Pixelworks ((PXLW)) has held its Q4 earnings call. Read on for the main highlights of the call.
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In the latest earnings call, Pixelworks delivered a mixed message to investors, reflecting both achievements and hurdles. While notable progress was made in the TrueCut Motion platform and cost reduction efforts, the overall sentiment was dampened by a decline in revenue and persistent challenges in the mobile segment. The company remains hopeful that its strategic review process could uncover future opportunities.
TrueCut Motion Platform Progress
Pixelworks announced significant milestones for its TrueCut Motion platform, securing agreements with major studios like Walt Disney and Universal Pictures. The platform is gaining traction, with commitments for additional theatrical releases and ongoing discussions with major device brands for potential future incorporation.
Gross Margin Improvement
The company reported a non-GAAP gross profit margin improvement of 350 basis points sequentially to 54.8%, and an increase of 1,000 basis points compared to the fourth quarter of 2023. This improvement is attributed to a favorable product mix and a strategic focus on maintaining healthy margins.
Cost Reduction Efforts
Pixelworks has successfully decreased operating expenses through previously implemented cost reduction measures. The company plans further reductions, aiming for a projected $10 million decrease in operating expenses for the full year of 2025.
Strategic Review Process
The company is actively engaged in a strategic review process for its Shanghai subsidiary with Morgan Stanley, receiving vetted indications of interest from multiple parties. This process is expected to open new avenues for growth and partnerships.
Revenue Decline
Revenue for the fourth quarter of 2024 fell to $9.1 million, down from $9.5 million in the third quarter and significantly lower than the $20.1 million in the fourth quarter of 2023. This decline is primarily attributed to ongoing headwinds in the mobile segment.
Mobile Revenue Challenges
Mobile revenue remained weak at approximately $550,000, highlighting continued difficulties in this segment and affecting the company’s overall financial performance.
Net Loss Increase
Pixelworks reported a non-GAAP net loss of $4.3 million for the fourth quarter of 2024, an improvement from the $7.1 million loss in the prior quarter but higher than the $2.6 million loss in the same quarter of 2023. This indicates ongoing financial challenges despite efforts to improve cost structures.
Forward-Looking Guidance
Looking ahead, Pixelworks projects first-quarter 2025 revenue between $7 million and $8 million. Non-GAAP gross profit margins are expected to range from 49% to 51%, reflecting the anticipated product mix. Operating expenses are forecasted to be between $10 million and $11 million, with non-GAAP EPS projected to be a loss of $0.13 to $0.10 per share. The company remains optimistic about growth prospects in mobile revenue and further adoption of the TrueCut Motion platform.
In summary, Pixelworks’ earnings call revealed a company navigating through a mix of opportunities and challenges. While the TrueCut Motion platform shows promising progress, the decline in revenue and mobile segment challenges weigh heavily on financial performance. However, Pixelworks’ strategic initiatives and cost reduction plans point towards potential recovery and growth in the near future.
