OREGON | 000-30269 | 91-1761992 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(d) | Exhibits. |
Exhibit No. | Description | |
99.1 | Press Release issued by Pixelworks, Inc. dated April 30, 2015. | |
99.2 | Pixelworks, Inc. First Quarter Results Conference Call Script dated April 30, 2015. |
PIXELWORKS, INC. | ||
(Registrant) | ||
Dated: | April 30, 2015 | /s/ Steven L. Moore |
Steven L. Moore Vice President, Chief Financial Officer, Secretary and Treasurer |
Exhibit No. | Description | |
99.1 | Press Release issued by Pixelworks, Inc. dated April 30, 2015. | |
99.2 | Pixelworks, Inc. First Quarter Results Conference Call Script dated April 30, 2015. |
PIXELWORKS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
March 31, | December 31, | March 31, | ||||||||||
2015 | 2014 | 2014 | ||||||||||
Revenue, net | $ | 14,392 | $ | 15,105 | $ | 13,541 | ||||||
Cost of revenue (1) | 7,425 | 7,546 | 5,546 | |||||||||
Gross profit | 6,967 | 7,559 | 7,995 | |||||||||
Operating expenses: | ||||||||||||
Research and development (2) | 6,318 | 6,390 | 6,385 | |||||||||
Selling, general and administrative (3) | 3,887 | 3,776 | 4,049 | |||||||||
Total operating expenses | 10,205 | 10,166 | 10,434 | |||||||||
Loss from operations | (3,238 | ) | (2,607 | ) | (2,439 | ) | ||||||
Interest expense and other, net | (107 | ) | (118 | ) | (122 | ) | ||||||
Loss before income taxes | (3,345 | ) | (2,725 | ) | (2,561 | ) | ||||||
Provision (benefit) for income taxes | 19 | 46 | (54 | ) | ||||||||
Net loss | $ | (3,364 | ) | $ | (2,771 | ) | $ | (2,507 | ) | |||
Net loss per share - basic and diluted | $ | (0.14 | ) | $ | (0.12 | ) | $ | (0.11 | ) | |||
Weighted average shares outstanding - basic and diluted | 23,328 | 23,175 | 22,204 | |||||||||
—————— | ||||||||||||
(1) Includes: | ||||||||||||
Stock-based compensation | $ | 53 | $ | 71 | $ | 89 | ||||||
Additional amortization of non-cancelable prepaid royalty | — | (30 | ) | 56 | ||||||||
(2) Includes stock-based compensation | 489 | 640 | 826 | |||||||||
(3) Includes stock-based compensation | 536 | 690 | 788 |
PIXELWORKS, INC. RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL INFORMATION * (In thousands, except per share data) (Unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
March 31, | December 31, | March 31, | ||||||||||
2015 | 2014 | 2014 | ||||||||||
Reconciliation of GAAP and non-GAAP gross profit | ||||||||||||
GAAP gross profit | $ | 6,967 | $ | 7,559 | $ | 7,995 | ||||||
Stock-based compensation | 53 | 71 | 89 | |||||||||
Additional amortization of non-cancelable prepaid royalty | — | (30 | ) | 56 | ||||||||
Total reconciling items included in cost of revenue | 53 | 41 | 145 | |||||||||
Non-GAAP gross profit | $ | 7,020 | $ | 7,600 | $ | 8,140 | ||||||
Non-GAAP gross profit margin | 48.8 | % | 50.3 | % | 60.1 | % | ||||||
Reconciliation of GAAP and non-GAAP operating expenses | ||||||||||||
GAAP operating expenses | $ | 10,205 | $ | 10,166 | $ | 10,434 | ||||||
Reconciling item included in research and development: | ||||||||||||
Stock-based compensation | 489 | 640 | 826 | |||||||||
Reconciling item included in selling, general and administrative: | ||||||||||||
Stock-based compensation | 536 | 690 | 788 | |||||||||
Total reconciling items included in operating expenses | 1,025 | 1,330 | 1,614 | |||||||||
Non-GAAP operating expenses | $ | 9,180 | $ | 8,836 | $ | 8,820 | ||||||
Reconciliation of GAAP and non-GAAP net loss | ||||||||||||
GAAP net loss | $ | (3,364 | ) | $ | (2,771 | ) | $ | (2,507 | ) | |||
Reconciling items included in cost of revenue | 53 | 41 | 145 | |||||||||
Reconciling items included in operating expenses | 1,025 | 1,330 | 1,614 | |||||||||
Tax effect of non-GAAP adjustments | (20 | ) | (6 | ) | (38 | ) | ||||||
Non-GAAP net loss | $ | (2,306 | ) | $ | (1,406 | ) | $ | (786 | ) | |||
Non-GAAP net loss per share - basic and diluted | $ | (0.10 | ) | $ | (0.06 | ) | $ | (0.04 | ) | |||
Non-GAAP weighted average shares outstanding - basic and diluted | 23,328 | 23,175 | 22,204 | |||||||||
* Our non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP operating expenses, non-GAAP net loss and non-GAAP net loss per share differs from GAAP gross profit, GAAP operating expenses, GAAP net loss and GAAP net loss per share due to the exclusion of stock-based compensation expense and additional amortization of a non-cancelable prepaid royalty. Pixelworks' management believes the presentation of non-GAAP gross profit, non-GAAP operating expenses, non-GAAP net loss and non-GAAP net loss per share provides useful information to investors regarding Pixelworks' results of operations by allowing investors to better evaluate underlying cash flow dynamics. Pixelworks' management also uses each of these non-GAAP measures internally to better evaluate underlying cash flow dynamics. Pixelworks, however, cautions investors to consider these non-GAAP financial measures in addition to, and not as a substitute for, our GAAP financial measures. |
