Pixelworks Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
February 12, 2025

Key Takeaways

  • Revenue for Q4 was $9.1 million, with non-GAAP gross margin expanding to 54.8% and non-GAAP net loss improving to $4.3 million ($0.07 per share), reflecting favorable product mix and cost reductions.
  • Pixelworks’ TrueCut Motion platform secured multiyear agreements with Walt Disney Studios and Universal Pictures, supported five major titles in premium large format theaters, and is in active discussions with three major device brands to bring high-frame-rate content to home entertainment in 2025.
  • At the Shanghai subsidiary, a new ASIC design services framework is being pursued— including a potential turnkey OEM engagement and IP licensing deals—while a feasibility study is underway for a limited run of legacy transcoding chips, offering upside in H2 2025.
  • Mobile revenue remained pressured in Q4 at $0.55 million but the company won design slots on Vivo’s iQOO Z9 Turbo series and expects to ramp shipments of a cost-down X5 visual processor derivative in Q2, driving sequential growth and targeting year-end recovery to 2023 levels.
  • Management plans an additional 10% reduction in run-rate operating expenses by end of Q2, expects the Shanghai subsidiary to be profitable in 2025, and is progressing a strategic review of the subsidiary with Morgan Stanley to maximize shareholder value.
AI Generated. May Contain Errors.
Earnings Conference Call
Pixelworks Q4 2024
00:00 / 00:00

Transcript Sections

Skip to Participants
Operator

Good day, ladies and gentlemen, and welcome to Pixelworks' fourth quarter 2024 earnings conference call. I will be your operator for today's call. At this time, all participants are in the listen-only mode. Following management's prepared remarks, instructions will be given for the question-and-answer session. This conference call is being recorded for replay purposes. I would now like to turn the call over to Brett Perry with Shelton Group Investor Relations. Please go ahead.

Brett Perry
VP of Investor Relation at Shelton Group

Thank you, Lisa. Good afternoon, and thank you for joining us on today's call. With me on the call are Pixelworks President and CEO Todd DeBonis and Chief Financial Officer Haley Aman. The purpose of today's conference call is to supplement the information provided in Pixelworks' press release issued earlier today announcing the company's financial results for the fourth quarter and fiscal year of 2024. Before we begin, I'd like to remind you that various remarks that we make on this call, including those about projected future financial results, economic and market trends, and competitive position, constitute forward-looking statements. These forward-looking statements and all other statements made on this call that are not historical facts are subject to a number of risks and uncertainties that may cause actual results to differ materially. All forward-looking statements are based on the company's beliefs as of today, Wednesday, February 12, 2025.

Brett Perry
VP of Investor Relation at Shelton Group

The company undertakes no obligation to update any such statements to reflect events or circumstances occurring after today. Please refer to today's press release, the company's annual report on Form 10-K for the year ended December 31, 2023, and subsequent SEC filings for a description of factors that could cause forward-looking statements to differ materially from actual results. Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms, including gross margin, operating expenses, net loss, and net loss per share. non-GAAP measures exclude restructuring costs and stock-based compensation expense. The company uses these non-GAAP measures internally to assess its operating performance. We believe these non-GAAP measures provide a meaningful perspective on core operating results and underlying cash flow dynamics.

Brett Perry
VP of Investor Relation at Shelton Group

We caution investors to consider these measures in addition to, and not as a substitute for, nor superior to, the company's consolidated financial results as presented in accordance with U.S. GAAP. Also note, throughout the company's press release and management statements during this conference call, we refer to net loss attributable to Pixelworks as simply net loss. For additional details on reconciliation of GAAP to non-GAAP net loss and GAAP net loss to adjust the dividend, please refer to the company's press release issued earlier today. With that, it's now my pleasure to turn the call over to Pixelworks CEO Todd. Please go ahead.

