Good day, ladies and gentlemen, and welcome to Pixelworks Inc.'s Second Quarter 2025 Earnings Conference Call. I will be your operator for today's call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, instructions will be given for the question and answer session. 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. Thank you, DeeDee. 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 second quarter of 2025. 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 competitive position, constitute forward-looking statements. These forward-looking statements, and all other statements made on this call, are not historical facts or are subject to a number of risks and uncertainty that may cause actual results to differ materially. All forward-looking statements are based on the company's beliefs as of today, Tuesday, August 12, 2025. 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, 2024, 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 both GAAP and non-GAAP terms, including gross margin, operating expenses, net loss, and net loss per share. Non-GAAP measures exclude restructuring costs and stock-based compensation expense, as well as the tax effect of the non-GAAP adjustments. The company uses these non-GAAP measures internally to assess its operating performance. We believe these non-GAAP measures provide a meaningful perspective on core operating results and underlying cash flow dynamics. We caution investors to consider these measures in addition to, and not as a substitute for, nor superior to, the company's consolidated financial results as presented in accordance with U.S. GAAP. Please note throughout the company's press release and management statements during this conference call, we refer to net loss attributable to Pixelworks Inc., simply net loss. Also note, on June 6, 2025, the company effected a 1-for-12 reverse stock split of the company's common stock, and all shares of the company's common stock, per share data and related information included in today's published condensed consolidated financial statements have been retroactively adjusted as though the reverse stock split had been effected prior to all periods presented. For additional details and reconciliations 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, it's now my pleasure to turn the call over to Pixelworks' CEO for his open remarks. Please go ahead. Thank you, Brett. Good afternoon and welcome to everyone on the phone and webcast. We appreciate you joining us for today's conference call. Earlier today, we reported top and bottom line results that were within our guidance and reflected our expectations for a return to sequential revenue growth in the second quarter. Gross margin came in better than anticipated due to yield improvements on a ramping new co-development projector SoC. We also realized another step down in recurring costs, with second quarter operating expenses decreasing more than $3 million year -over -year to below $10 million. Staying with the same order of our most recent calls, I'll start with an update on our TrueCut Motion business, then provide remarks specific to our majority-owned Pixelworks Shanghai subsidiary and the strategic review process. Starting with our TrueCut Motion platform, following a quiet first half of the year in terms of new titles across the industry, we've recently been credited with three new theatrical releases. First in early July, Universal Pictures' Jurassic World Rebirth, then earlier this month, DreamWorks' animation The Bad Guys 2, and yesterday we announced Universal Pictures' Nobody 2. As discussed in the past, exhibitors are investing significantly in laser PLF theater upgrades that drive higher box office revenues. TrueCut Motion delivers major improvements to the viewing experience in these theaters, and exhibitors are increasingly asking for the format, driving increased pull for TrueCut Motion at the studios. Notably, China's flagship Sineady Theaters promoted that Jurassic World Rebirth was exclusively available in the TrueCut Motion format on their screens. Studios understand that premium screens generate an outsized portion of the box office sales, so we confidently expect to see expanded presence of TrueCut Motion format and the brand in theaters worldwide. While exhibitor and audience pull are growing, an important indication of studio and filmmaker acceptance is the quality and success of the titles on which we've been credited. 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. Also notable, we were excited to recently receive confirmation that in advance of the scheduled theatrical release of Avatar: Fire and Ash in December, James Cameron's highly successful Avatar: The Way of the Water will return to selected IMAX screens in October using the TrueCut Motion format. Based upon our recent momentum, we believe TrueCut Motion format is quickly moving towards becoming a standard for premium large format cinemas. With cinema format standards a leading indicator of future home entertainment standards, there is a growing consumer desire to bring the TrueCut Motion PLF experience home. The first home entertainment device to support TrueCut Motion is also one of the world's best ways to watch movies outside of the cinema, namely the Apple Vision Pro. Streaming services Disney+ and Apple TV+ both brought Avatar: The Way of the Water and the 4K re-release of the original Avatar to their respective platforms and apps for this device. We encourage anyone who has the opportunity and wants to fully appreciate what TrueCut Motion can do for the movie experience to watch either title on