Corporate Overview March 2020
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Corporate Overview
March 2020
Cautionary Statements & Other Disclosures
This presentation includes forward-looking statements regarding Pixelworks’
business outlook.
These forward-looking statements involve risks & uncertainties & actual results
may vary significantly from those suggested here. Additional information
concerning risk factors that could cause actual results to vary from these forward
looking statements can be found in our Form 10-K for the fiscal year ended
December 31, 2018 and subsequent SEC filings.
To the extent this presentation includes non-GAAP financial measures, the most
directly comparable GAAP information and a reconciliation between GAAP and
non-GAAP figures is provided in the Company’s Q4 2019 press release which has
been furnished to the SEC on Form 8-K.
2
At a Glance (NASDAQ: PXLW)
Company Overview
Leading provider of the Video and Display solutions behind the
world’s most exceptional displays and visual experiences
Over 20-year heritage of display and visual processing innovation
Fundamental image processing IP, including 360+ issued/pending patents
Target Markets Products and Solutions
Mobile (Smartphone, Gaming & Tablet) Semiconductor Solutions
Home Entertainment (TV, PVR, OTA, Projector) Iris visual processors for Mobile
XCode transcoders for OTA and Home Entertainment
Business & Education (Projector)
SoCs for Digital Projectors
Content Creation, Remastering & Delivery
(Software & Platform Licensing) Software and Platform Licensing
Soft Iris color calibration and tone mapping for Mobile
TrueCut content and video platform
3
Pixel Perfection®
Pixelworks provides industry-leading video processing
technology and solutions that enable highly authentic viewing
experiences with superior visual quality
4
Massive Growth in Video Content & Consumption
Monthly Internet Traffic
Per Capita (Gb)
more Sources
82% of
Video Internet traffic
Source: Cisco, 2/2019
is Video
more Titles 44
13
2017 2022
Over 530 scripted original series made available in 2019 –
an increase of 98 percent compared to 2011
– FX Networks Research
5
Video: Key Element of All Major Content Platforms
Mobile Driving Growth in Video Consumption
Global Mobile Traffic Growth
Exabytes per Month by Device Type
46% CAGR
More than 75% of WORLDWIDE video viewing of digitally
streamed content is on mobile
– eMarketer
Source: Cisco, 2/2019 6
Picture Quality is Critical
Industry leaders support a “Filmmaker Mode”
to ensure creative intent on TVs
Christopher Nolan
Paul Thomas Anderson
Paul Thomas
Christopher McQuarrie
Christopher
Anderson
James Cameron
Nolan
Steven Spielberg
Martin Scorsese
JJ Abrams
Judd Apatow
+ many others
As mobile becomes the go-to destination for content
viewing, consumers worldwide seek a premium display
and video performance
– HMD Global, Chief Product Officer, Juho Sarvikas
Netflix & Sony collaborate on
“Calibrated Mode”
7
Value Proposition: Solving Content Pain-Points
Content formats lag far behind device capabilities,
and the gap is growing Device
Capability
Poor quality video processing diminishes user experience,
demotivates high-end device consumption and increases user churn
Pixelworks advanced video processing solutions correctly 8K
and accurately bridge this quality gap Quality
Gap
Solutions maintain creative intent to make visual storytelling 120Hz
richer and more engaging, increasing the
value delivered and customer loyalty HDR
Content
4K Format
4K
60Hz 60Hz
HDR
FHD
FHD
709 30Hz
HD
1995 2005 2015 2025
8