Todd DeBonis
Todd DeBonis
Pixelworks

Thank you for joining today's conference call. I am currently watching a full moon over downtown Pudong in Shanghai. I will start with a brief recap of our fourth quarter financial results. Revenue was within the range of guidance, with sequential growth in home and enterprise helping to offset the anticipated product transition in our mobile business. Gross margin exceeded expectation, expanding over 340 basis points sequentially and nearly 1,000 basis points year-over-year. Combined with the realized benefits from our previously implemented and ongoing initiatives to reduce costs and increase operational efficiencies, we exited the year with significant improvement in our bottom line quarterly results. Now, for those accustomed to the typical format of our commentary on our previous conference calls, the flow of information and update on today's call will be a little different.

Todd DeBonis
Todd DeBonis
Pixelworks

More specifically, given the strategic review process currently underway with our Pixelworks Shanghai subsidiary, I'll begin with comments on our TrueCut Motion business in the U.S., then provide a detailed update on the developments specific to our majority-owned subsidiary in China. Today, Pixelworks TrueCut Motion platform remains the industry's leading and, in fact, only platform for the creation and delivery of motion-graded content. To recap, over the past 12 months, we've achieved a number of key ecosystem milestones, including a multi-year home entertainment agreement with Walt Disney Studios, a multi-year multi-title theatrical agreement with Universal Pictures, five major titles from three different distribution studios, and a compelling global compatibility footprint of over 1,100 of the world's highest-grossing premium large-format theaters.

Todd DeBonis
Todd DeBonis
Pixelworks

We are entering 2025 with momentum across both filmmakers and studios, with commitments on an additional five major theatrical releases, and we are targeting to double that number by year-end. We are also working to expand our title growth and motion-graded scalability through industry-leading partnerships and post-production and visual effects companies. Our long-term plan has always been to bring TrueCut Motion to the mass market through home entertainment devices, and today, as a result of our momentum and foundational investments in the ecosystem, we are in active discussions or formal evaluations with three major device brands for potential incorporation of TrueCut Motion capability into their future devices. While we still must execute and convert these engagements into contractual agreements, 2025 has the opportunity to be a transformational year for our TrueCut Motion business.

Todd DeBonis
Todd DeBonis
Pixelworks

As a reminder, our TrueCut platform, as well as all associated intellectual property and tools, are 100% owned and managed by the U.S. parent company, Pixelworks. Turning to our Pixelworks Shanghai subsidiary, which we previously restructured to serve as the center of operations for all of our semiconductor business, including our open market and co-developed visual display processing chips for digital projector, mobile, and video delivery markets. I want to start by highlighting a few new opportunities that our team is currently pursuing. I will comment on our existing mobile and home and enterprise business and provide an update on the strategic review process. As part of our ongoing focus to drive renewed growth and position the company to achieve profitability, we recently established a new framework for selectively providing ASIC design services to customers.

Todd DeBonis
Todd DeBonis
Pixelworks

In addition to the incremental revenue opportunity, these services also provide the benefit of fully utilizing our highly skilled ASIC engineering team and software resources. We are looking to secure our first customer engagement to provide a series of turnkey design services for a large international OEM. Also notable, the new program that we will be supporting includes the potential license of one or more blocks of display intellectual property. Based upon the current proposed scope, we believe this initial design services agreement could meaningfully contribute to our anticipated total revenue growth as soon as mid this year. Separately, but with the same goal of further leveraging our existing available resources, we're also engaged in active discussions with several other unrelated parties around agreements to license specific intellectual property for use in their respective products.

Todd DeBonis
Todd DeBonis
Pixelworks

To the extent that these discussions result in an agreement, the potential proceeds would represent high-margin upside to the current forecast of our existing product businesses. Additionally, we believe these engagements could significantly accelerate momentum with our mobile gaming ecosystem efforts. Lastly, we are also currently evaluating an opportunity with a prior transcoding customer who recently approached us about placing a multi-million dollar order for one of our legacy transcoding chips that was recently EOLed or end-of-life and is no longer in production. Our team is working with our supply chain partners to confirm whether this large limited production run of the legacy device is technically feasible. However, the initial assessment looks favorable. If we are ultimately able to accept and fulfill this customer's order, it will contribute to significant revenue upside in the second half of this year.

