Pixelworks (PXLW) Misses Q4 EPS by 1c, Revenues Beat

Pixelworks (NASDAQ: PXLW) reported Q4 EPS of ($0.11), $0.01 worse than the analyst estimate of ($0.10). Revenue for the quarter came in at $9.64 million versus the consensus estimate of $9.5 million.

Fourth Quarter and Recent Highlights

• Mobile revenue grew 49% sequentially, driven by increased demand from OEM customers in support of recent and upcoming launches of new smartphones
• Commenced initial production shipments of new sixth-generation mobile visual processor (i6) to leading smartphone customers in advance of scheduled product launches in early 2021
• GAAP gross margin was 45.5% and non-GAAP gross margin was 49.6%
• Expanded multi-year collaboration agreement with TCL to incorporate Pixelworks visual processing in next-generation smartphone models featuring TCL's NXTVISION displays
• Closed a strategic private placement round with MTM-Xinhe and other accredited investors as well as a follow-on public offering of stock, generating combined net proceeds of $18.9 million
• Ended the quarter with $31.5 million in cash, cash equivalents and short-term investments, no long-term debt and no outstanding balance on existing line of credit

"Fourth quarter revenue increased 18% sequentially, driven by second consecutive quarter of solid growth in Mobile and an initial recovery of customer demand in the Projector market," commented Todd DeBonis, President and CEO of Pixelworks. "Following the pronounced impact the global pandemic had on our target end markets during the year, we've begun to observe gradual but improving order patterns from a majority of our lead customers. Specific to our Mobile business, we proactively utilized this period of disruptive market dynamics to become more deeply engaged with our customers on expanded programs aimed at differentiating their next-generation models with exceptional visual display quality. As a result, we have continued to secure a growing number of design-ins on upcoming smartphones that feature industry-leading color accuracy, HDR, higher frame rates and superior gaming performance. Also, during the quarter, we secured additional capital to significantly strengthen our balance sheet in support of expected near-term growth.

"Today, we believe our existing pipeline of active Mobile programs comfortably represents the opportunity to double the number of models launched in 2021 that incorporate Pixelworks' technology. These collective engagements are comprised of increased penetration at existing customers across multiple tiers and at least two new customers, including our second tier-one mobile OEM. While we expect continued sequential growth in Mobile and improving dynamics in our non-mobile businesses to be offset by seasonality in the first quarter, we believe we are positioned to achieve significant year-over-year growth in our Mobile business as well as on a consolidated basis in 2021."

Business Outlook

The Company's current business outlook, including guidance for the first quarter of 2021, will be provided as part of the scheduled conference call.

For earnings history and earnings-related data on Pixelworks (PXLW) click here.

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