Q3 2025 Pixelworks Inc Earnings Call

November 11, 2025

At this time all participants are in a listen only mode. As a reminder, this 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.

Operator: I will be your operator for today's call. At this time, all participants are in a listen-only mode. As a reminder, this 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.

Thank you Latif and good afternoon, and thank you for joining today's conference call.

Brett Perry: Thank you, Lateef. Good afternoon, and thank you for joining today's conference call. With me today 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 Q3 2025. Before we begin, I'd like to remind you that various remarks 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, Tuesday, 11 November 2025.

With me today on the call are <unk>, President and CEO talked about us and Chief Financial Officer Haley a model. The purpose of today's conference calls to supplement the information provided in pixel <unk> press release issued earlier today announcing the company's financial results for the third quarter of 2025.

Before we begin I'd like to remind you that various remarks, we make on this call, including those about projected future financial results economic and market trends and our 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 <unk>.

<unk> results to differ materially all forward looking statements are based on the company's beliefs as of today Tuesday November 11, 2025, the company undertakes no obligation to update any such statements to reflect events or circumstances occurring after today.

Brett Perry: 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 31 December 2024, 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, as well as the tax effects of the non-GAAP adjustments. The company uses these non-GAAP measures internally to assess its internal operating performance.

Please refer to today's press release, the Companys annual report on Form 10-K for the year ended December 31, 2024, 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.

non-GAAP measures exclude restructuring costs and stock based compensation expense as well as the tax effects of the non-GAAP adjustments.

The company uses these non-GAAP measures internally to assess its internal operating performance. We believe these measures.

We believe these non-GAAP measures provide a meaningful perspective on core operating results and underlying cash flow dynamics, 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.

Brett Perry: We believe these non-GAAP measures provide a meaningful perspective on core operating results and underlying cash flow dynamics. 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 US GAAP. Please note throughout the company's press release and management statements during this conference call, we refer to net loss attributable to Pixelworks, Inc. as simply net loss. Also note on 6 January 2025, the company affected a 1-for-12 reverse stock split of the company's common stock, and all shares of the company's common stock per share data and related information included in today's published condensed consolidated financial statements have been retroactively adjusted as though the reverse stock split had been affected prior to all periods presented.

Please note throughout the company's press release and management statements. During this conference call. We refer to net loss attributable to picks works, Inc. Is simply net loss.

Also note on January six 2025, the company effected a one for 12 reverse stock split of the company's common stock and all shares of the company's common stock per share of data and related information included in today's published condensed consolidated financial statements have been retroactively adjusted.

As the reverse stock split had been affected prior to all periods presented for additional details and reconciliations of GAAP to non-GAAP net loss and GAAP net loss to adjusted EBITDA. Please refer to the company's press release issued earlier today with that it's now my pleasure to turn the call over to pixel works as CEO thought the bonus. Please go ahead.

Brett Perry: For additional details and reconciliations of GAAP to non-GAAP net loss and GAAP net loss to adjusted EBITDA, 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 DeBonis. Please go ahead.

Ted.

Thank you Brad.

Good afternoon, and welcome to everyone on the phone or on the webcast.

Todd DeBonis: Thank you, Brett. Good afternoon, and welcome to everyone on the phone and on the webcast. We appreciate you joining us for today's conference call. I'll start with a brief overview of the results for the quarter, then I'll follow with the two primary objectives for today's call. The first is to review the background and rationale for the proposed transaction involving our Shanghai-based subsidiary. Second is to provide a preview of what the future Pixelworks will look like after the proposed transaction closes. With respect to results for Q3, both top and bottom line results were within our guidance. Revenue grew by 6% sequentially, and gross margin improved to approximately 50%, a little better than expected. We also realized continued benefits from our previous cost reduction actions, with Q3 operating expenses decreasing sequentially and down $3.1 million year over year.

We appreciate you joining us for today's conference call.

I'll start with a brief overview of the results for the quarter and then I'll follow with two primary objectives for today's call.

The first is to review the background and rationale for the proposed transaction involving our Shanghai based subsidiary.

And second is to provide a preview of what the future pixel works will look like after the proposed transaction closes.

With respect to results for the third quarter, both top and bottom line results were within our guidance revenue grew by 6% sequentially.

And gross margin improved to approximately 50%.

Little better than expected.

We also realized continued benefits from our previous cost reduction actions with third quarter operating expenses decreasing sequentially and down $3 $1 million year over year.

Through a combination of our prior restructuring and ongoing cost reductions, we reduced cash burn from operations by more than 60% year over year.

Todd DeBonis: Through a combination of our prior restructuring and ongoing cost reductions, we've reduced cash burn from operations by more than 60% year over year to under $3 million in Q3. Turning to our Pixelworks Shanghai subsidiary and the proposed transaction. As background, our Shanghai-based subsidiary was formed in 2021 as part of a comprehensive realignment of the larger Pixelworks organization. This included restructuring our Shanghai-based subsidiary to serve as the center of operations for all of Pixelworks' semiconductor business, and then securing investment from China-centric investors, as well as our Pixelworks Shanghai employees. More specifically, this business comprises all generations of our open market and co-developed visual display processing chips for both digital projector and the mobile markets. Today, the subsidiary represents a substantial amount of our operating revenue and expenses and also accounts for the majority of our employees.

