Pixelworks (PXLW 5.25%) reported its second-quarter 2025 earnings on August 12, 2025, a non-GAAP net loss of $5.3 million, and sequential revenue growth driven by home and enterprise product shipments. Management highlighted progress in TrueCut Motion, ongoing strategic review of the Shanghai subsidiary, and a continued focus on cost containment. Management continues to target profitability for the Shanghai subsidiary as early as Q4 2025.
TrueCut Motion gains global traction and $4 billion box office milestone
TrueCut Motion, Pixelworks’ cinematic visual enhancement platform, has been credited on blockbuster films across leading studios and is expected to expand into the home entertainment market through premium devices, including the Apple Vision Pro. The format has enabled titles to gross over $4 billion at the box office as of August 12, 2025. This solidifies its position with key studio partners like Universal, DreamWorks, and Disney.
"As of today, titles that utilize TrueCut Motion have achieved over $4 billion at the box office, proving that our current studio partners, Universal, DreamWorks, Disney, Legendary, and Lightstorm see the value that TrueCut brings to their tentpole production films. These encouraging results clearly show that we are moving towards sustained growth for titles and brand awareness."
-- Todd DeBonis, President and CEO
Adoption of TrueCut Motion by major studios and select theaters validates technology leadership.
Shanghai subsidiary realignment and strategic review near inflection point
Pixelworks Shanghai now consolidates all semiconductor operations, serving both projector and mobile markets, following a 2021 realignment to enable efficiency and focus. The subsidiary is the subject of an active strategic review process, managed by Morgan Stanley, with three non-binding term sheets under due diligence and a transaction targeted before Q3 end.
"We have since been engaged in due diligence with all three parties. I traveled to Shanghai last week and although the outcome is yet to be determined, we believe the process is progressing well, and nearing closure, and likely to result in a new strategic direction for our Pixelworks Shanghai subsidiary before the end of the third quarter."
-- Todd DeBonis, President and CEO
Cost reductions drive improved margins and narrower losses for Pixelworks
Non-GAAP operating expenses decreased by over $3 million year-over-year to $9.7 million, while non-GAAP gross margin reached 46% due to improved yields and a favorable mix. The Shanghai entity received approximately $1.6 million in Chinese government “Little Giant” program subsidies, aiding cash flow and offsetting R&D expenses.
"The sequential and year-over-year decrease in operating expenses reflects the results of our previously taken actions to reduce operating expenses and streamline our overall cost structure. Additionally, during the second quarter, our Pixelworks Shanghai subsidiary received approximately $1.6 million in cash subsidies as part of its certified status in China's Little Giant program."
-- Haley Aman, Chief Financial Officer
This disciplined cost management, combined with targeted government incentives, improves the likelihood of approaching profitability even as revenue expansion remains gradual.
Looking Ahead
For Q3 2025, management guides for revenue in the $8.5 million to $9.5 million range, non-GAAP gross margin between 47% and 49%, and non-GAAP operating expenses between $8.5 million and $9.5 million. Non-GAAP EPS is expected to range from a loss of $0.70 to $1.02 per share. Management expects a decision regarding the Shanghai subsidiary’s strategic transaction before the end of Q3 and continues to target profitability in the subsidiary as soon as Q4 2025.