Bringing Big Screen Technology to Mobile
Architecture Flexibility Creating the World’s Most Exceptional Displays
Iris visual processors Unique Iris Features
› Camera
› Video
› Wi-Fi
› Touch
Video Memory
DDI/TCON
› Graphics
Application Iris Chip Panel
Processor
Without Iris With Iris
System
Memory Backlight MotionEngine® Color Calibration
Smooth, Blur Free Motion Industry Leading ∆E
Rapidly Growing Mobile Customer Base
Iris Mobile Solutions
Enabling unmatched Cinema & Gaming in the palm of your hands
2016 – 2017 2018 – 2019
Over 70% of YouTube traffic is viewed on mobile devices
– Variety (May 2019)
without Pixelworks with Pixelworks
without Pixelworks with Pixelworks
Real-time SDR-to-HDR Conversion Dynamic Range Improvement for Gaming
10Mobile Momentum | 2019 Sept. 2019
TCL re-enters mobile market
with first TCL-branded
Iris Solutions: Growing Partnerships and Adoption smartphone leveraging
Iris visual processor
Achieved multiple milestones and record revenue contribution
July 2019 TCL PLEX
ROG (Republic of Gamers) launches
1st smartphone with Soft Iris solution
Sept. 2019
HMD launches two Nokia
March 2019 smartphones featuring
Cooperative agreement PureDisplay enabled by
with Qualcomm to offer Pixelworks’ Iris technology
Soft Iris on Snapdragon™
Jan. 2019 855/Plus Platforms ROG Phone II
Partnership with HMD Global
on Iris solutions for next-gen
Nokia smartphones March 2019 July 2019
Black Shark launched Black Shark launched
its next-generation its 4th mobile device
gaming smartphone with to incorporate
Iris visual processor Iris visual processor Nokia 7.2
Feb. 2019
Began sampling
5th generation
Iris visual processors
11
Black Shark 2 Nokia 6.2
Black Shark 2 ProMobile Momentum | 1H 2020
Iris Solutions: Growing Partnerships and Adoption
Anticipate accelerated growth in first half 2020, including
launch of smartphones by first tier-one mobile OEM
1H 2020: Expect launch of 12 new models across 7 mobile OEMs, including
flagships and mid-tier smartphones and several high-end gaming phones
March 6, 2020
Jan. 2020 OPPO launched Find X2 & Find X2 Pro,
Signed multi-year collaboration agreement first-ever models launched by tier-one
with OPPO Group to incorporate latest OEM with 5th Gen Iris;
March 3, 2020 120 Hz variable refresh rate HDR display
Pixelworks visual processors and software Black Shark launched its 5th & 6th
in series of next-gen smartphones gaming phones with Iris visual processor
Jan. 2020
Collaborative partnership with Coolpad
to include Pixelworks visual solutions in
multiple next-gen mobile devices
Black Shark 3 & 3 Pro OPPO Find X2 & Find X2 Pro
12TrueCut® – Game Changing Video Platform
Unleashing a new level of Motion Picture and HDR Imaging for the latest
generation of Advanced Display Technologies
A broader range of Motion and HDR “looks” Service-provider solutions improve user
than previously possible experience and increase long-term value
Refresh content for the latest devices, with Device-level solutions maintain creative
SDR to HDR and 4k remastering intent for color, detail and motion
Award Winning ‘Motion Grading’
cinematic fine-tuning of Motion Blur,
Judder and Frame-rate appearance 13Pixelworks and YOUKU Partnership
Brings High-Quality HDR Video to Mobile Devices in China
YOUKU utilizing the TrueCut platform to remaster
existing titles and create new titles for its growing
subscriber base of over 500 million users
“YOUKU is committed to delivering content that
portrays the original artistic intent, and we believe
that high-quality HDR is one of the important ways
for our users to experience video storytelling.”
