $16.9 million in the fourth quarter of 2022. The sequential and year-over-year increase in fourth quarter revenue was driven by continued growth and record revenue contribution from Pixelworks' mobile business. For the full year 2023, total revenue was $59.7 million compared to $70.1 million in 2022. The year-over-year decrease reflected lower revenue contribution from the Company's home and enterprise business, which was partly offset by strong growth and record revenue in the mobile business.
On a GAAP basis, gross profit margin in the fourth quarter of 2023 was 44.7%, compared to 42.9% in the third quarter of 2023 and 53.1% in the fourth quarter of 2022. GAAP gross profit margin for the full year 2023 was 43.1% compared to 51.2% in the prior year. Fourth quarter 2023 GAAP operating expenses were $13.1 million, compared to $14.5 million in the third quarter of 2023 and $12.0 million in the year-ago quarter. For the full year 2023, GAAP operating expenses were $54.3 million compared to $52.7 million in the prior year.
On a non-GAAP basis, fourth quarter 2023 gross profit margin was 44.8%, compared to 43.1% in the third quarter of 2023 and 53.3% in the year-ago quarter. Non-GAAP gross profit margin for the full year 2023 was 43.2% compared to 51.3% in the prior year. Fourth quarter 2023 non-GAAP operating expenses were $12.0 million, compared to $13.3 million in the third quarter of 2023 and $10.8 million in the year-ago quarter. Non-GAAP operating expenses for the full year 2023 were $49.6 million compared to $47.5 million in the prior year.
For the fourth quarter of 2023, the Company recorded a GAAP net loss of $3.7 million, or ($0.07) per share, compared to a GAAP net loss of $7.0 million, or ($0.12) per share, in the third quarter of 2023, and a GAAP net loss of $1.9 million , or ($0.04) per share, in the year-ago quarter. GAAP net loss for the full year 2023 was $26.2 million , or ($0.47) per share, compared to a net loss of $16.0 million , or ($0.30) per share, in the prior year. Note, the Company refers to "net loss attributable to Pixelworks, Inc." as "net loss".