To under $3 million in the third quarter.

Turning to our pixel works Shanghai subsidiary and the proposed transaction.

As background, our Shanghai based subsidiary was formed in 2021 as part of a comprehensive realignment of the larger pixel works organization.

This included restructuring our Shanghai based subsidiary to serve as the center of operations.

For all of pixel work semiconductor business, and then securing investment from China centric investors as well as our pixel where chenghai employees.

More specifically this business comprises all generations of our open market and co developed visual display processing chips for both digital projector in the mobile markets.

Today, the subsidiary represents a substantial amount of our operating revenue and expenses and also accounts for the majority of our employees.

After several prior investment round in the subsidiary picks works ownership ended up at approximately 78%, which is where it is today.

Todd DeBonis: After several prior investment rounds in the subsidiary, Pixelworks' ownership ended up at approximately 78%, which is where it is today. On 15 October 2025, we signed a definitive purchase agreement to sell all of Pixelworks, Inc.'s ownership in the Pixelworks Shanghai subsidiary to a special purpose entity led by VeriSilicon. For those not familiar with this name, VeriSilicon is a well-established Chinese company that provides platform-based custom silicon services and semiconductor IP licensing services. Most participating on today's call are aware, however, I would like to emphasize that this proposed transaction did not come about suddenly, nor without extensive deliberation and due diligence. The recently entered definitive agreement is a result of a thorough strategic review process launched in the latter part of 2024 that started with the engagement of Morgan Stanley as an advisor to evaluate potential alternative ownership structures for the Shanghai subsidiary.

On October 15th 2025.

We signed a definitive purchase agreement to sell all of pixel works, Inc. Ownership.

In the pixel works Shane high subsidiary to a special purpose entity led by various silicon.

For those not familiar with this name their silicon is a well established Chinese company that provides platform based custom silicon services and semiconductor IP licensing services.

Most participating on today's call are aware, however, I would like to emphasize that this proposed transaction did not come about suddenly nor without extensive deliberation and due diligence.

The recently entered definitive agreement is a result of a thorough strategic review process launched in the latter part of 2024.

That started with the engagement of Morgan Stanley as an adviser to evaluate potential alternative ownership structures for the Shanghai subsidiary.

And a large part due to impatience from our subsidiaries China based investors yes.

Todd DeBonis: In a large part due to impatience from the subsidiary's China-based investors, escalating geopolitical tensions, and capital market constraints within China, after evaluating all serious interest in the subsidiary, the board and I unanimously concluded that the currently proposed transaction was in the best interest of our shareholders. Although still subject to the approval by Pixelworks, Inc. shareholders as well as other customary closing conditions, after satisfying agreed-upon and contractually reduced obligations to minority equity holders of the subsidiary, transaction costs, and withholding taxes, the proposed transaction is expected to result in net cash proceeds to Pixelworks of between $50 and $60 million upon closing. As outlined in my recent published letter to shareholders on 4 November, the rationale for the proposed transaction is threefold. First, it unlocks significant value for shareholders while eliminating minority investor obligations.

Escalating geopolitical tensions.

And capital market constraints within China.

And after evaluating all serious interest in a subsidiary.

As background, our Shanghai based subsidiary was formed in 2020, one as part of a comprehensive realignment of the larger picture works organization.

The board and I unanimously concluded that the currently proposed transaction was in the best interest of our shareholders.

This included restructuring our Shanghai based subsidiary to serve as the center of operations.

Although still subject to the approval by pixel works, Inc, shareholders as well as other customary closing conditions.

For all of pixel works semiconductor business, and then securing investment from China centric investors as well as our pixel works Shanghai employees.

And after satisfying agreed upon and contractually reduced obligations to minority equity holders of the subsidiary.

More specifically this business comprises all generations of our open market and co developed visual display processing chips for both digital projector in the mobile markets.

Transaction costs and withholding taxes.

The proposed transaction is expected to result in net cash proceeds to pixel works of between 50 and $60 million upon closing.

Okay.

Today, the subsidiary represents a substantial amount of our operating revenue and expenses and also accounts for the majority of our employees.

As outlined in my recent published a letter to shareholders on November 4th the rationale for the proposed transaction is three fold.

After several prior investment rounds in the subsidiary picks works ownership ended up at approximately 78%, which is where it is today.

First and unlocked significant value for shareholders, while eliminating minority investor obligations.

Acknowledging the strategic and potential long term value in our pixel works Shanghai subsidiary this.

On October 15th 2025, we signed a definitive purchase agreement to sell all of pixel works inks ownership.

Todd DeBonis: Acknowledging the strategic and potential long-term value in our Pixelworks Shanghai subsidiary, this transaction captures the optimal realizable value in the current environment and allows the company to monetize a significant asset in the form of cash proceeds repatriated to the U.S. Second, it enables a renewed focus and expansion of core strengths. Following a successful exit of the semiconductor hardware business, Pixelworks will be positioned as a global technology licensing business, specializing in cinematic visualization solutions. As an asset-light, IP-rich company in this space, the company will have competitive differentiation and compelling long-term growth potential. Third, it will achieve financial flexibility. The net cash proceeds from the transaction will significantly enhance the balance sheet. Pixelworks will have the flexibility to invest in growth opportunities, support new and existing licensing initiatives, and enable the allocation of capital to the highest return projects.

