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Pixelworks , Inc. (NASDAQ:) has reported a strong start to 2024, with a first-quarter revenue of $16.1 million, marking a significant 61% increase from the previous year. The company’s success is largely attributed to its mobile segment, which saw a nearly 200% increase in revenue year-over-year and now constitutes 61% of the total revenue.

This growth has been driven by the X-Series visual processors and TrueCut motion licensing. Despite facing some near-term headwinds, including a reduction in demand from a major mobile customer and delays in the launch of its next-generation mobile visual processor, Pixelworks remains optimistic about its long-term strategy and growth potential.

Key Takeaways

  • Pixelworks’ Q1 2024 revenue exceeded guidance, with a 61% year-over-year increase to $16.1 million.
  • The mobile segment’s revenue surged nearly 200% compared to the previous year.
  • Gross margin surpassed 50% due to a favorable shift in revenue mix and cost efficiencies.
  • The company’s IRX gaming ecosystem is expanding, with plans to double the number of IRX-certified games by year’s end.
  • Pixelworks is pausing orders for recent models due to slow sell-through, with this pause expected to last into Q3.
  • The launch of the next-generation mobile visual processor is delayed, impacting the securing of new premium model customers in H2 2024.
  • Despite a lower revenue forecast for Q2, Pixelworks anticipates a return to sequential growth in the latter half of the year.

Company Outlook

  • Pixelworks forecasts lower revenue for Q2 but expects to resume sequential growth in the second half of the year.
  • The company is focused on international expansion and sees Transsion as its fastest-growing mobile phone customer.
  • With over 100 IRX-qualified games, Pixelworks aims to double the number of IRX-certified games by the end of the year.
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Bearish Highlights

  • Demand reduction from the largest mobile customer presents a near-term challenge.
  • Technical hurdles have delayed the market introduction of the next-generation mobile visual processor.
  • The delay may result in missed opportunities with customers designing new premium models for the second half of 2024.

Bullish Highlights

  • The IRX ecosystem engagement is at an all-time high, with robust growth in IRX-certified mobile games.
  • The home and enterprise business revenue met expectations, and a next-generation projector SOC is set for volume production in H2 2024.
  • Transsion’s growth in unit sales by over 80% year-over-year in Q1 indicates a strong demand in emerging markets.

Misses

  • Pixelworks will miss securing some customers for new premium models due to the delayed processor launch.
  • The company reported a net loss of $4 million for Q1 2024.

Q&A Highlights

  • Todd DeBonis highlighted the success of promoting the IRX brand with a limited budget through strategic partnerships and customer support.
  • Pixelworks is executing cost efficiency initiatives to navigate the near-term challenges while maintaining confidence in their long-term growth strategy.

Pixelworks, Inc. continues to navigate the competitive tech landscape with a focus on innovation and market expansion. The company’s confidence in its IRX ecosystem and strategic initiatives underscores its commitment to long-term growth despite the current challenges. Investors and stakeholders will be watching closely as Pixelworks moves towards the latter half of 2024, aiming to capitalize on emerging market trends and technological advancements.

InvestingPro Insights

Pixelworks, Inc. (PXLW) has demonstrated resilience amidst market volatility, as evidenced by its recent financial performance. The company’s market capitalization stands at $108.08 million, reflecting investor sentiment and market recognition of its potential. Despite a challenging operating environment, Pixelworks’ gross profit margin remains strong at 43.08% for the last twelve months as of Q1 2023, indicating effective cost management and a potentially sustainable business model in its sector.

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Investors should note that the company’s stock price has experienced significant fluctuations, with a 44.96% increase over the last six months, yet a 28.08% decrease in the last three months. This volatility may be attributed to the dynamic nature of the tech industry and the specific operational challenges Pixelworks faces, such as the delayed launch of its next-generation mobile visual processor.