the Apple Vision Pro and compare that to the experience of titles that don't utilize TrueCut Motion format. Recognizing the differentiated sales opportunity and growing consumer awareness, premium streaming services and home entertainment device brands are engaging closely with us to roll out the format. Turning to an update on our Pixelworks Shanghai subsidiary. As a reminder, and for newer participants on today's call, as part of the strategic realignment initiated in the 2021 timeframe, we restructured our Shanghai-based subsidiary to serve as the center of operations for all Pixelworks semiconductor business. This includes all generations of our open market and co-developed visual display processor chips for both the digital projector and mobile markets, as well as previously end-of-life transcoding chips for video delivery. Starting with an update on the mobile business, second quarter mobile revenue had a similar profile to the prior quarter, with shipments largely in support of residual demand from customers' previously launched smartphone models. Although design ends for newly launched smartphones and the expected revenue recovery has taken longer to materialize, we remain committed to several existing engagements that we believe will contribute to achieving renewed mobile growth over the coming quarters. Our strategy and efforts are focused on two defined approaches based upon the market segment. The first is expansion of our served target market with a new low-cost mobile graphics accelerator solution for mid and entry-level smartphones. Our open market roadmap will continue to focus on improving the visual performance of graphics, animation, and gaming in mobile phones with ASPs below $350. We have created a completely new architecture to dramatically improve the performance of application processors used in this market segment. Second, we continue to pursue the premium gaming experience for mobile phones with ASPs over $350, with our current X7 Prime and X8 flagship mobile visual processors. Within this premium segment, we have seen growing interest and a trend towards a more customer-optimized solution. Going forward, we are increasingly focused on IP licensing and custom design engagements. Highlighting our most recent win resulting from an in-depth collaboration with the customer, over the weekend, Oppo's affiliate brand Realme previewed their upcoming launch of its Realme P4 series in India, targeted for August 20th. Both the Realme P4 and P4 Pro smartphones are explicitly marketed as incorporating Pixelworks' X7 Gen 2 visual processor. The Realme P4 series will be the first phones in the segment of the market to feature dual chips based upon our distributed rendering architecture. The P4 Pro model pairs our X7 visual processor alongside a Snapdragon 7 Gen 4 applications processor, and the standard P4 model will pair our processor alongside a MediaTek Dimensity 7400 Ultra 5G processor. In both device models, our visual processor enables 144 fps gaming on over 100 mobile games with real-time frame generation and AI-enhanced 1.5K resolution upscaling. In addition to delivering visual performance typically reserved for flagship smartphones, our rendering acceleration solution contributes to improved system responsiveness and extended gameplay while eliminating overheating and the need for performance throttling. Touching briefly on our home and enterprise business, which comprises our visual processor system on a chip for the 3LCD digital projector market, revenue increased by over 20% sequentially, driven by a combination of the traditional bounce back from seasonally lower first quarter demand as well as a growing ramp in shipments of our newest SoC to our large co-development projector customer. Despite the ongoing dynamic global trade environment, we have yet to see evidence of meaningful impacts from our customers' order patterns. Consistent with our comments last quarter, we continue to anticipate our total projector business in 2025 to look very similar to 2024. Shifting gears to a brief update on the adjacent revenue opportunities discussed in recent quarters. Starting with transcoding, which again, as a reminder, we completed all scheduled end-of-life shipments of transcoding products during the fourth quarter of last year. Subsequently, we were approached by two different prior transcoding customers that expressed interest in sizable one-time orders for our prior transcoding chips that are no longer in production. As of today, we have a purchase order in hand from one of the customers, and we expect to fulfill the entirety of this order during the fourth quarter. The second prior customer representing the larger opportunity is still evaluating whether to move forward. We have communicated a deadline to this customer, and we will know the outcome on the second opportunity by quarter end. Next, with respect to ASIC design services, having established a framework earlier this year, we now have a pipeline of prospective ASIC design service engagements. We are currently engaged with two different companies with the potential to become our first design service customer. Both of these initial ASIC design service customers have the potential to contribute revenue later this year, and we expect increased visibility on these respective opportunities in the coming months. In addition to working towards winning these two programs, we are continuing to focus on expanding our pipeline of design service opportunities. Lastly, in terms of IP licensing, since our previous conference call, the number of discussions and evaluations