PIXELWORKS, INC. RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL INFORMATION * (In thousands) (Unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
March 31, | December 31, | March 31, | ||||||||||
2015 | 2014 | 2014 | ||||||||||
Reconciliation of GAAP net loss and adjusted EBITDA | ||||||||||||
GAAP net loss | $ | (3,364 | ) | $ | (2,771 | ) | $ | (2,507 | ) | |||
Stock-based compensation | 1,078 | 1,401 | 1,703 | |||||||||
Tax effect of non-GAAP adjustments | (20 | ) | (6 | ) | (38 | ) | ||||||
Additional amortization of non-cancelable prepaid royalty | — | (30 | ) | 56 | ||||||||
Non-GAAP net loss | $ | (2,306 | ) | $ | (1,406 | ) | $ | (786 | ) | |||
EBITDA adjustments: | ||||||||||||
Depreciation and amortization | $ | 1,098 | $ | 1,099 | $ | 1,144 | ||||||
Interest expense and other, net | 107 | 118 | 122 | |||||||||
Non-GAAP provision (benefit) for income taxes | 39 | 52 | (16 | ) | ||||||||
Adjusted EBITDA | $ | (1,062 | ) | $ | (137 | ) | $ | 464 | ||||
* Adjusted EBITDA differs from GAAP net loss due to the exclusion of stock-based compensation expense, additional amortization of a non-cancelable prepaid royalty, interest expense and other, net, income tax provision (benefit) and depreciation and amortization. Pixelworks' management believes the presentation of adjusted EBITDA provides useful information to investors regarding Pixelworks' results of operations by allowing investors to better evaluate underlying cash flow dynamics and core operating results and are used by Pixelworks' management for these purposes. Pixelworks, however, cautions investors to consider these non-GAAP financial measures in addition to, and not as a substitute for, our GAAP financial measures. |
PIXELWORKS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) | |||||||
March 31, 2015 | December 31, 2014 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 15,591 | $ | 17,926 | |||
Accounts receivable, net | 4,760 | 4,648 | |||||
Inventories | 3,295 | 2,898 | |||||
Prepaid expenses and other current assets | 900 | 888 | |||||
Total current assets | 24,546 | 26,360 | |||||
Property and equipment, net | 5,762 | 6,402 | |||||
Other assets, net | 1,211 | 1,382 | |||||
Total assets | $ | 31,519 | $ | 34,144 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 2,289 | $ | 3,154 | |||
Accrued liabilities and current portion of long-term liabilities | 9,129 | 8,539 | |||||
Current portion of income taxes payable | 168 | 197 | |||||
Short-term line of credit | 3,000 | 3,000 | |||||
Total current liabilities | 14,586 | 14,890 | |||||
Long-term liabilities, net of current portion | 1,319 | 1,476 | |||||
Income taxes payable, net of current portion | 1,966 | 2,094 | |||||
Total liabilities | 17,871 | 18,460 | |||||
Shareholders’ equity | 13,648 | 15,684 | |||||
Total liabilities and shareholders’ equity | $ | 31,519 | $ | 34,144 |
• | Q1 2015 results came in within the range of guidance with Revenues of $14.4M, representing a 35% increase in chip product revenue versus Q1 2014, as product momentum continued to drive strong year-over-year growth. |
• | All other Non-GAAP metrics came within the range of guidance and we had great execution on our co-development project which is right on schedule. |
• | We made significant progress with our mobile initiative and we saw increasing market pull and design win traction. |
• | And while we expect to see double digit growth in our product business in 2015, the overall environment remains cautious. |
• | Steve will review the results of the quarter and provide the outlook for Q2 2015 later in this call. |
• | Q1 was a great quarter of progress as we enjoyed a very successful CES and Mobile World Congress. |
• | We showed how Iris brings value to mobile devices with its “True Clarity” suite of display technology enhancements that improve the overall user experience and address the major issues of mobile device picture quality: |
◦ | The clearest, sharpest motion image; |
◦ | The richest colors and deepest blacks; |
◦ | Enhanced usability, which includes backlight controls for the best viewing in any light and power saving system management. |
• | Iris adjusts the characteristics of the content to the capabilities of the display and the way we perceive images. |
• | Displays using Iris can deliver their optimum performance in order to show whatever is on the screen to its best advantage and provide the best visual user experience. |
• | This drastically improves the clarity of the image, the device’s ease of use and enjoyment of the user. |
• | But just as critically, it also works at the system level, improving battery life and freeing up valuable system resources to create the optimal viewing experience. |
• | A concept that has been verified with customers. |
• | In the second half of last year, we introduced the first device in our family of Iris chips, and it includes a complete set of features that enable Pixelworks’ full array of “True Clarity” display enhancements. |