From an operational standpoint, Pixelworks’ strategy appears to be focused on maintaining liquidity, as suggested by an InvestingPro Tip indicating that the company holds more cash than debt on its balance sheet. This financial position may provide Pixelworks with the flexibility to navigate near-term headwinds and invest in growth opportunities. However, the company is quickly burning through cash, which is a critical factor for investors to monitor, especially in light of the company’s net loss reported for Q1 2024.

For those interested in a deeper dive into Pixelworks’ financial health and future prospects, there are 11 additional InvestingPro Tips available at https://www.investing.com/pro/PXLW. These tips can provide valuable insights, especially when considering the company’s current valuation, which implies a poor free cash flow yield and a high Price / Book multiple of 8.62.

Investors looking to leverage these insights for a comprehensive investment strategy can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking further analysis and data that could inform investment decisions.

Full transcript – Pixelworks (PXLW) Q1 2024:

Operator: Good day, ladies and gentlemen and welcome to Pixelworks, Inc.’s First Quarter 2024 Earnings Conference Call. I’ll be your operator for today’s call. And as a reminder, this conference 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.

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Brett Perry: Good afternoon and thank you for joining us on today’s call. With me 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 the first quarter of 2024. Before we begin, I’d like to remind you that various remarks we make on this call, including those about our 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 actual results to differ materially. All forward-looking statements are based on the company’s beliefs as of today, Tuesday, May 14, 2024. 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 December 31, 2023 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 stock-based compensation expense. The company uses these non-GAAP measures internally to assess operating performance. We believe the non-GAAP measures provide a meaningful perspective into core operating results and underlying cash flow dynamics. We caution investors to consider these measures in addition to not as a substitute for nor superior to the company’s consolidated financial results as presented in accordance with U.S. GAAP. Also note, throughout the company’s press release and management statements during this conference, we refer to net loss attributable to Pixelworks Inc. as simply net loss. For additional details and reconciliation 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, I’d now like to turn the call over to Pixelworks’ CEO Todd DeBonis for his opening remarks. Todd, please go ahead.

