PXLW

• Strategic Transformation Completion: Q2 2026 was the first full quarter of operations as a lean, asset-light, well-capitalized pure play technology licensing company focused on scaling its global licensing business centered on the TrueCut Motion Platform. The company has minimal overhead and a low breakeven threshold, with sufficient capital to execute its strategy after monetizing its prior semiconductor business and completing restructuring. The largest use of cash in Q2 was $3.2 million for common stock repurchases, leaving $1.8 million remaining on the current buyback authorization.

• Industry Validation of Premium Display: Management highlighted growing industry adoption of premium large format (PLF) theatrical experiences: 4% of total domestic screens that are PLF accounted for almost 20% of total domestic box office in 2026 to date. AMC, IMAX, and Dolby all reported strong results and growth plans for PLF venues, and Disney launched its Infinity Vision premium theater certification program, which further validates the industry focus on high-margin premium viewing experiences that TrueCut Motion is designed to enable.

• Ecosystem Expansion: During Q2, the company secured two new key PLF exhibitor partnerships: Kannapolis Group endorsed and will preferentially screen TrueCut Motion enhanced content on its laser ultra large format screens across Europe and North America, and CineD added TrueCut Motion as a prioritized technology for its global PLF network (with a major footprint in China) that integrates advanced 4K, high frame rate, HDR, and immersive audio systems. These partnerships add to prior collaborations with Marcus Theatres, Odeon Cinemas Group, and VIEW, expanding the company's reach across key global markets.

• Content Pipeline: The company holds a growing pipeline of TrueCut Motion enhanced theatrical titles, with multiple projects in production for releases over the coming months and into early 2027. Content deals will be announced as titles launch.

• Device Licensing Milestone: The company secured its first major multi-year device licensing agreement with an undisclosed large global device manufacturer, ahead of internal timeline targets. The agreement covers certification for a family of devices and includes a commitment from the partner to bring new motion graded content to its platform, with a public announcement planned for late 2026 aligned with the partner's product launch schedule.

• The company does not provide formal quarterly guidance, but confirms revenue will increase sequentially in Q3 2026 based on currently booked licensing and motion grading service business.
• Management reaffirms that near-term quarterly revenue will remain lumpy as the company builds its theatrical pipeline and scales the business, with consistent revenue growth expected once greater scale is achieved.
• Cash operating expenses are expected to stay below $2.5 million per quarter for the remainder of 2026.
• Quarterly interest income is projected to be between $400,000 and $500,000 for the remainder of 2026, based on the current cash balance and prevailing interest rates.

Following its strategic transformation completed in early 2026, Pixelworks now operates as a single-segment pure play technology licensing business focused on the TrueCut Motion Platform and visualization enhancement solutions. For Q2 2026, total company revenue was $64,000, with year-to-date (first half 2026) total revenue of $510,000. Full year 2025 revenue from the core TrueCut Motion and related motion grading services was $690,000. Gross profit margin for Q2 2026 was 60.9%, up from 56.7% in Q1 2026. Total GAAP operating expenses for Q2 2026 were $3.4 million, a $1.8 million sequential decrease from Q1 2026 reflecting completed restructuring and streamlining. The company ended Q2 2026 with $53 million in cash and cash equivalents and zero debt.

No explicit discussion of material new risks or operational failures was included in the call. Management noted in the standard forward-looking statement disclaimer that all projections are subject to uncertainties that could cause actual results to differ materially from expectations, and directed participants to the company's recent SEC filings for a full listing of disclosed risk factors.

Q: Which ecosystem partner categories are most critical to achieving flywheel growth for the licensing business over the next six months?

A: Management notes both theatrical PLF exhibitors and the new device licensing partner are equally critical in the near term. Prior to the device partner approaching Pixelworks, focus was entirely on theatrical expansion, but the new device agreement, which brings a commitment to add TrueCut Motion content to the partner's platform, is an important early milestone for home entertainment expansion. More updates on both initiatives will be shared over the next six months.

Q: Can management disclose the geographic focus of the new undisclosed device manufacturing partner?

A: The device manufacturer serves global consumers, so the partnership has a global footprint rather than being focused on a single regional market.

Q: Which of the current licensing deals offers the largest near-term royalty revenue opportunity?

A: The new device certification agreement includes certification fees structured similarly to royalties, so it will deliver the most immediate near-term revenue impact. Currently, all theatrical TrueCut Motion projects only generate motion grading service fees rather than royalties, as the company is prioritizing content pipeline growth to drive broader industry adoption. Long-term, broad adoption relies on building a quality content library to replicate the premium theatrical experience across home devices.