• | Additionally it also supports multiple interfaces making it compatible with today’s leading mobile applications processors as well as PC platforms based on Intel processors. |
• | Iris will become a family of products that will cover a range of features and price points to cover the entire spectrum of mobile displays. |
• | The market is beginning to see specialization around dimensions such as audio quality, camera and display resolution as manufacturers struggle for differentiation, |
• | And the display experience is playing an increasingly important role as mobile devices are becoming the primary screen for viewing content. |
• | To address the expanding need for differentiation and segmentation. |
• | Later this quarter we will be sampling our next device in the Iris family of mobile video display processors. |
• | This device is targeted for high resolution 2K Quad HD displays based on leading mobile applications processors, |
• | And it includes features specifically targeted for small form factor displays in order to achieve a lower price point, while also providing lower power and next generation interface support. |
• | Our next chip brings True Clarity™ front-of-screen differentiation advantages so manufacturers can offer new devices that deliver an enhanced mobile viewing experience, and can differentiate their offerings on that basis. |
• | These products typically have higher end resolution screens and are geared for power-hungry applications such as video streaming and music, and as a result have more stringent power requirements. |
• | This latest chip will extend the reach of the Iris product family and give OEMs more options than ever to optimize their offerings in a range of different product segments. |
• | And we will be launching this product at the upcoming Computex trade show in Taipei, Taiwan later this quarter. |
• | In terms of the market acceptance we are seeing, |
• | The value propositions of Iris are resonating across customers and partners as the need for differentiation intensifies. |
• | During the quarter we saw increasing customer traction with an expanding set of design wins. |
• | Customer engagements and evaluations multiplied as our pipeline of design opportunities expanded substantially and we anticipate entering mass production later this year. |
• | Delivering great image quality is an art as well as a science, and it takes many years of providing solutions that are tested in mass production by the industry’s most demanding TV customers to develop the expertise and know-how necessary. |
• | Leveraging a portfolio of more than 130 patents, and over 15 years of experience in the marketplace solving the most difficult video problems, we have now brought that expertise and innovation to mobile screens as well. |
• | In our large screen projected and panel display applications, |
• | During the quarter we released the latest version of our VueMagicTM software which offers enhanced connectivity features and this quarter we will be adding support for 64-bit iOS applications as well as a new release for Android 5 (Lollipop). |
• | VueMagicTM software provides wireless connectivity for mobile devices to Topaz based projectors or dongles based on Topaz chips, and adds features such as advanced content sharing capabilities. |
• | There are now over 76 VueMagicTM enabled Topaz based projector models available with new ones coming from Hitachi, Panasonic, and Vivitek. |
• | And this quarter, BenQ is set to release QPresenter Pro based on our VueMagicTM Mate reference platform. |
• | QPresenter Pro will allow any existing projector to wireless connect to smartphones, tablets and laptops. |
• | BenQ reviewed all solutions, and VueMagicTM was adopted due to its multi-screen and annotate features making it ideally suited for education and collaborative meetings. |
• | Our co-development program is on track and ramping as expected and we anticipate this product will continue to ramp into 2015 and drive year on year growth. |
• | Design win momentum remains strong for our Topaz family of SoCs for projectors, and we continue to see opportunities across our families of video co-processors for large screen panels, as 4K applications broaden. |
• | In summary, |
• | Q1 2015 was a solid quarter of chip product growth which increased 35% over Q1 2014. |
• | Our co-development program for the advanced SoC for large screen applications is on track and ramping as expected. |
• | And while the environment remains cautions, we expect to see double digit growth in our product business in 2015. |
• | We had a great CES and Mobile World Congress, and significant progress on our mobile initiative and saw increasing design traction for our Iris family of mobile video processors. |
• | And we will be launching our next device in the Iris family of mobile display processors at the upcoming Computex Show in Taipei, Taiwan. |
• | Now, I’d now like to turn the call over to Steve to review the financial results of the quarter. |