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Todd DeBonis: Thank you, Brett. Good afternoon and welcome to everyone joining us on today’s call. In terms of our overall results, we had a solid first quarter. As outlined in today’s press release, total revenue was just above the midpoint of guidance. We anticipated March quarter seasonality coming off record mobile revenue in the fourth quarter. Gross margin expanded nearly 600 basis points sequentially to over 50% due to a favorable shift in revenue mix towards our newer X7 Gen 2 visual processor, combined cost [ph] efficiencies, and an increase in TrueCut revenue. Together with well-managed operating expenses, we utilized minimal cash from operations during the first quarter. For a review of end markets, starting with our mobile business, as previously mentioned, mobile revenue for the quarter [indiscernible] associated with customers launch cycles for new smartphone models. Year-over-year, mobile revenue was up nearly 200% and represented a record 61% of total revenue for the first quarter. This growth was driven by increased unit shipments of our X-Series visual processors, [indiscernible] Gen 2 mobile visual processor, and an increase in TrueCut motion licensing and motion grading services. We have continued to expand and gain momentum with our IRX branded gaming experience and ecosystem, which serves to further differentiate the inherent performance advantage of the premium visual gaming experience that our mobile processors bring customer smartphones. Introduced in the second half of last year, IRX, which is short for Image Rendering Accelerator, is an end-to-end ecosystem solution that we established specifically for mobile gaming. The overall response and our resulting collaborations across industry leading game engines and gaming studios have been encouraging. Since the introduction of IRX, our work with several leading gaming studios has resulted in a total of 9 IRX-certified mobile games and we have tuned our solution to optimize visual performance on over 100 IRX-qualified mobile games. When played on an IRX-enabled smartphone, incorporating our X-Series visual processor, IRX-certified games deliver a superior high visual quality. This provides a [Technical Difficulty]. In April, we announced that Diablo Immortal, a mobile game co-developed by Blizzard Entertainment and NetEase (NASDAQ:) Studios, was the latest game to incorporate our IRX rendered [Technical Difficulty]. Based on our current pipeline of engagements with studios on new games, we are aiming to double the current number of IRX certified games by the end of this year. And among these, we expect some of the highest global ranking mobile games to soon be IRX certified. In terms of year-to-date, we’ve announced a series of newly launched smartphones incorporating our mobile visual processors. First, as highlighted on our last call, in early January, the OnePlus Ace 3 smartphone was the first device launched incorporating our new X7 Gen 2. Also, as a reminder, we are [Technical Difficulty] focused on expansion beyond premium domestic models in China. Our two-pronged strategy includes increasing penetration of the mid to lower-tier market, as well as expanded adoption in models targeting for global markets. As evidence of our initial traction in January, OnePlus launched the global version of its OnePlus 12, representing the first flagship international model to incorporate both our X7 visual processor and IRX certification. Then in April, we announced the X5 Turbo visual processor was incorporated in Vivo’s newly launched iQOO Z9 Turbo smartphone targeted at the mid-tier market segment. Leveraging our X5 series processor, the iQOO Z9 Turbo features differentiated frame rate optimization as well as diverse gaming display enhancement modes. Most recently, we achieved a meaningful step toward international expansion with Transsion’s announced launch of its Infinix GT 20 Pro smartphone. With the incorporation of our X5 series processor, Transsion became our fifth Tier 1 mobile customer. More importantly, the Infinix GT 20 Pro represents the first integration of Pixelworks’ visual processing technology in a sub $350 smartphone that is primarily targeted for emerging markets outside of China. We are encouraged by these recently launched models in support of expanding our [indiscernible] as we succeed in securing additional international models and penetration of the sub-premium market segments, it will further complement our core strategy, which remains focused on delivering highly differentiated, market-leading visual display performance for the mobile market. With expansion of our server-developable market, we have the opportunity to drive higher unit volumes, accelerated ecosystem development, and more robust future growth. Next, I want to cover updates on our other businesses, and then I will circle back with some additional comments about our near-term expectations for mobile as part of our closing remarks. Turning to TrueCut Motion. As highlighted on our previous conference call, in late January, we announced a multi-year agreement with Walt Disney (NYSE:) Studios to bring a collection of TrueCut Motion graded titles to select home entertainment devices [Technical Difficulty] the first Apple (NASDAQ:) Vision Pro. Securing Disney as our first home entertainment ecosystem partner was a significant milestone for TrueCut Motion. Today, Apple Vision Pro users can watch motion-graded versions of Avatar and Avatar the Way of the Water on both Disney and Apple TV Plus streaming networks. In the 3 months since our announcement with Walt Disney Studios, 3 additional new titles have been released to the premium format theaters in TrueCut Motion’s cinematic high frame rate format. In February, Matthew Vaughn’s Argylle, which was [Technical Difficulty] in association with Marv, was distributed globally by Universal Pictures. Then in March, DreamWorks Animation’s Kung Fu Panda 4 was released by Universal Pictures in TrueCut Motion format in select premium theaters. Most recently, Legendary Pictures’ Godzilla x Kong New Empire was released globally by Warner Brothers to select premium theaters. Additionally, in collaboration with our industry partner, Christie, in April, we demonstrated these titles in TrueCut Motion format at CinemaCon in Las Vegas. Utilizing a mock theater equipped with world-class CineD cinema system, these demos received very positive response from exhibitors, and also served as further industry validation that TrueCut Motion is the leading premium format. Our near-term focus remains on bringing more high-value titles to theaters [Technical Difficulty] in TrueCut Motion format over the coming months and quarters, while also continuing to engage in prospective content distribution and consumer device ecosystem partnerships. Shifting to our home and enterprise business, which is predominantly comprised of our visual processor SOCs for 3LCD digital projector market. Revenue was in line with our expectations and consistent with typical first quarter seasonality, reflecting the standard practice of managing down internal inventories by Japanese OEM customers in advance of their fiscal year end. Compared to the first quarter, home and enterprise revenue was down slightly due to lower contribution from our legacy video delivery solutions with sales in the projector market effectively flat year-over-year. As indicated by home enterprise revenue, end market demand for digital projectors has stabilized in recent quarters. However, several quarters have represented a challenging environment for the professional projector market, resulting in a steady consolidation of 3LCD market share by the industry’s leading manufacturer, and also, our largest projector customer. At the end, the same projector customer completed final testing and evaluation on production samples of our co-developed next-generation projector SOC. I’m pleased to report that we received acceptance on the new SOC, and it will go into volume production in support of our customer’s first two models during the second half of this year. I want to briefly emphasize that the significance of this new product milestone, while also recognizing our talented and dedicated team that made this multi-year development project a success. Our customers’ transition to the new SOC from prior generation will be gradual as the new projector models are introduced to market. As a result, this SOC will drive revenue over the course of several years and effectively extends the runway for our profitable projector business through the latter part of this decade. Before handing the call to Haley, I want to make – I want to take a minute to discuss our current outlook based upon two recent developments impacting our near-term mobile business. First, our largest mobile customer over the past two quarters recently informed us of a near-term reduction in their demand compared to our previous expectations. In short, this customer has counted some unique sales challenges on recently launched models that are completely unrelated to Pixelworks. Due to their slower than anticipated sell-through, they are pausing orders until their current and soon-to-be released production models consume existing inventory. We expect this pause to extend into calendar Q3. Separately, we are experiencing delay on the market introduction of our next generation mobile visual processor. As alluded to in the past, we have been aggressively working on this yet to be announced new product for the last 2 years. It will be by far the most enhancing market disruptive visual processor that Pixelworks has introduced. In addition to being our first ever processor designed in TSMC’s 12 nanometer LLP process, it integrates a highly advanced feature set that, with the collaboration of our IRX ecosystem, [Technical Difficulty]. Our targeted timeline for releasing this next-generation processor was the end of the current quarter. However, a few technical hurdles have required pushing out its production release to later in the year. As a result, we are unfortunately going to miss a couple of the customers designing windows for new premium models in the back half of 2024 that we had previously anticipated securing. Despite this delay, we still have multiple customers that are excited about our next-gen solution. They remain engaged for incorporating it in subsequently planned models. While these two developments are obviously very disappointing, I want to emphasize that IRX ecosystem engagement is an all-time high. I would also add that these respective headwinds primarily impact the timing of our previous expectations, including near-term revenue, and they do not change our strategy nor our longer-term growth potential. With that said, given the anticipated short-term drawdown in revenue, we are reviewing our near-term OpEx and areas to maximize operational efficiencies. Apart from the current headwinds, we are very pleased with the previously discussed expansion of our two-pronged mobile strategy. And we also remain very confident in the ability of our growing IRX ecosystem to drive increased adoption of our current and future mobile visual processors. With that, I’ll pass the call to Haley to review financial [Technical Difficulty] guidance for second quarter.

