Executive Summary

Q3 2025 delivered sequential improvement: revenue $8.77M (+6% q/q, -8% y/y), non-GAAP gross margin 49.9% (+400 bps q/q), non-GAAP EPS -$0.69, adjusted EBITDA -$3.59M; all key metrics were “within or better than guided ranges.” Management highlighted cost actions driving opex down $3.1M y/y and cash burn from operations to “under $3 million” in Q3 .
Versus S&P consensus: revenue modest miss ($8.77M vs $9.00M)* while EPS beat (-$0.69 vs -$0.86); coverage is thin (2 estimates in Q3).
Guidance: company withdrew Q4 guidance given definitive agreement to sell Pixelworks Shanghai; Q3 results landed inside prior Q2 guidance ranges for revenue, margins, opex and EPS .
Strategic catalysts: definitive agreement to sell Shanghai subsidiary (expected net proceeds $50–$60M on closing), $6.5M registered direct offering and $3M patent sale post-Q3; cash ~ $22M as of Oct 31, split roughly half Inc./half Shanghai. TrueCut Motion pipeline advanced with upcoming Universal’s “Wicked: For Good” and late-stage partner certification for home device distribution .

What Went Well and What Went Wrong

What Went Well

Gross margin improved above plan on mix shift toward Home & Enterprise; non-GAAP GM 49.9% vs 46.0% in Q2 (GAAP 49.8% vs 45.8% in Q2). “Gross margin expanded sequentially and was more favorable than expected, achieving approximately 50%” .
Operating discipline: non-GAAP opex fell to $9.25M (from $9.71M in Q2) and down $3.1M y/y; “we’ve reduced cash burn from operations by more than 60% year-over-year – to under $3 million in the third quarter” .
Strategic balance sheet actions and transaction: completed $3M sale of non-strategic patents and ~$6.5M net proceeds offering; definitive agreement to sell Shanghai subsidiary to a VeriSilicon-led entity (RMB 950M equity value; expected net cash $50–$60M) .

Management quotes:

“All financial metrics being within or better than our guided ranges” .
“Adjusted EBITDA…negative $3.6 million” (improving q/q and y/y) .
“We believe the proposed transaction stands to unlock substantial value for shareholders…transforming…into a highly compelling global technology licensing business” .

What Went Wrong

Top-line still below prior year: Q3 revenue $8.77M vs $9.53M in Q3’24; GAAP GM 49.8% vs 51.2% y/y; continued net loss despite sequential improvement .
Mobile remains small: Q3 mobile revenue ~$1.4M vs Home & Enterprise ~$7.4M; broader mobile recovery/design-in traction remains gradual .
No Q4 guidance (transaction-related uncertainty): company elected not to provide Q4 guidance due to the Shanghai sale, raising near-term visibility questions for investors .

Analyst concerns:

Geopolitical headwinds in China impacting subsidiary access: “delete A (delete America)” policy biasing buyers toward local semiconductor firms; opportunities improved after announced deal but execution risk remains .
Net proceeds bridge: 78% ownership, redemptions for minority holders, transaction costs and ~10% China withholding tax reduce proceeds from RMB 950M to $50–$60M net .

Financial Results

Core Financials vs Prior Periods

Metric (USD)	Q1 2025	Q2 2025	Q3 2025
Revenue ($ Millions)	$7.09	$8.25	$8.77
GAAP Gross Margin (%)	48.7%	45.8%	49.8%
Non-GAAP Gross Margin (%)	49.9%	46.0%	49.9%
GAAP Net Loss per Share	($0.13)	($1.27)	($0.81)
Non-GAAP EPS	($0.11)	($1.00)	($0.69)
Adjusted EBITDA ($ Millions)	($5.78)	($4.33)	($3.59)

Year-over-Year Snapshot (Q3)

Metric (USD)	Q3 2024	Q3 2025
Revenue ($ Millions)	$9.53	$8.77
GAAP Gross Margin (%)	51.2%	49.8%
Non-GAAP EPS	($1.45)	($0.69)

Segment Breakdown

Segment Revenue ($ Millions)	Q1 2025	Q2 2025	Q3 2025
Home & Enterprise	~$5.8	~$7.1	~$7.4
Mobile	~$1.3	~$1.2	~$1.4

KPIs and Operating Metrics

KPI	Q1 2025	Q2 2025	Q3 2025
Non-GAAP Operating Expenses ($M)	$10.41	$9.71	$9.25
Government Subsidies Recognized ($M)	$0.013	$0.801	$0.467
Cash & Cash Equivalents ($M)	$18.50	$14.26	$14.61
Weighted Avg Shares (Basic/Diluted, Millions)	60.59	5.28 (post RS)	5.44 (post RS)

Note: Company effected a 1-for-12 reverse stock split on June 6, 2025; share counts and per-share data are retroactively adjusted .