This transaction captures the optimal about realizable value in the current environment.

In the pixel work Shanghai subsidiary to a special purpose entity.

And allows the company to monetize a significant asset in the form of cash proceeds repatriated to the U S.

Led by various silicon.

For those not familiar with this name their silicon is a well established Chinese company that provides platform based custom silicon services and semiconductor IP licensing services.

Second.

It enables a renewed focus and expansion of core strengths.

Following a successful exit of the semiconductor hardware business.

Yeah.

Axel works will be positioned as a global technology licensing business.

Most participating on today's call are aware, however, I would like to emphasize that this proposed transaction did not come about suddenly nor without extensive deliberation and due diligence.

Realizing cinematic visualization solutions.

As an asset light IP rich company in this space the company will have competitive differentiation and compelling long term growth potential.

The recently entered definitive agreement is a result of a thorough strategic review process launched in the latter part of 2024.

And third it will achieve financial flexibility.

It started with the engagement of Morgan Stanley as an adviser to evaluate potential alternative ownership structures for the Shanghai subsidiary.

The net cash proceeds from the transaction will significantly enhance the balance sheet.

Pixel works, we will have the flexibility to invest in growth opportunities.

In a large part due to impatience from the subsidiaries China based investors.

Support new and existing licensing initiatives and enable the allocation of capital to the highest return projects.

Escalating geopolitical tensions and capital market constraints within China.

As a reminder, shareholders as of October 17th record date have the right to vote.

And after evaluating all serious interest in a subsidiary.

Todd DeBonis: As a reminder, shareholders as of 17 October record date have the right to vote, and I strongly encourage those investors to consider the published proxy materials and vote their shares for in support of the proposed transaction. Importantly, I want to emphasize that all current shareholders will have equal per share participation in the future growth opportunity and success of our transformed business going forward. Having said that, I want to frame what this future transformed business looks like. Post-transaction, Pixelworks become a low headcount, pure-play technology licensing company specializing in cinematic visualization solutions. Our existing TrueCut Motion platform, used by leading filmmakers to enhance the cinematic experience across premium theatrical and home screens, will anchor a portfolio of proprietary imaging technologies extending beyond film and into high-growth enterprise, consumer visualization, and entertainment markets.

The board and I unanimously concluded that the currently proposed transaction was in the best interest of our shareholders.

And I strongly encourage those investors to consider the publish proxy materials and vote their shares for.

Although still subject to the approval by pixel works, Inc, shareholders as well as other customary closing conditions.

In support of the proposed transaction.

Importantly, I want to emphasize that all current shareholders will have equal per share participation in the future growth opportunity and success of our transformed business going forward.

And after satisfying agreed upon and contractually reduced obligations to minority equity holders of the subsidiary.

Transaction costs and withholding taxes.

Yeah.

Having said that I want to frame what this future transformed business looks like.

The proposed transaction is expected to result in net cash proceeds to pixel works of between 50 and $60 million upon closing.

Post transaction picks works become a low head count pure play technology licensing company.

As outlined in my recent published a letter to shareholders on November 4th the rationale for the proposed transaction is three fold.

Specializing in cinematic visualization solutions.

Our existing true cut motion platform used by leading filmmakers to enhance the cinematic experience across premium theatrical and home screens will anchor our portfolio of proprietary imaging technologies, extending beyond film and into high growth enterprise consumer visually.

First and unlocked significant value for shareholders, while eliminating minority investor obligations.

Acknowledging the strategic and potential long term value in our pixel works Shanghai subsidiary.

This transaction captures the optimal that realizable value in the current environment.

Nation and entertainment markets.

Specific to true cut motion.

And allows the company to monetize a significant asset in the form of cash proceeds repatriated to the U S.

I want to reiterate that picks works continues to own and control, 100% of true cut motion, including all related assets and intellectual property.

Todd DeBonis: Specific to TrueCut Motion, I want to reiterate that Pixelworks continues to own and control 100% of TrueCut Motion, including all related assets and intellectual property, irrespective of the proposed transaction with our Shanghai subsidiary. Even though a majority of our recent TrueCut engagement activity with new prospective ecosystem partners has remained behind the scenes, we are continuing to make tangible progress in support of expanded market awareness and adoption of our TrueCut Motion platform. As previously highlighted on our August conference call, during Q3, we were credited in three new theatrical releases: Universal Pictures' Jurassic World Rebirth, DreamWorks Animation's The Bad Guys 2, and Universal Pictures' Nobody 2. Today, I can confirm the next theatrical release to feature our award-winning TrueCut Motion grading technology will be Universal Pictures' Wicked: For Good, which is slated to hit theaters on 21 November.

Second.

It enables a renewed focus and expansion of core strengths.

Irrespective of the proposed transaction with our Shanghai subsidiary.

Following a successful exit of the semiconductor hardware business.

Even though a majority of our recent true cut engagement activity with new prospective ecosystem partners.

Pixel works will be positioned as a global technology licensing business.