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Haley Aman: Thank you, Todd. Revenue for the first quarter of 2024 was $16.1 million, which was just above the midpoint of our guidance. Year-over-year, total revenue for the first quarter increased 61%, driven by strong growth. The breakdown of revenue in the first quarter was as follows. Revenue from mobile was approximately $9.8 million, or 61% of total revenue, and was comprised primarily of shipments of our X5 and X7 series of visual processors, as well as revenue contributing series of recent TrueCut Motion grading services and licensing engagements. Home and enterprise revenue was approximately $6.2 million. First quarter non-GAAP gross profit margin expanded almost 600 basis points, sequentially, to 50.7% [indiscernible] 44.8% in the fourth quarter of 2023, and compared to 44.1% in the first quarter of 2023. The sequential and year-over-year improvement in gross margin primarily reflected a higher mix of revenue from newer generation mobile visual processes, including TrueCut licensing revenue, as well as the benefit of manufacturing cost efficiencies with our suppliers. Non-GAAP operating expenses were $12.6 million in the first quarter, compared to $12 million in the prior quarter, and $13.6 million in the first quarter of 2023. Comparing sequential quarters, fourth quarter operating expenses reflected the final credit to R&D related to the co-development agreement with our largest projector customer. On a non-GAAP basis, first quarter 2024 net loss was $4 million, or a loss of $0.07 per share, compared to a net loss of $2.6 million, or a loss of $0.05 per share in the prior quarter, and a net loss of $8.2 million or a loss of $0.15 per share in the first quarter of 2023. Adjusted EBITDA for the first quarter of 2024 was [Technical Difficulty] compared to a negative $1.9 million in the fourth quarter and a negative $7.8 million in the first quarter 2023. Turning to the balance sheet, we ended the first quarter with cash and cash equivalents of $46.2 million compared to $47.5 million [indiscernible] quarter. While the company had a small sequential decrease in cash balance, I’d like to highlight that Pixelworks Shanghai subsidiary achieved positive cash flow from operations for the first quarter of 2024. Shifting to our current expectations and guidance for the second quarter of 2024. As Todd discussed, total revenue for the second quarter will be lower than previously anticipated, primarily a result of the near-term headwinds in our mobile business. Considering these factors and based on our existing backlog, we currently expect total revenue for the second quarter range of between $8 million and $9 million. I also want to emphasize that we believe the headwinds impacting second quarter mobile revenue are near-term, and we expect to return to sequential growth in the second half of the year. In terms of gross profit margin, for the second quarter, [indiscernible] non-GAAP gross profit margin to be between 50% and 52%. We expect operating expenses in the second quarter to range between $12.5 million and $13.5 million on a non-GAAP basis. And lastly, we expect second quarter non-GAAP EPS to range between a loss of $0.16 per share and a loss of $0.13 per share. That completes our prepared remarks, and we look forward to taking your questions. Operator, please proceed with the Q&A session.