Todd DeBonis
Todd DeBonis
Pixelworks

Shifting gears to a review of the subsidiary's end market, starting with our mobile business. As expected, mobile revenue in the quarter continued to reflect the previously articulated headwinds that impact the majority of 2024. During the quarter, we announced our most recent win with Vivo's newly launched iQOO Z9 Turbo+ smartphone. This phone is a refresh model following the success of the original iQOO Z9 Turbo launched earlier this year, both of which incorporated our X5 Turbo visual processor and targeted the mid-tier market segment. Entering the new year, we remain focused on several leading customer engagements on smartphone programs targeted for launch over the coming quarters. Collectively, these new programs represent a combination of significant unit volume opportunities for both our newest generation flagship mobile visual processor as well as a cost-down derivative of our X5 series processor.

Todd DeBonis
Todd DeBonis
Pixelworks

Specific to our cost-down X5 visual processor, we have been working closely with a lead customer since the middle of last year to enable an innovative graphics and animation accelerating solution specifically targeted to mid and entry-level smartphones. Additional OEMs have also expressed interest, and they are evaluating our derivative X5 processor to solve the frequent technology mismatch between lower-end application processors and the high frame rate capabilities of current-generation display panels. Consistent with my comments on the previous call, we expect to begin ramping shipments of this solution to our lead smartphone customer in the second quarter. Finally, with respect to the home and enterprise business predominantly comprised of our visual processor system on a chip for the 3LCD digital projector market, revenue was up sequentially driven by a combination of increased projector SOC business as well as the anticipated contribution from our EOL of transcoding products.

Todd DeBonis
Todd DeBonis
Pixelworks

For the full year, home and enterprise was effectively flat, reflecting a relatively stable market dynamic and end demand for digital projectors. As anticipated during the quarter, we completed the first production shipments of our newest projector SOC to our large co-development customer, and we expect to gradually ramp additional shipments to this customer over the course of 2025. For our overall projector business, we expect historical double-digit seasonality in the first quarter, followed by sequential growth beginning in the second quarter, consistent with typical trends of seasonal demand. For the full year, we currently anticipate total projector business in 2025 to look similar to 2024. Taken together, we do expect a slower start to the year in terms of total revenue.

Todd DeBonis
Todd DeBonis
Pixelworks

However, we believe there are multiple drivers that will contribute to a sizable rebound starting in the second quarter, including the beginning of the return of mobile revenue growth. Additionally, we have continued to identify areas to further reduce fixed costs and increase operational efficiencies. Once fully implemented, we expect an additional 10% reduction in our run rate operating expenses. These savings will start toward the end of the first quarter and be fully captured by the end of Q2. Also, we expect the benefit from additional subsidies during the year, as is customary with the Little Giant status our subsidiary has achieved. Combined with our ask for a return of top-line growth, we believe that our Pixelworks Shanghai subsidiary will achieve profitability for the full year of 2025. With that as a backdrop, I'll provide a brief update on our ongoing strategic review process with our advisor, Morgan Stanley.

Todd DeBonis
Todd DeBonis
Pixelworks

As discussed on the previous conference call, we initiated a formal and comprehensive review process in the latter part of last year after receiving inbound strategic interest in our Pixelworks Shanghai subsidiary. We have since fielded vetted indications of interest from additional parties, all of which are currently progressing through various stages of due diligence. Together with our financial advisor, we are simultaneously evaluating potential ownership and collaboration structures to determine the optimal path for both enhancing Pixelworks Shanghai's long-term growth potential as well as maximizing value for shareholders. While today there is no definitive timeframe in which this process will be completed, we are encouraged by the progress and respective dialogue to date. In summary, we believe we've made significant progress with regards to our cost structure over the last six months and will continue with that effort over the first half of this year.