Has remained behind the scenes, we are continuing to make tangible progress in support of expanded market awareness and adoption of our true cut motion platform.

Specializing in cinematic visualization solutions.

As an asset light IP rich company in this space the company will have competitive differentiation and compelling long term growth potential.

As previously highlighted on our August conference call. During the third quarter. We were credited in three new theatrical releases.

Okay.

And third it will achieve financial flexibility.

Universal Pictures Jurassic World Rieber Dray.

The net cash proceeds from the transaction will significantly enhance the balance sheet.

Dreamworks animations, the bad guys too and Universal Pictures nobody too.

Pixel works will have the flexibility to invest in growth opportunities support new and existing licensing initiatives and enable the allocation of capital to the highest return projects.

Today I can confirm the next theatrical release to feature our award winning Truecar motion grading technology will be Universal pictures Wicked for good.

Which is slated to hit theaters on November 21.

As a reminder, shareholders as of October 17th record date have the right to vote and.

Earlier today, we confirm the true cut the coup that the true cut motion version of Wicked for good was selected for last night's UK premiere of the film.

Todd DeBonis: Earlier today, we confirmed that the TrueCut Motion version of Wicked: For Good was selected for last night's UK premiere of the film. Separately, we believe we are getting close to completing an agreement with a strategic ecosystem partner to license the broader distribution of TrueCut Motion content to consumer devices in their home. This prospective partner is currently in the process of late-stage certification, and if successful, we believe it can open and accelerate the path to device licensees. While we continue to be encouraged by this and other ongoing engagement activity, we see our TrueCut Motion platform as a foundation to build upon. Exiting the obligations associated with Pixelworks Shanghai's manufacturing and design business will free up the company's management and capital resources to grow an attractive high margin licensing business.

And I strongly encourage those investors to consider the published proxy materials and vote their shares for.

In support of the proposed transaction.

Separately, we believe we're getting close to completing an agreement with a strategic ecosystem partner to license the broader distribution of true cut motion content to consumer devices in their home.

Importantly, I want to emphasize that all current shareholders will have equal per share participation in the future growth opportunity and success of our transformed business going forward.

This prospective partner is currently in the process of late stage certification and if successful we believe it can open and accelerate the path to device licensees.

Okay.

Having said that I want to frame what this future transformed business looks like.

Post transaction picks works become a low head count pure play technology licensing company.

Yeah.

While we continue to be encouraged by this and other ongoing engagement activity, we see our true cut motion platform as a foundation to build upon.

Specializing in cinematic visualization solutions.

Exiting the obligations associated with pixel works Shanghai's manufacturing and design business will free up the company's management and capital resources to grow in attractive high margin licensing business.

As we grow the post transaction piss works into a global technology licensing company.

Todd DeBonis: As we grow the post-transaction Pixelworks into a global technology licensing company, TrueCut Motion will not remain the company's exclusive offering. Coupled with significantly lower headcount and cost structure, we envision a post-transaction business model that will be inherently more scalable, less capital-intensive, and has the potential to deliver high return on invested capital. With more than 2 decades of image processing innovation and our industry-leading TrueCut Motion platform serving as the flagship offering, we believe Pixelworks is poised to enable the most authentic, high-fidelity viewing experiences across all screens, both today's and the advanced screens of the future. With that, I'll turn the call over to Haley to review the financials for Q3, as well as a couple of positive new balance sheet developments that took place subsequent to quarter end.

Nation and entertainment markets.

True cut motion will not remain the company's exclusive offering.

Specific to true cut motion.

Coupled with significantly lower head count and cost structure, we envision envision a post transaction business model that will be inherently more scalable.

I want to reiterate that picks works continues to own and control, 100% of true cut motion, including all related assets and intellectual property.

Irrespective of the proposed transaction with our Shanghai subsidiary.

Less capital intensive and has the potential to deliver high return on invested capital.

Even though a majority of our recent true cut engagement activity with new prospective ecosystem partners.

With more than two decades of image processing innovation in our industry, leading true cut motion platform, serving as the flagship offering.

Has remained behind the scenes, we're continuing to make tangible progress in support of expanded market awareness and adoption of our true cut motion platform.

We believe picks of works is poised to enable the most authentic high fidelity viewing experiences across all screens.

As previously highlighted on our August conference call. During the third quarter. We were credited in three new theatrical releases.

Both today's and the advanced screens of the future.

With that I'll turn the call over to Hayley to review the financials for the third quarter as well as a couple of positive new balance sheet developments that took place subsequent to quarter end.

Universal Pictures Jurassic World Rebirth.

Dreamworks animations, the bad guys too and.

Universal Pictures nobody too.

Thank you Todd.

Today I can confirm the next theatrical release to feature our award winning <unk> motion grading technology will be Universal pictures Wicked for good.

Revenue for the third quarter of 2025 was $8 8 million compared to $8 3 million in the second quarter.