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Operator: Thank you. [Operator Instruction] Our first question will come from the line of Suji Desilva from ROTH. Your line is open.

Suji Desilva: Hi, Todd. Hi, Haley. A couple of questions on the mobile. First of all, on the mobile customers, just curious how much concentration there is in the $20 million in the last two quarters, the customer that’s having, I guess, model challenges now. And are there other large customers in mobile, just to understand the concentration there?

Todd DeBonis: So of the $20 million in the last two quarters, a significant portion was with one large customer. We don’t break out each customer because we don’t want to break out too much information about the models. We’re still on a handful of models on a per-customer basis. But we were overweight one particular customer, and that is the customer that is pulling back.

Suji Desilva: Okay, Todd, that’s helpful color. And then on the new chip push-out in the launch, is that a chip architecture issue? Is it a design issue? Is it a – or software, firmware, or is it an issue with the manufacturing process? Any color there on the challenge would be helpful.

Todd DeBonis: So it’s not an architecture issue. I mean, this is an entirely new architecture. We put several new features and functionality in the device as we were progressing to our first chip in 12-nanometer. When you move to a new process node like this, one of the things we have is we have mixed signal analog interfaces. Porting those to a new process technology is always challenging. Some of the new features are taking us longer to bring up. But it is not – it’s certainly not anything to do with the process technology or our manufacturing partner. It is design related. We have – we got devices back, I think, late April. They were in good enough shape that we actually sampled devices to customers on May 8. So we wouldn’t have done that if there was something architecturally or fundamentally wrong with them. But needless to say, we were already running on a tight schedule with the customers that were committed to use it in the near-term. So it was already a bit of a risk. And I would say with some of the challenges we have, it was just too much of a risk to engage on those models. So these are companies that put out new models every 6 months. And so from their perspective, risk became too high to go on the near-term. And we have ample time now to bring it up for the subsequent models.