Todd DeBonis
Todd DeBonis
Pixelworks

We expect initial evidence of a renewed traction in mobile during the first quarter, followed by the potential for an aggressive ramp of production shipments and revenue as we approach the middle of the year. Additionally, with the recent push towards near-term adjacent revenue opportunities, we have positioned our Shanghai subsidiary on a clear path to achieving profitability. Finally, our multi-year evangelism for Pixelworks TrueCut Motion Grading platform continues to capture growing mindshare, and we expect this to contribute towards further substantive traction in 2025. With that, I will turn the call over to Haley to review financials and provide guidance for the first quarter.

Haley Aman
Haley Aman
CFO at Pixelworks

Thank you, Todd. Revenue for the fourth quarter of 2024 was $9.1 million, compared to $9.5 million in the third quarter and $20.1 million in the fourth quarter of 2023. The decrease in revenue primarily reflected the previously expected near-term headwinds in mobile.

Haley Aman
Haley Aman
CFO at Pixelworks

The breakdown of revenue in the fourth quarter was as follows. Home and enterprise revenue was approximately $8.5 million. Revenue from mobile was approximately $550,000. Fourth quarter non-GAAP gross profit margin expanded 350 basis points sequentially to 54.8% from 51.3% in the third quarter of 2024 and increased 1,000 basis points from 44.8% in the fourth quarter of 2023. The improvement in gross margin for the fourth quarter and throughout 2024 reflects a more favorable product mix and our ongoing focus to drive healthy margins. non-GAAP operating expenses decreased to $10.4 million in the fourth quarter from $12.4 million in the prior quarter and $12 million in the fourth quarter of 2023. The sequential and year-over-year decrease in the fourth quarter operating expenses reflected our previously implemented cost reduction measures. As Todd mentioned, we have identified and plan to take additional cost reduction measures during the first quarter.

Haley Aman
Haley Aman
CFO at Pixelworks

This, combined with the previous measures taken in mid-2024, is expected to contribute to a total year-over-year decrease in operating expenses of approximately $10 million for the full year of 2025. Additionally, during the fourth quarter, our Pixelworks Shanghai subsidiary received $1.8 million in cash subsidies as part of its certified status in China's Little Giant program. These subsidies effectively serve as reimbursement for certain purchases of IP, design tools, as well as various R&D and sales expenses. We recognize $1.1 million as other income in the fourth quarter, with the balance of the total subsidies allocated as offsetting credits to applicable expense and balance sheet items.

Haley Aman
Haley Aman
CFO at Pixelworks

On a non-GAAP basis, fourth quarter 2024 net loss was $4.3 million, or a loss of $0.07 per share, compared to a net loss of $7.1 million, or a loss of $0.12 per share in the prior quarter, and a net loss of $2.6 million, or a loss of $0.05 per share in the fourth quarter of 2023. Adjusted EBITDA for the fourth quarter of 2024 was a negative $3.6 million, compared to a negative $6.3 million in the prior quarter and a negative $1.9 million in the fourth quarter of 2023. Turning to the balance sheet, we ended the fourth quarter with cash and cash equivalents of $23.6 million, compared to $28.8 million at the end of the third quarter. As previously mentioned, we are continuing to take actions to further reduce costs and preserve our existing cash balance.

Haley Aman
Haley Aman
CFO at Pixelworks

Together with a return to top-line growth, we expect to achieve significantly lower cash burn in 2025. Shifting to our current expectations and guidance for the first quarter of 2025. As Todd discussed, we anticipate our home and enterprise business to reflect typical first quarter seasonality as well as a decrease in revenue from the end of life of our transcoding products. We anticipate this seasonality to be partially offset by an initial recovery and sequential increase in mobile revenue in the first quarter. Based on our existing backlog, we currently expect total revenue for the first quarter to be in a range of between $7 million and $8 million. For the first quarter, we expect non-GAAP gross profit margin to be between 49% and 51%. This range primarily reflects anticipated product mix and lower overhead absorption.

Haley Aman
Haley Aman
CFO at Pixelworks

With respect to operating expenses, we expect first quarter operating expenses to be in a range of between $10 million and $11 million on a non-GAAP basis. Lastly, we expect first quarter non-GAAP EPS to range between a loss of $0.13 per share and a loss of $0.10 per share. That completes our prepared remarks, and we look forward to taking your questions. Operator, please proceed with the Q&A session.

