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| Statement |
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| To the extent we are successful in securing additional international models and expanding our customer base, we believe that both will contribute incremental unit volumes, accelerate the ecosystem development, and accelerate our mobile growth |
| And based upon this new rollout of pricing, it improves the margin profile across all of the projector product lines |
| Third quarter non-GAAP gross profit margin expanded 170 basis points sequentially to 44.8% from 43.1% in the third quarter of 2023 and compared to 53.3% in the fourth quarter of 2022 |
| In addition to strong top line growth, gross margin expanded for the second consecutive quarter as we continued to execute on certain cost related initiatives, while also driving increased sales of newer products with higher ASPs and better margin profiles |
| I would like to specifically acknowledge our team's solid execution on our strategic growth initiatives, including the building of two influential ecosystems that will become the foundation of our mobile and TrueCut businesses |
| Exiting 2023 I believe the company is well poised and better positioned than at any time in my tenure as CEO |
| We continue to build a strong, capable team |
| Revenue from mobile increased 44% sequentially to approximately $11.9 million, which represented a quarterly record and a record 59% of total revenue |
| In terms of gross profit margin, as discussed in my earlier remarks, we expect to drive continued gross margin expansion in the current quarter and throughout the year |
| IRX certified games integrating our SDK deliver unparalleled visual quality, enabling a truly immersive gaming experience while also saving overall system power and providing for longer battery life |
| We anticipate further benefits to gross margin from a combination of incremental sales of new products with higher margins as well as increased overhead absorption |
| As discussed in recent quarters, we expect to continue to drive gross margin expansion by passing through an increased portion of previously incurred higher material costs to customers as well as improving manufacturing cost efficiencies with our suppliers |
| Our mobile revenue reached a new quarterly record, increasing 44% sequentially and growing more than 200% year-over-year |
| We have entered 2024 with strong momentum across our mobile visual processing solutions and IRX certification program, coupled with the recently secured commercial engagements with two major Hollywood studios for our TrueCut Motion Platform |
| Underpinning our momentum in mobile against a challenging market backdrop for consumer semiconductors is the differentiated display performance enabled by our visual processing technology |
| As Todd previously highlighted, the sequential and year-over-year increase in fourth quarter revenue was primarily driven by continued strong growth in mobile |
| Also fundamental to achieving non-GAAP profitability in the back half of this year will be our continued expansion of corporate gross margins and tightly managing OpEx, while still adequately funding our existing growth initiatives |
| Our fourth quarter results marked a strong finish to the year, which was highlighted by the continued momentum and significant growth of our mobile business |
| In addition, we believe our new codeveloped chip will increase our market share in the 3LCD projector market over the next several years |
| Specific to our expectations for mobile in 2024, we are targeting annual revenue growth of 50%, driven by a combination of increased unit volumes and a favorable mix of newer visual processors with higher ASPs |
| Specific to mobile, we expect to achieve another year of accelerated growth driven by a combination of increased unit volumes and the continued ramp of new product introductions |
| Total revenue for the quarter increased 25% sequentially and was up 19% year-over-year |
| For the full year, mobile revenue grew 33% to a record $30 million, expanding to represent more than half of the total revenue |
| The margin guidance we gave increases the margin by 600 basis points |
| This enables exceptional picture quality with simultaneous operation of up to 144 frames per second and 1.5K resolution for immersive mobile gaming while also maintaining lower power consumption |
| We believe that this model launch represents a definable moment in the next leg of our growth |
| The expected sequential increase in first quarter gross margin primarily reflects increased shipments of our newest generation mobile visual processor, which has a higher margin profile compared to prior generation mobile chips |
| This growth takes into consideration the recent ecosystem traction and momentum of our IRX-based solutions, resulting in an increased pipeline of design-ins |
| With this superior visual experience being especially prevalent for mobile gaming, we formally introduced Pixelworks IRX branded gaming experience and certification program |
| The global box office success of these three titles was an important first step |
| Statement |
|---|
| Adjusted EBITDA for the fourth quarter 2023 was a negative $1.9 million compared to a negative $5 million in the third quarter and a negative $1 million in the fourth quarter of 2022 |
| More generally, the market dynamics throughout 2023 reflected a prolonged period of inventory adjustment by projector OEMs |
| If a phone gets too hot, bad things happen |
| And then we do expect in 2025, home and enterprise will probably have churned through all the inventory issues |
| Lastly, we expect first quarter non-GAAP EPS to range between a loss of $0.10 per share and a loss of $0.06 per share |
| On a non-GAAP basis, fourth quarter 2023 net loss was $2.6 million or a loss of $0.05 per share, compared to a net loss of $5.7 million or a loss of $0.10 per share in the prior quarter, and a loss of $0.8 million or a loss of $0.01 per share in the year ago quarter fourth quarter |
| Although end demand for digital projectors appears to have stabilized, most of our projector customers are still in various stages of realigning their business following previous component supply imbalances |
| I think people still feeling like, what is this |
| Achieving this final development milestone allowed us to recognize an anticipated R&D credit, which reduced our reported OpEx in the quarter |
| as simply net loss |
| 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 |
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