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Suji Desilva: Okay, Todd. Appreciate the color. Thanks.

Operator: Thank you. [Operator Instructions] And our next question will come from the line of Nicolas Doyle from Needham. Your line is open.

Nicolas Doyle: Hi guys. A couple of follow-ups there on Suji’s question. I guess what gives you confidence that the large customer pausing through the third quarter? What gives you confidence that they will come back in the fourth quarter? And then also, how big is the impact that you will miss the design window for these new premium models? How are you thinking about that? Thanks.

Todd DeBonis: So, Nick, so first of all, we [Technical Difficulty] by saying that, we are inferring that their order coverage will start to come back in partial third quarter. I do not anticipate we will be overweight one customer on a go-forward basis. We have had a lot of design activity over the last six months outside this large customer. That continues with our newest partner, Transsion, and it also continues outside of China, which is good for us. And so even though this customer will be coming back, it’s not [Technical Difficulty] And the second question, Nick, was, can you repeat it?

Nicolas Doyle: Yes, how big of an impact is it that you will miss the design window for these new premium models?

Todd DeBonis: Well, for the new device, which was a very high ASP, it’s significant. It will impact our mobile growth for this year. So, we will probably not see mobile growth this year because of that impact.

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Nicolas Doyle: Okay. And then on the international expansion, what – I mean did you see any trends in the first quarter with the OnePlus Ace and then kind of moving over to Transsion and their global OEM with ties in China, but focused in these emerging markets including Africa, Middle East and I think Europe? Where are you focused on expanding internationally, and what are the biggest challenges you see there? Thanks.

Todd DeBonis: Okay. So the OnePlus Ace 3 was not an international. It was domestic only from OnePlus. The one phone that they did put in an international market, so they put both the domestic version and international, was their flagship, their OnePlus 13, or 12, I think it was the OnePlus 12, excuse me. Transsion – and by the way, to go back to OnePlus, they still probably sell more domestically than they do internationally with that flagship. Transsion does not sell domestically. They are A share publicly traded company that [Technical Difficulty]. They sell throughout emerging markets throughout the world. And so they were the fastest growing mobile phone customer by unit growth in Q1. I think they grew over 80% year-over-year. And all of that growth is by selling phones in what I would call low to mid-tier price ranges throughout the emerging markets. So, engaging with on this design, Transsion, has been a very good thing for our international expansion. When we started with them, we had modest expectations for this first model. We believe there would be more. By the time we launched the model, we have been working with them probably eight months on this model. By the time we launched the model, their forecast had tripled, meaning the emerging markets they serve, there is pent-up demand for gaming-centric mobile phones. Not a lot of companies have been targeting those emerging markets with these capabilities at this price point. And what we have seen is there is a strong demand for that. So, let’s hope that continues.

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Nicolas Doyle: Excellent.

Operator: Thank you. [Operator Instructions] Our next question will come from the line of Richard Shannon from Craig-Hallum. Your line is open.

Richard Shannon: Hi Todd, many thanks for taking my questions here. Kind of maybe I will hit on gaming and IRX. I think you talked about, I don’t know, it was 100% or 200% increase in the number of games announced by the end of the year. Apologies, I may have missed some items, but the line was garbled at times. Is that the same numerical goal as what you talked about a couple quarters ago when you were talking about a 400% increase? I didn’t have the numbers all in front of me to do the math, but is that the same goal?

Todd DeBonis: It’s consistent with what I think I have talked about in the past. I mean what I said in the prepared remarks is we have nine IRX-certified games as of today, and our current goal is to double them by the end of the year.