Operator

Thank you. If you would like to ask a question, please press star 11 on your telephone. You will then hear an automated message advising your hand is raised. If you would like to withdraw your question, please press star 11 again. We also ask that you wait for your name and company to be announced before proceeding with your question. One moment while we compile the Q&A roster.

Operator

Our first question of the day will come from Suji Desilva of Roth. Your line is open.

Suji Desilva
Suji Desilva
Managing Director and Senior Research Analyst at Roth Capital Partners

Hi, Todd. Hi, Haley. The mobile revenues, as we look ahead to the second half 2025 into 2026, what's your visibility there with programs and recovery and what kind of revenue rate recovery can we kind of think about versus the past levels? Specifically the X5 product, are you seeing the mainstream volumes kick up where those might cut over on a unit revenue basis versus the premium programs, or would that be a longer-term opportunity?

Todd DeBonis
Todd DeBonis
Pixelworks

We expect growth throughout the year, Suji, thanks for the question, in mobile. Our current expectation is we will end the year with higher mobile revenue than we did in 2024. It will progress sequentially every quarter. Clearly, it's probably more back-end loaded, but we will see progress throughout the year.

Todd DeBonis
Todd DeBonis
Pixelworks

I think we have a range. On the high side of that range, it probably puts us similar to our 2023 numbers. On the low side of the range, it still shows growth over 2024. There still is work to be done for that to be realized. Not all the programs are won. On the second question, which is this new graphics acceleration solution for the mid to low-end versus our flagship device, I would say that in probably almost all cases, being in that range between the low-end and the high-end, I would expect this new visual processor for the broader market to be over 50% of the revenue.

Suji Desilva
Suji Desilva
Managing Director and Senior Research Analyst at Roth Capital Partners

Okay. Great. Separately, you talked about a bunch of new opportunities. It sounds like, I mean, I want to just list them. I guess TrueCut device partnerships. I'm curious what geography those are.

Suji Desilva
Suji Desilva
Managing Director and Senior Research Analyst at Roth Capital Partners

ASIC support, what kind of end devices are those? When you said legacy, is that the ViXS products coming back? I'm just curious. A bunch of things mentioned on the call.

Todd DeBonis
Todd DeBonis
Pixelworks

The legacy product that was end of life, yes, that is Transcoding ViXS product. This is a long-standing customer we've had for 10 years. They went through their own M&A, and the new owner wants to kick off some programs that are based upon this device. They want to come back and see if we can restart production. It looks like we can, but there will be some constraints and restrictions on it because it's going to be a one-off. That is that. As far as the other opportunities, both TrueCut, I'm not going to go into detail who the device manufacturers are, what region they're from, etc.

Todd DeBonis
Todd DeBonis
Pixelworks

Let's just say they're leading device manufacturers, global brands. The IP opportunities are in several markets. Yeah, it's exciting. It's broad-based.

Suji Desilva
Suji Desilva
Managing Director and Senior Research Analyst at Roth Capital Partners

Great. Maybe one last question for Haley. The China subsidiary benefit there, did that impact the COGS and gross margin, or was that all operating expense contra?

Haley Aman
Haley Aman
CFO at Pixelworks

There was a portion of it that impacted COGS and gross margin related specifically to subsidies received for mass purchases in the past.

Suji Desilva
Suji Desilva
Managing Director and Senior Research Analyst at Roth Capital Partners

Okay. Got it. Great. Thanks, guys.

Operator

Thank you. As a reminder, if you'd like to ask a question, please press star 11 on your telephone. Our next question will be coming from the line of Richard Shannon of Craig-Hallum. Your line is open.

Richard Shannon
Richard Shannon
Senior Research Analyst at Craig-Hallum

Hi, this is Tyler Anderson on for Richard Shannon. Thank you for taking my questions. I was wondering, you mentioned getting 10 films out this year or around that.