- Alibaba VP and YOUKU COO, Zhuang Zhuoran (Nantian)
TrueCut Metrics
TrueCut Content
over 20,000 hours of available content in True Cut format
Enabled Devices
over 130 existing smartphone models across 9 mobile OEMs
Accessible Users
over 100 million mobile device users and ~70% of average daily users of YOUKU in China
14Bringing Broadcast TV to Any Device
OTA (Over-the-Air) Solutions
Transcoding: enables efficient high-quality streaming of TV over wireless networks
XCODE processor: allows up to 4 simultaneous transcoded streams of free HD TV
Requires access
to local TV
7 of the top 10 most watched TV networks in the US are local channels
– Nielsen (Dec 2018)
15Projector and Japan PVR Businesses
Profitable, generate cash to fund growth initiatives in Mobile/TrueCut
Projector business Japan PVR business
Mature Market Mature Market
8M units annually, long product cycles 2M units annually, long product cycles
Limited Competition - #1 Market Share Limited Competition - #2 Market Share
Business Focus Business Focus
Ramping co-developed SoC with large Support wins in new 4K ADSB (ISDB-S3 standard)
customer in 1H 2020 compatible PVR and STB converter devices
Transition broader customer base to new- Evaluate potential increased customer penetration,
generation SoC with advanced features including expanded opportunities in 4K & 2K devices
Customers CustomersBillion Dollar Market Opportunity
$ Millions Pixelworks Total Market Opportunity
$1,500
$1,250
$1,000
$750
$500
$250
$0
2018 2019 2020 2021 2022
Projector Japan PVR OTA Mobile+TrueCut
17Financial Overview
Financial results and financial outlook data provided in the following slides is
presented on both a GAAP and non-GAAP basis. Our non-GAAP financial results
and non-GAAP financial outlook exclude restructuring charges and stock-based
compensation expense, both of which are required under GAAP. We use non-
GAAP measures internally to assess our operating performance, and believe non-
GAAP measures provide meaningful perspective on our underlying cash flow
dynamics. However, we caution users to consider these measures in addition to,
not as a substitute for, nor superior to, our consolidated financial results presented in
accordance with GAAP.
18Total Revenue Trend Excluding EOL
$ Millions
Revenue (TTM)
Millions
$20.0 12% CAGR
$15.0
$10.0
$5.0
$0.0
Q1 16 Q2 16 Q316 Q416 Q117 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19
Excludes EOL revenueMobile & TrueCut License Revenue
$ Millions
$4.0
Millions
$3.5
$3.0
$2.5 Revenue (TTM)
92% CAGR
$2.0
$1.5
$1.0
$0.5
$0.0
Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19Non-GAAP P&L Comparison
Q1 19 Q2 19 Q3 19 Q4 19
Revenue $16,648 $18,027 $18,056 $16,023
Gross Margin (1) $8,880 $9,758 $9,733 $7,699
Gross Margin % 53.3% 54.1% 53.9% 48.0%
R&D (2) 5,811 5,660 5,888 6,113
SG&A (3) 4,444 3,981 4,416 4,313
Total Opex 10,255 9,641 10,304 10,426
Income/(Loss) from Operations (1,375) 117 (571) (2,727)
Other Income (4) 96 104 71 324
Tax Provision 191 317 16 (69)
Net Income/(Loss) (1,470) (96) (516) (2,334)
EBITDA (463) 1,005 452 (1,714)
Net Income/(Loss) per share ($0.04) ($0.00) ($0.01) ($0.06)
Weighted Shares Basic/Dilutive 37,247 37,688 38,086 38,486
(1) - (4) see GAAP/Non-GAAP Reconciliation in AppendixBalance Sheet Comparison
Q4 18 Q4 19
Assets
Cash and Investments $24,013 $14,232
Accounts Receivable 6,982 10,915
Inventories 2,954 5,401
Property, Plant & Equipment 6,151 4,608
Operating Lease Assets - 5,434
Goodwill 18,407 18,407
Acquired Intangibles 4,208 2,703
Prepaid Expenses & Other Assets 2,626 2,956
Total Assets $65,341 $64,657
Liabilities
Accounts Payable $2,116 $818
Accrued Payroll Liablities 4,431 3,513
Operating Lease Liabilities - 5,757
Other Accrued Liabilities 6,842 4,615
Income Taxes Payable 2,562 2,423
Shareholders Equity 49,390 47,530
Total Liabilities and Shareholder's Equity $65,341 $64,657Thank You
GAAP/Non-GAAP Reconciliation
Q1 19 Q2 19 Q3 19 Q4 19
(1) Excludes:
Amortization of acquired intangible assets 298 298 298 298
Stock-based compensation 95 83 89 100
Inventory step-up and backlog amortization 12 - - -
(2) Excludes stock-based compensation 661 703 570 611
(3) Excludes:
Stock-based compensation 933 879 839 1,085
Amortization of acquired intangible assets 84 76 76 76
Restructuring - 398 - -
(4) Excludes:
Gain on sale of patents 3,905 - - -You can also read