Haley Aman: Thank you, Todd. Revenue for Q3 2025 was $8.8 million, compared to $8.3 million in Q2 and $9.5 million in Q3 2024. The sequential increase in Q3 revenue reflected growth across both of our end markets, led by increased sales in the home and enterprise market. The breakdown of revenue in Q3 was as follows: Home and enterprise revenue was approximately $7.4 million. Revenue from mobile was approximately $1.4 million. Q3 non-GAAP gross profit margin was 49.9%, compared to 46% in Q2 2025 and 51.3% in Q3 2024. The sequential increase in gross profit margin primarily reflected a more favorable product mix on shipments into the home and enterprise market.

And $9 5 million in the third quarter of 2024.

Which is slated to hit theaters on November 20 <unk>.

The sequential increase in third quarter revenue reflected growth across both of our end markets led by increased sales in the home and enterprise market.

Earlier today, we confirm that true cut that the true cut motion version of Wicked for good was selected for last Night's U K premiere of the film.

The breakdown of revenue in the third quarter was as follows.

And enterprise revenue was approximately $7 4 million.

Revenue from mobile was approximately one 4 million.

Third quarter non-GAAP gross profit margin was 49, 9% compared to 46% in the second quarter of 2025.

This prospective partner is currently in the process of late stage certification and if successful we believe it can open and accelerate the path to device licensees.

And 51, 3% in the third quarter of 2024.

The sequential increase in gross profit margin, primarily reflected a more favorable product mix on shipments into the home and enterprise market.

While we continue to be encouraged by this and other ongoing engagement activity, we see our true cut motion platform as a foundation to build upon.

non-GAAP operating expenses were $9 2 million in the third quarter compared to $9 7 million in the prior quarter.

Haley Aman: Non-GAAP operating expenses were $9.2 million in Q3, compared to $9.7 million in the prior Q2 and $12.4 million in Q3 2024. The sequential and year-over-year decrease in operating expenses reflects the ongoing realized benefits of our previously taken actions to reduce expenses. On a non-GAAP basis, Q3 2025 net loss was $3.8 million, or a loss of $0.69 per share, compared to a net loss of $5.3 million, or a loss of $1.00 per share in the prior Q2, and a net loss of $7.1 million, or a loss of $1.45 per share in Q3 2024.

And $12 4 million in the third quarter of 2024.

The sequential and year over year decrease in operating expenses reflects the ongoing realize benefits of our previously taken actions to reduce expenses.

As we grow the post transaction piss works into a global technology licensing company.

True cut motion will not remain the company's exclusive offering.

On a non-GAAP basis third quarter 2025, net loss was $3 8 million or a loss of <unk> 69 per share.

Coupled with significantly lower head count and cost structure, we envision envision a post transaction business model that will be inherently more scalable.

Compared to a net loss of $5 3 million or a loss of $1 per share in the prior quarter.

Less capital intensive and has the potential to deliver high return on invested capital.

And a net loss of $7 1 million or a loss of $1.45 per share in the third quarter of 2024.

With more than two decades of image processing innovation in our industry, leading true cut motion platform, serving as the flagship offering.

Adjusted EBITDA for the third quarter of 2025.

Haley Aman: Adjusted EBITDA for Q3 2025 was -$3.6 million, compared to -$4.3 million in the prior quarter and -$6.3 million in Q3 2024. With respect to our outlook, the company is electing not to provide financial guidance for Q4 due to the previously announced definitive agreement to sell substantially all of the assets of Pixelworks Shanghai. However, we want to highlight that in October 2025, we closed a registered direct offering and the sale of patents pertaining to technologies we no longer pursue, collectively contributing approximately $10 million to our cash position. As of 31 October 2025, our cash and cash equivalents balance was approximately $22 million, of which roughly half is associated with Pixelworks Shanghai and the other half is associated with Pixelworks Inc.

It was a negative $3 6 million compared to a negative $4 3 million in the prior quarter.

We believe pixel works is poised to enable the most authentic high fidelity viewing experiences across all screens.

And a negative $6 3 million in the third quarter of 2024.

Both today's and the advanced screens of the future.

With respect to our outlook. The company has elected not to provide financial guidance for the fourth quarter due to the previously announced definitive agreement to sell substantially all of the athletes absorbed Shanghai.

With that I'll turn the call over to Hayley to review the financials for the third quarter as well as a couple of positive new balance sheet developments that took place subsequent to quarter end.

However, we want to highlight that in October 2025, we closed a registered direct offering and the sale of patents pertaining to technologies, we no longer pursue collectively contributing approximately $10 million to our cash position.

Thank you Todd.

Revenue for the third quarter of 2025 was $8 8 million compared to $8 3 million in the second quarter.

And $9 5 million in the third quarter of 2024.

As of October 31, 2025.

The sequential increase in third quarter revenue reflected growth across both of our end markets led by increased sales in the home and enterprise market.

Cash and cash equivalents balance was approximately $22 million of which roughly half is associated with Pixar Shanghai and the other half is associated with pixel works Inc.

The breakdown of revenue in the third quarter was as follows.

Enterprise revenue was approximately seven 4 million.

That completes our prepared remarks, and we look forward to taking your questions. Operator. Please proceed with the Q&A session. Thank you.

Revenue from mobile was approximately one 4 million.

Haley Aman: That completes our prepared remarks, and we look forward to taking your questions. Operator, please proceed with the Q&A session. Thank you.