Richard Shannon
Richard Shannon
Senior Research Analyst at Craig-Hallum

How many films do you think it would take to create a tipping point for these streaming services to adopt this technology broadly?

Todd DeBonis
Todd DeBonis
Pixelworks

It's not just Tyler, thanks for the question. It's not just titles that would create that tipping point. I think certainly having a history of key titles, a quantity of key titles, a minimum set of key titles announced every year, they get a benefit of those titles showing them in TrueCut format in the premium large format space, whether it goes to home entertainment or not. It will make the home entertainment streaming companies and device manufacturers, because there's two ends to that home entertainment piece, right? It will make them more comfortable the longer we have an established track record of bringing content to premium large format theaters and the quantity of films.

Todd DeBonis
Todd DeBonis
Pixelworks

It is really going to be about, I think, tentpole titles. I do not think it is going to be about quantity of titles. Now, we are probably approaching that critical mass of tentpole titles. If you get up into the double digits, that is probably enough to matter. Other things are important. For the streaming companies to go out and commit to it on a long-term basis, they need to know that the device manufacturers are going to have TrueCut certified devices to display that content. As well as the device manufacturers to fully commit to incorporating the technology and then marketing that their devices are capable of displaying TrueCut cinematic high frame rate content, they are going to want to know that the streaming service providers are committed to do it. It is a little chicken and egg thing.

Todd DeBonis
Todd DeBonis
Pixelworks

Just the number of titles alone will not push the other sides of that over the equation. I think we're making significant progress. It's just one of those things where you have to have, first of all, you have to have technology that delivers on the promise of delivering an experience that is notable and wanted by the consumer. I think we've achieved that. I think they all agree our technology delivers on the promise. The second piece is you just got to continue to build critical mass and momentum, and then it will happen.

Richard Shannon
Richard Shannon
Senior Research Analyst at Craig-Hallum

Okay. It sounds like one goes, the other may be soon to follow. How have your engagements been?

Todd DeBonis
Todd DeBonis
Pixelworks

It may be, Tyler, sorry to interrupt you, but it may be that they both get announced simultaneously. You never know, right?

Richard Shannon
Richard Shannon
Senior Research Analyst at Craig-Hallum

That's kind of what I'm thinking too.

Richard Shannon
Richard Shannon
Senior Research Analyst at Craig-Hallum

With these post-production houses, are you going after the smaller fragmented post-production houses, or are these owned by the larger production companies themselves?

Todd DeBonis
Todd DeBonis
Pixelworks

As you know, we have had relationships with current post-production companies, and I would say they're of decent size. Pixelogic's a decent-sized finishing company that wanted to expand into post-production. If you really look at it, there are a couple of very large post-production companies that do color grading and finishing work for many of the tentpole titles for the studios. I would say that we're in discussion with that level of post-production company today. It is expanded.

Richard Shannon
Richard Shannon
Senior Research Analyst at Craig-Hallum

Do you have an update on the break-even model, whether or not that's a 2025 or 2026 story? If that's a 2025, if there's any timing available for that?

Todd DeBonis
Todd DeBonis
Pixelworks

Your question is probably specific to all of Pixelworks, right?

Todd DeBonis
Todd DeBonis
Pixelworks

We just said on the spring of 2025. We just said on the call that we expect the subsidiary to be profitable in 2025.

Richard Shannon
Richard Shannon
Senior Research Analyst at Craig-Hallum

We did not see the whole company or parent company.

Todd DeBonis
Todd DeBonis
Pixelworks

Yeah, yeah. We did not expect it. I would suggest that we're also going through a strategic review process, right? If that strategic review process ends with us not being the controlling shareholder of Pixelworks Shanghai, we will not be integrating their P&L into ours, right? It'll be sold, right? We may still have some ownership of it, but it won't be a controlling ownership. It really depends how the strategic process goes and how much progress we make with both Shanghai subsidiary and TrueCut. Right now, I am not expecting to be fully profitable at the top level, but probably close. Probably close. Maybe exit the year. We'll see.

