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

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

2022

2022

2021

2022

2021

Reconciliation of GAAP and non-GAAP gross profit

GAAP gross profit

$                8,796

$                9,348

$                7,985

$              26,907

$              18,820

Stock-based compensation

(47)

59

(138)

20

17

Amortization of acquired intangible assets

—

—

218

72

681

Total reconciling items included in gross profit

59

80

92

698

Non-GAAP gross profit

$                8,749

$                9,407

$                8,065

$              26,999

$              19,518

Non-GAAP gross profit margin

49.8 %

49.3 %

53.1 %

50.7 %

50.7 %

Reconciliation of GAAP and non-GAAP operating expenses

 GAAP operating expenses

$              13,527

$              14,545

$              11,889

$              40,716

$              35,095

Reconciling item included in research and development:

Stock-based compensation

565

647

549

1,795

1,740

Reconciling items included in selling, general and administrative:

Stock-based compensation

776

989

1,146

2,223

2,738

Amortization of acquired intangible assets

—

—

53

18

166

Total reconciling items included in operating expenses

1,341

1,636

1,748

4,036

4,644

Non-GAAP operating expenses

$              12,186

$              12,909

$              10,141

$              36,680

$              30,451

Reconciliation of GAAP and non-GAAP net loss attributable to Pixelworks, Inc.

GAAP net loss attributable to Pixelworks Inc.

$              (4,496)

$              (5,008)

$              (4,073)

$            (14,096)

$            (16,530)

Reconciling items included in gross profit

(47)

59

80

92

698

Reconciling items included in operating expenses

1,341

1,636

1,748

4,036

4,644

Tax effect of non-GAAP adjustments

1

(1)

7

(3)

(9)

Impact of non-GAAP adjustments to redeemable non-controlling interest

—

—

(9)

—

(9)

Non-GAAP net loss attributable to Pixelworks Inc.

$              (3,201)

$              (3,314)

$              (2,247)

$              (9,971)

$            (11,206)

Non-GAAP net loss attributable to Pixelworks Inc. per share - basic and diluted

$                (0.06)

$                (0.06)

$                (0.04)

$                (0.18)

$                (0.21)

Non-GAAP weighted average shares outstanding - basic and diluted

54,826

54,120

52,768

54,120

52,245

*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.