Actuals vs S&P Global Consensus

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue Actual ($M)	$7.09	$8.25	$8.77
Revenue Consensus Mean ($M)	$7.43*	$8.50*	$9.00*
EPS Actual (Non-GAAP)	($0.11)	($1.00)	($0.69)
Primary EPS Consensus Mean	($1.36)*	($1.12)*	($0.86)*
Revenue - # of Estimates	3*	3*	2*
EPS - # of Estimates	3*	3*	2*

Values retrieved from S&P Global.*

Observations:

Q3 revenue slight miss vs consensus; Q3 EPS beat. Non-GAAP GM and opex better than implied by guidance drove EPS outperformance .

Guidance Changes

Metric	Period	Previous Guidance	Actual/Current	Change
Revenue ($M)	Q3 2025	$8.5–$9.5	$8.77	Maintained (in range)
Non-GAAP Gross Margin (%)	Q3 2025	47%–49%	49.9%	Raised (above high end)
Non-GAAP Opex ($M)	Q3 2025	$8.5–$9.5	$9.25	Maintained (in range)
Non-GAAP EPS	Q3 2025	($0.70) to ($1.02)	($0.69)	Beat (better than upper bound)
Q4 Guidance	Q4 2025	N/A	Company withdrew Q4 guidance due to Shanghai sale process	Withdrawn

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
TrueCut Motion ecosystem & titles	Targeting 10 titles in 2025; Apple Vision Pro support; box office >$4B; PLF momentum; partnerships expanding	Confirms “Wicked: For Good” upcoming; continued studio/exhibitor traction; late-stage certification with strategic partner for home device distribution	Accelerating
Mobile strategy & custom/IP	Low-cost accelerator for <$350 ASP phones; premium X7/X8; shift toward IP licensing and ASIC design services; realme P4 series preview with dual-chip distributed rendering	Collaborations continue; Realme GT8/P4 launches with Pixelworks chips; mobile revenue ~$1.4M; gradual recovery	Mixed (strategic progress, slow revenue)
Home & Enterprise (projectors)	New SoC ramp, higher ASP; ~flat market but sequential growth amid stocking; resilient to trade impacts	Led q/q growth; favorable mix drove GM improvement	Improving sequentially
Geopolitics & China policy	Strategic review underway; multiple bidders; plan for profitability in H2	“Delete America” preference; opportunities improved post-announced sale to local buyer	Improving post-announcement
Balance sheet & cash actions	Cash $18.5M (Q1); cost reductions; subsidies; pursuing one-time transcoding orders	~$10M gross proceeds from patents + offering; cash ~$22M Oct 31; Q3 subsidies $0.467M	Strengthened liquidity
Corporate transformation	Evaluating Shanghai options (Q1/Q2)	Definitive agreement to sell Shanghai subsidiary; target net proceeds $50–$60M; Board unanimous; shareholder vote required	Major step forward

Management Commentary

“Gross margin expanded sequentially and was more favorable than expected, achieving approximately 50% for the quarter.” — Todd DeBonis, CEO .
“We’ve reduced cash burn from operations by more than 60% year-over-year – to under $3 million in the third quarter.” — Todd DeBonis .
“Net cash proceeds…expected to result in…between $50 and $60 million upon closing.” — Todd DeBonis (Shanghai sale) .
“As of October 31, 2025, our cash and cash equivalents balance was approximately $22 million, of which roughly half is associated with Pixelworks Shanghai and the other half…Pixelworks Inc.” — Haley Aman, CFO .
“We believe [the sale]…transform[s] the future of Pixelworks into a highly compelling global technology licensing business.” — Todd DeBonis .

Q&A Highlights

Transaction proceeds bridge: 78% ownership, redemptions for minority investors at lower valuation, transaction/legal costs, ~10% China withholding tax drive net proceeds to $50–$60M; later-stage investors had prior valuations “over $500 million” .
Geopolitical dynamics: “delete A” policy favoring local suppliers; announced deal has already attracted new opportunities for the subsidiary .
TrueCut focus post-transaction: same operating approach but more capital/focus likely to accelerate adoption; prior investments were “artificially constrained” amid China headwinds .
ASIC/IP scope: beyond smartphones to tablets, AR/VR, LED walls, monitors; production model varies by OEM (ancillary chip vs IP/design services) .
Legacy transcoding orders: PO for one customer to ship in Q4; magnitude not disclosed; second larger opportunity evaluating .

Estimates Context

Q3 revenue slightly below consensus ($8.77M actual vs $9.00M mean); Q3 EPS beat (-$0.69 actual vs -$0.86 mean); limited coverage (2 estimates in Q3)*. Sequential opex reductions and favorable mix drove the EPS outperformance even as revenue modestly lagged .
Estimate recalibration: Consensus likely to tighten around higher margin trajectory and lower opex run-rate post Q3; withdrawal of Q4 guidance and pending Shanghai sale may widen near-term dispersion.