Richard Shannon
Richard Shannon
Senior Research Analyst at Craig-Hallum

Okay. Great. Thank you. That's all my questions for now.

Operator

Thank you. One moment for the next question. Our next question will be coming from the line of Nick Doyle of Needham & Company. Your line is open.

Operator

Hey, guys. Thanks for taking my question. The first one, is there any sort of timeline that you can help us think about for the strategic process that could be a year, two years?

Todd DeBonis
Todd DeBonis
Pixelworks

I doubt it's going to be two years, Nick. I mean, if I thought it was going to be two years, we would probably shut down the current process, and then it would restart, right? It's not going to take that long. Other than that, I'm encouraged, which I said on my prepared remarks. I don't have a timeline for you. As soon as I do, I'll update you.

Todd DeBonis
Todd DeBonis
Pixelworks

Okay.

Todd DeBonis
Todd DeBonis
Pixelworks

Can you expand at all on the ASIC design services and IP licensing, as in maybe any more specificity on what you're offering and to who? I mean, I know you mentioned international OEMs, but I guess Chinese OEMs are interested as well. Thanks.

Todd DeBonis
Todd DeBonis
Pixelworks

I don't want to go into too much detail because we are under confidentiality agreements, and these are in dialog. It's not IP that we're not specialized in. I mean, people come to us because we are display experts, okay? We're also motion experts. One would assume that the IP discussions we're having are either some of our display IP or our motion processing IP. Specifics on who those are with until there's a deal. Even if there's a deal, it may not be announceable.

Todd DeBonis
Todd DeBonis
Pixelworks

It may be with somebody that wants to keep it confidential, but it'll show up in our financials. I thought it was important to make sure people understand this is something we're pursuing with vigor. It is not, I mean, since I've been CEO, I have always occasionally, I would say at least once a year, sometimes multiple, been approached by people for licensing. I have usually said no because licensing, we're not in the IP licensing business until now. If you're in the IP licensing business, you prepare your IP to be transferred to another party. If you are only building IP for your own products, it does take effort to prepare that IP, to transfer it to somebody else, license it, and have them incorporate in their products.

Todd DeBonis
Todd DeBonis
Pixelworks

Many of the deals that were brought to me over the years would take significant resources, and it would pull away from our own product development. I shaded away from it. Where we are today, two things. One, some of the IP that we've had inbound interest on is easy to transfer. It is not as time-consuming for our team. Two, I want to get to profitability as soon as possible. It is high-margin business.

Todd DeBonis
Todd DeBonis
Pixelworks

Okay. Thank you for that. On the digital projector, you started shipping that next-gen SOC last quarter, and then you had a comment about the segment being flattish for the year. Is that just based on majority is this new product, this new co-developed product, and then any transcoding EOL would be on top of that if that comes to pass? Thanks.

Todd DeBonis
Todd DeBonis
Pixelworks

The comment about the home and enterprise business being similar to 2024, that is without this transcoding. This new opportunity that has been brought to us to bring a product back for a limited production run, that would be upside to that flat year-over-year or similar to year-over-year. Okay? That is that question. The other question is relative to specific projector, which is the majority of revenue in home and enterprise. Our newest co-developed product is ramping, but it will not be the major revenue portion in 2025. It will be bigger than it was in 2024, but I do not think it will be the largest revenue portion in 2025. It will probably take until 2026 for that to be the largest portion of the projector revenue.

Todd DeBonis
Todd DeBonis
Pixelworks

Got it. Thank you. Yep.

Operator

Thank you.

Operator

At this time, I'd like to go ahead and turn the call back over to management for closing remarks. Please go ahead.

Todd DeBonis
Todd DeBonis
Pixelworks

Thanks all for joining this call. Clearly, a lot of activity going on. I look forward to updating you on our next quarterly call. Thank you.

Operator

This concludes today's conference call. Thank you so much for participating. You may all disconnect.

Executives
    • Haley Aman
      Haley Aman
      CFO
    • Todd DeBonis
      Todd DeBonis
Analysts
Powered by Quartr