Third quarter non-GAAP gross profit margin was 49, 9% compared to 46% in the second quarter of 2025.

Thank you.

As a reminder to ask a question you will need to press star one one on your telephone to remove yourself from the queue. You May Press Star one one again, please standby, while we compile the Q&A roster.

Operator: Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone. To remove yourself from the queue, you may press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Suji Desilva of Roth Capital. Please go ahead, Suji.

And 51, 3% in the third quarter of 2024.

The sequential increase in gross profit margin, primarily reflected a more favorable product mix on shipments into the home and enterprise market.

Our first question comes from the line of Sujit de Silva of Roth Capital. Please go ahead Sir.

non-GAAP operating expenses were $9 2 million in the third quarter compared to $9 7 million in the prior quarter.

Hi, Todd Hi, alien congratulations on this transformative transaction.

And $12 4 million in the third quarter of 2024.

Suji Desilva: Hi, Todd. Hi, Haley, and congratulations on this transformative transaction. Maybe you can start with the transaction itself and, maybe Todd, you can help us bridge, or Haley, the $133 million of consideration to the $50 to 60 million you're gonna get. Just understanding what the amounts were and the circumstance of the, I guess, the minority shareholders receiving portion of this?

So maybe we can start with the transaction itself and maybe Todd you can help us bridge or Haley the $133 million of consideration to the $50 million to $60 million on again, just understanding what the amounts were in the circumstance of the AR.

The sequential and year over year decrease in operating expenses reflects the ongoing realize benefits of our previously taken action to reduce expenses.

On a non-GAAP basis third quarter 2025, net loss was $3 8 million or a loss of 69 per share.

It's the minority shareholders receiving portion of this.

Yeah, I'll I'll take it I'll give you a rough guideline on how it is so first of all we do only 178% of the entity. So the value of the entire entity was valued at 950 million RMB.

Compared to a net loss of $5 3 million or a loss of $1 per share in the prior quarter.

Todd DeBonis: I'll take it. I'll give you a rough guideline on how to. First of all, we do only own 78% of the entity. The value of the entire entity was valued at RMB 950 million or $133 million USD. We had obligations, either redemption obligations to, like, our employees, and we had actually preferred return obligations to all of the outstanding investors. As part of this transaction, they've all agreed to release the preferred return benefit in return for just redemption. We're using some of our ownership to effectively redeem them at this lower valuation. I'll remind you that when we raised capital for the subsidiary, it was at significantly higher valuations than what we are selling the entity for.

And a net loss of $7 1 million or a loss of $1.45 per share in the third quarter of 2024.

433 million USD.

Then we had obligations either redemption obligations to like our employees.

Adjusted EBITDA for the third quarter of 2025.

It was a negative $3 6 million compared to a negative $4 3 million in the prior quarter.

And we had actually preferred return obligations to all of the outstanding investors.

And a negative $6 3 million in the third quarter of 2024.

As part of this transaction they've all agreed.

To release the preferred return.

Benno.

Benefit in return for just redemption.

So we're using some of our ownership to effectively redeem them at this lower valuation.

However, we wanted to highlight that in October 2025, we closed a registered direct offering and the sale of patents pertaining to technologies, we no longer pursue collectively contributing approximately $10 million to our cash position.

I'll remind you that when we raised capital.

For the subsidiary it was at significantly higher valuations than what we are selling the entity for.

In fact, the later stage investors it was valued over 500 million USD.

As of October 31, 2025, our cash and cash equivalents balance was approximately 22 million of which roughly half is associated with Pixar Shanghai and the other half is associated with <unk>, Inc.

Todd DeBonis: In fact, the later stage investors, it was valued over $500 million USD. That's the main reason why we're not getting 78% of the return is because we're redeeming the shareholders. In return, they're foregoing their preferred return, which would have been significantly higher. There's just your normal transaction costs and legal costs. The final step is that there is a withholding tax, as we're selling a Chinese asset to a Chinese buyer in China. To repatriate our cash, we have to pay a withholding tax in China of approximately 10%. Once you go through all of that, you get to this net proceeds delivered in the US between $50 and 60 million.

So that's the main.

The reason why we're not getting 78% of returns because we are redeeming the shareholders, but in return they're forgoing their preferred return.

That completes our prepared remarks, and we look forward to taking your questions. Operator. Please proceed with the Q&A session. Thank you.

Which would have been significantly higher.

And then Theres, just your normal transaction costs and legal costs.

Thank you.

The final step is is that there is a a.

But withholding tax as we're selling the Chinese asset to a Chinese buyer in China to repatriate our cash we have to pay withholding tax in China of approximately 10%. So once you go through all of that you get to this.

Our first question comes from a line of Sujit de Silva of Roth Capital. Please go ahead Sir.

Net proceeds delivered in the U S between $50 million to $60 million.

Hi, Todd Hi, alien congratulations on this transformative transaction.

So maybe you can start with the transaction itself and maybe Todd you can help us bridge or Haley the $133 million of consideration to the 50 to 60 million you're going to get just understanding what the amounts were in the circumstance of the I.

Okay, Todd I appreciate the detail there.

The second question is really on the.