Richard Shannon: Got it. Okay. And then Todd, maybe…

Todd DeBonis: I also said one other thing, Richard. I also said for the first time I brought up something besides certified games. I brought up what we call qualified games. And we have over 100 IRX qualified games. The difference between certified and qualified is a certified game is we work directly with the studio and they incorporate our game engine SDK to support their game playing on an IRX-enabled phone. An IRX-qualified game is where we work with the phone manufacturer to make sure that game works well with our visual processor. It’s more one-sided. But we do optimize the hardware to play with that game, and we qualify it, and then the OEM white-list those games. Today, there – we don’t have any phone manufacturer that just turns on our visual processor to play with any game that somebody can download. It’s a controlled environment. So, it’s either a white-listed qualified IRX game or one of our IRX certified games that we have engaged directly with the studio and collaborated with.

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Richard Shannon: Okay. That’s helpful and thanks for that description there Todd. And maybe to touch on IRX here, obviously introduced this last summer here, and this is to a good degree a branding exercise, and obviously there is a little bit of a chicken and egg dynamic here is establishing a brand, which clearly isn’t very easy to do. And maybe want to get your kind of qualitative scorecard on how well that has taken hold so far, and what are the things should we look for to show further entrenchment and success there?

Todd DeBonis: Was that TrueCut you were asking about, Richard, or IRX?

Richard Shannon: No, IRX.

Todd DeBonis: Because we are trying to establish two brands.

Richard Shannon: I was asking IRX.

Todd DeBonis: Okay. I just want to make sure. So, yes, I mean establishing brands, how do you do it, you go out and you spend marketing dollars in making sure that brand is recognized with the businesses that you are targeting. We can do that, we don’t have a huge budget. Well, I think we have done a pretty good job of people talking about IRX, given the budgets that we have. The secondly thing we do is we leverage our customers. So, when they talk about either, sometimes they call it a dual processor architecture, or they call it [Technical Difficulty], that they actually talk about it being an IRX-certified processor and supporting the IRX ecosystem. Most of the customer support is in that activity. And for evidence, I suggest you go see how the Infinix GT20 from Transsion, and how they advertise that phone. They talk about Pixelworks. They talk about our IRX certification. The last thing we do is if you go look at these nine games that are IRX certified, we have actually worked with the game manufacturer itself. So, there is a setting in the user setting section that if you want to increase the performance of the output of the game, they have an IRX button in the menu of the game itself. And so that is another way for us to promote the IRX brand. So, when you have Tencent or NetEase or Perfect World actually incorporate your IRX logo and explanation of what IRX is in their game, that gives us a lot of exposure.

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Richard Shannon: Okay. Thanks for that Todd. And my last question, I can’t remember who mentioned this, but just kind of thinking past the second quarter here, and again, the comments are a bit garbled here about how to think about the second half. I think there was some expectation of sequential growth, and I wasn’t sure if that was – the thought was there that would happen in the third quarter or fourth quarter. I am not sure, but to clarify what your thoughts are and what you see right now.

Todd DeBonis: So, what we said, I hope my answers aren’t garbled. You sound perfectly clear, so I don’t know what’s going on, but I assume you are perfectly clear. What we said was in the second half of the year, meaning Q3 would be sequential growth over Q2, and Q4 would be sequential growth over Q3.

Richard Shannon: Okay. Perfect. Got it. I certainly heard that one.

Todd DeBonis: We don’t give guidance out that far, but that is what we anticipate.

Richard Shannon: Okay. Thanks for your opinion. Again, I didn’t hear very well before, so I think that’s all the question we have. Thank you.

Todd DeBonis: Thanks Richard.

Operator: Thank you. And I am not showing any further questions in the queue. I would like to turn it back over to management for any closing remarks.

Todd DeBonis: Alright, well, thank you. Thank you for joining Pixelworks Q1 2024 earnings call. Even though the management team is disappointed in our near-term guidance, we remain extremely confident in our long-term strategy as demonstrated by expanding our mobile system and TrueCut progress in the recent quarter. Additionally, our expanded corporate gross margins demonstrate the value that our visual processing solutions bring to customers, as well as our execution on cost efficiency initiatives. The team is very focused on the elements of the business we can control, and we look forward to progress over the next couple of coming months. Thank you.

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Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect. Everyone have a great day.

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