Pixelworks Reports Second Quarter 2020 Financial Results

PIXELWORKS, INC. RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL INFORMATION * (In thousands, except per share data) (Unaudited)

	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
		2020			2020			2019			2020			2019
Reconciliation of GAAP and non-GAAP gross profit
GAAP gross profit	$	5,049		$	6,775		$	9,376		$	11,824		$	17,848
Amortization of acquired intangible assets		298			298			298			596			596
Stock-based compensation		127			101			83			228			178
Inventory step-up and backlog amortization		-			-			-			-			12
Total reconciling items included in gross profit		425			399			381			824			786
Non-GAAP gross profit	$	5,474		$	7,174		$	9,757		$	12,648		$	18,634
Non-GAAP gross profit margin		59.2	%		52.1	%		54.1	%		54.9	%		53.7	%

Reconciliation of GAAP and non-GAAP operating expenses
GAAP operating expenses	$	11,470		$	12,052		$	11,697		$	23,522		$	23,629
Reconciling item included in research and development:
Stock-based compensation		806			648			703			1,454			1,364
Reconciling items included in selling, general and administrative:
Stock-based compensation		1,310			1,073			879			2,383			1,812
Amortization of acquired intangible assets		76			76			76			152			160
Restructuring		-			592			398			592			398
Total reconciling items included in operating expenses		2,192			2,389			2,056			4,581			3,734
Non-GAAP operating expenses	$	9,278		$	9,663		$	9,641		$	18,941		$	19,895

Reconciliation of GAAP and non-GAAP net loss
GAAP net loss	$	(6,552	)	$	(5,399	)	$	(2,448	)	$	(11,951	)	$	(2,315	)
Reconciling items included in gross profit		425			399			381			824			786
Reconciling items included in operating expenses		2,192			2,389			2,056			4,581			3,734
Reconciling items included in total other income, net		-			-			-			-			(3,905	)
Tax effect of non-GAAP adjustments		18			(25	)		(86	)		(7	)		133
Non-GAAP net loss	$	(3,917	)	$	(2,636	)	$	(97	)	$	(6,553	)	$	(1,567	)

Non-GAAP net loss per share - basic and diluted	$	(0.10	)	$	(0.07	)	$	(0.00	)	$	(0.17	)	$	(0.04	)

Non-GAAP weighted average shares outstanding - basic and diluted		39,444			38,868			37,688			39,156			37,469

*Set forth above are reconciliations of the non-GAAP financial measure to the most directly comparable GAAP financial measure. The non-GAAP financial measure disclosed by the company has limitations and should not be considered a substitute for, or superior to, the financial measure prepared in accordance with GAAP, and the reconciliations from GAAP to Non-GAAP actuals should be carefully evaluated. Please refer to "Non-GAAP Financial Measures” in this document for an explanation of the adjustments made to the comparable GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide useful information for investors.

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