Suji Desilva: Okay. Todd, appreciate the detail there. The second question is really on the Shanghai subsidiary. Have you seen actual impact to the business in the last few weeks or months due to geopolitical? Just to understand that sudden, you know, this deal closing, just to understand if there has been any impact there or whether it's more normal course.

On the Shanghai subsidiary, how have you seen actual impact to the business in the last few weeks or months.

Due to geopolitical just starter stand that asset in this deal closing just to understand if there has been any impact.

I guess the minority shareholders receiving portion of this.

Yeah, I'll take it I'll give you a rough guideline on how does so first of all we do only 178% of the entity. So the value of the entire entity was valued at 950 million RMB.

There are whether it's more normal course.

You know, it's hard to be definitive on this but there is a delete a.

Todd DeBonis: You know, it's hard to be definitive on this, but there is a Delete A. You could call it a policy. It's an undercurrent. Delete A being Delete America. There is a big effort, and I mean, and you can see this in the AR world right now, where the government steps in and pushes the large buyers of semiconductors, so large equipment manufacturers to the smartphone manufacturers, et cetera, they want a preferred preference on local semiconductor companies. We were a hybrid. Pixelworks Shanghai was effectively a Little Giant. It got subsidies, et cetera, but they knew it was 80% owned by a US public entity. We felt it. We felt it for the last 18 months. We tried to sell through it. Some cases we were successful, in some cases we weren't.

You could call it a policy, it's an undercurrent delete a bean to lead America.

433 million USD.

Then we had obligations either redemption obligations to like our employees.

There was a big effort and you can see this in the world right now where the government steps in and pushes the large.

And we had actually preferred return obligations to all of the outstanding investors.

As part of this transaction they've all agreed.

Buyers of semiconductor so large equipment manufacturers to the smartphone manufacturers et cetera to prove they want.

To release the preferred return.

Benefit in return for just redemption.

Preferred preference.

On local semiconductor companies.

So we're using some of our ownership to effectively redeem them at the slower valuation.

We were at a hybrid.

Pixel works Shanghai was affectively, a little giant it got subsidies et cetera.

I'll remind you that when we raised capital.

For the subsidiary it was at significantly higher valuations than what we are selling the entity for.

But they knew it was 80% owned.

Bye.

The U S public entity.

We felt it.

In fact, our later stage investors it was valued over 500 million USD.

We felt that for the last 18 months.

We tried to sell through at some cases, we were successful in some cases, we werent.

So that's the main.

I can tell you since the deal was announced in public.

The reason why we're not getting 78% of returns because we are redeeming the shareholders, but in return they are foregoing their preferred return.

Todd DeBonis: I can tell you since the deal was announced in public, I've seen several opportunities show up to the subsidiary that I do not think would have showed up to the subsidiary if we would have kept the existing ownership intact. Now, whether that VeriSilicon will convert those opportunities or not remains to be seen, but it, you can feel it, Suji.

I've seen several opportunities show up to the subsidiary that I do not think would have showed up to the subsidiary if we would have kept the existing ownership intact now whether that.

Which would have been significantly higher.

Their silicon rule.

And then Theres, just your normal transaction costs and legal costs.

Convert those opportunities or not remains to be seen but it is you can feel it to Jay.

The final step is is that there is a.

Right now that really helps out and then lastly.

Turning to the forward look the.

Suji Desilva: Right. No, that really helps, Todd. Lastly, turning to the forward look, the TrueCut business you have here, just maybe give me the before and after this transaction, how you are running that business and what, you know, if this question makes sense, what this transaction unlocks and how you will run the TrueCut opportunity here differently going forward, whether it's capital, employees, as, customer discussions. Anything of color there would help to kind of look forward to the pro forma business.

The Truecar business you'd have here, just maybe give me the before and after this transaction how you are running that business.

And what this question makes sense, what this transaction unlocks and how you will run the <unk>.

Net proceeds delivered in the U S between $50 million to $60 million.

We'll cut opportunity here differently going forward, whether its capital.

Okay, Tom I appreciate the detail there.

Employees.

Second question is really on the.

Customer discussions anything of color there would help to kind of look forward to the pro forma business.

On the Shanghai subsidiary.

Are you seeing actual impact to the business in the last few weeks or months due.

That's a good question.

Due to geopolitical just understand that asset in this deal closing just to understand if there has been any impact there.

Todd DeBonis: That's a good question. I never really thought about it in running it differently, okay. I thought we were running it appropriately up to this point. Now we are going to focus on it and try to accelerate it. I do believe the nature of the business and the way we went to market, which is a very difficult way to go to market, where you have to bring the whole ecosystem together, from content generation to theatrical distribution, then to home entertainment distribution, and then device manufacturers. You have to bring this whole ecosystem sort of forward together. It takes a lot of evangelism. During that evangelism period, not always throwing money and resources accelerates it.

I never really thought about it and running it differently. Okay. I would have thought we were running it appropriately up to this point.

Or whether it's more normal course.

And now we.

We're going to focus on it and try to accelerate it I do believe.

It's hard to be definitive on this but there is a delete a.

The nature of the business and the way we went to market, which is very difficult way to go to market, where you have to bring the whole ecosystem.

You could call it a policy it's an undercurrent.

Delete a bean to lead America.

Together.

So from content generation.

There was a big effort and I mean, I know you can see this in the a our world right now where the government steps in and pushes the large.

Two theatrical distribution than to home entertainment distribution.

And then device manufacturers and you have to bring this whole ecosystem.

Buyers of semiconductors, so large equipment manufacturers to the smartphone manufacturers et cetera to prove they want.

Forward together.

It takes a lot of evangelism.

And so during that evangelism period.

Preferred preference.

On local semiconductor companies.

Not always throwing money and resources accelerates it.

We were a hybrid.

It takes a week Shanghai was effectively a little giant she got subsidies et cetera.

And so you know since we sort of first.

Todd DeBonis: You know, since we sort of first won awards for this technology from HPA and other Hollywood technical bodies, we've been evangelizing. Could we have done more of it? Maybe, with more capital and more focus. For the most part, it took its own time. We see now that that evangelism is starting to pay dividends. Now might be the time to accelerate the investment and energy into the business. I would say that's probably the only difference between then and now. I will say, you know, as a public company, you're very focused on trying to be cash flow positive and earnings growth. When we ran into headwinds in China, we definitely slowed down our investment in TrueCut.

One awards for this technology.

But they knew it was 80% owned.

From HPA and other Hollywood.

Bye bye.

The U S public entity.

Technical bodies.

We felt it.

We felt that for the last 18 months.

We've been evangelizing.

We tried to sell through at some cases, we were successful in some cases, we werent.

Could we have done more of it maybe with more capital and more focus but for the most part it took its own time, we see now that that evangelism is starting to pay dividends and so now might be the time to.

I can tell you since the deal was announced in public.

I've seen several opportunities show up to the subsidiary that I do not think would have showed up to the subsidiary if we would have kept the existing ownership intact now what did that.

To.

Accelerate the investment in energy into the business.

So I would say that's probably the only difference between then and now I will say you know.

Their silicon wall.

Convert those opportunities or not remains to be seen but it did it you can feel it Judy.

You know as a public company, you're very focused on.

Trying to be cash flow positive.

Right now that really helps out and then lastly.

And earnings growth.

Turning to the forward look.

And so when we ran into headwinds.

The truecar business you'd have here.

Headwinds in China.

Just maybe give me the before and after this transaction how you are running that business.

We definitely slowed down or investment in true cut.

And what this question makes sense, what this transaction unlocks and how you will run the <unk>.

So.

Maybe for the last year or so it was artificially constrained.

Todd DeBonis: Maybe for the last year or so, it was artificially constrained.

True cut opportunity here differently going forward, whether its capital.

Okay. Thanks.

Employees.

Thanks, Todd Thanks Alice.

Customer discussions anything of color there would help to kind of look forward to the pro forma business.

Suji Desilva: Okay. Thanks, Todd. Thanks, Haley Aman.

Thank you Susie good questions.

Thank you I would now like to turn the conference back to management for closing remarks.

Todd DeBonis: Thank you, Suji. Good questions.

That's a good question.

Operator: Thank you. I would now like to turn the conference back to management for closing remarks.

Yeah. So thanks, everybody I once again would like to repeat I encourage all shareholders of record to vote. Your proxy shares is in Oregon Corporation we.

I never really thought about it and running it differently okay.

Todd DeBonis: Yeah. Thanks, everybody. I once again would like to repeat, I encourage all shareholders of record to vote your proxy shares. As an Oregon corporation, we require 67% of all outstanding shareholders to vote for in order for this to pass. I encourage you all to vote your shares, and thanks for your time.

We were running it appropriately up to this point.

And now we are.

We're going to focus on it and try to accelerate it I do believe.

We require 67% of all its standing shareholders to vote for in order for this.

The nature of the business and the way we went to market.

To pass so I encourage you all to vote your shares.

Which is very difficult way to go to market, where you have to bring the whole ecosystem.

And thanks for your time.

Together.

Yeah.

So from content generation.

This concludes today's conference call. Thank you for participating you may now disconnect.

Two theatrical distribution and home entertainment distribution.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

And then device manufacturers and you have to bring this whole ecosystem.

Forward together.

It takes a lot of evangelism.

And so during that evangelism period.

Not always throwing money and resources accelerates it.

And so you know since we sort of first.

One awards for this technology.

From H P E and other Hollywood.

Technical bodies.

We've been evangelizing.

Two.

Accelerate the investment in energy into the business.

So I would say that's probably the only difference between then and now I will say you know.

As a public company, you're very focused on.

Trying to be cash flow positive.

And earnings growth.

And so when we ran into.

The headwinds in China.

We definitely slowed down our investment in Truecar.

So.

Maybe for the last year or so it was artificially constrained.

Okay.

Thanks, Todd Thanks Alastair.

Thank you Susie good questions.

Thank you I would now like to turn the conference back to management for closing remarks.

Yeah. So thanks to everybody I once again would like to repeat I encourage all shareholders of record.

To vote your proxy shares.

As in Oregon Corporation.

We require 67% of all its standing shareholders to vote for in order for this to.

To pass so I encourage you all to vote your shares.

And thanks for your time.

This concludes today's conference call. Thank you for participating you may now disconnect.

[music].

Yeah.

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