underway with third parties has expanded meaningfully. Given the binary and sometimes open-ended nature of these programs, it's challenging to provide definitive timelines and qualitative updates on these collective discussions. However, we are seeing progression, and we currently have active IP evaluations underway with three Tier 1 system companies in China and one Tier 1 system company in North America. Given our previous actions to significantly reduce our cost structure and ongoing efforts to streamline the business, today we are better positioned to drive bottom-line results from a reasonably small uplift in revenue. Although the planned recovery in mobile revenue is taking a bit longer than previously anticipated, we are still targeting for our Pixelworks Shanghai subsidiary to reach profitability as soon as the fourth quarter. Having said that, I want to share the latest status on our strategic review process. To briefly recap how and when this process originated, in the latter part of 2024, we received inbound strategic interest in our Pixelworks Shanghai subsidiary. We engaged Morgan Stanley as an advisor and initiated a formal review process. In addition to reviewing the initial inbound interest, the process was expanded to include a strategic evaluation of potential alternative ownership structures as well as possible collaboration structures, all specific to our Shanghai-based subsidiary. Relatively early in the process, we received additional inbound interest from multiple other unrelated third parties. Following early-stage discussions with all interested parties, as well as some preliminary due diligence, Pixelworks Inc. imposed a deadline of May 31 to receive term sheets from all parties that were interested in moving forward. We received non-binding term sheets from three different potential buyers. We have since been engaged with 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. With that, I'll turn the call to Haley to review financials and provide guidance for the third quarter. Thank you, Todd. Revenue for the second quarter of 2025 was $8.3 million, compared to $7.1 million in the first quarter and $8.5 million in the second quarter of 2024. The sequential increase in second quarter revenue was primarily driven by product shipments in the home and enterprise market. The breakdown of revenue in the second quarter was as follows: home and enterprise revenue was approximately $7.1 million. Revenue from mobile was approximately $1.2 million. Second quarter non-GAAP gross profit margin was 46%, compared to 49.9% in the first quarter of 2025 and 51% in the second quarter of 2024. The sequential decrease in gross profit margin reflected a unique mix consisting of a new product ramp within home and enterprise. However, yields related to this new product ramp were better than originally expected, leading to gross margin that was above our second quarter guidance range. Non-GAAP operating expenses of $9.7 million in the second quarter, compared to $10.4 million in the prior quarter, and $12.8 million in the second quarter of 2024. 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. These subsidies effectively serve as reimbursement for certain purchases of IP and design tools, as well as various R&D expenses. We recognized $800,000 of other income in the second quarter, with the remainder of the total subsidies allocated as offsetting credits to applicable expense and balance sheet items. On a non-GAAP basis, second quarter 2025 net loss was $5.3 million, or a loss of $1 per share, compared to a net loss of $6.5 million, or a loss of $1.30 per share in the prior quarter, and a net loss of $7.7 million, or a loss of $1.60 per share in the second quarter of 2024. Adjusted EBITDA for the second quarter of 2025 was a negative $4.3 million, compared to a negative $5.8 million in the prior quarter, and a negative $7 million in the second quarter of 2024. Turning to the balance sheet, we ended the second quarter with cash and cash equivalents of $14.3 million, compared to $18.5 million at the end of the first quarter. Shifting to our current expectations and guidance for the third quarter of 2025. Based on our existing backlog, we currently expect total revenue for the third quarter to be in a range of between $8.5 million and $9.5 million. For the third quarter, we expect non-GAAP gross profit margin to be between 47% and 49%. This range primarily reflects a more favorable product mix within home and enterprise. With respect to operating expenses, we expect third quarter operating expenses to be in a range of between $8.5 million and $9.5 million on a non-GAAP basis. Note that this range reflects the expected incremental benefits associated with our cost reduction actions taken during the first and second quarters. Lastly, we expect third quarter non-GAAP EPS to range between a loss of $0.70 per share and a loss of $1.02 per share. That completes our prepared remarks, and we look forward to taking your questions. Operator, please proceed with the Q&A. Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from Suji Desilva of ROTH Capital. Your line is open. Hi, Todd. Hi, Haley. Maybe first, Todd, you could talk about why your mobile customers in China in the premium side are emphasizing a custom ASIC versus your standard merchant products. I'm just curious the trends underneath that that's driving that opportunity for you. Yeah, the main driver is they want differentiation. They want something that the other phone—I mean, Suji, it's a flat market. I don't expect high growth in the overall mobile market. I expect the Chinese OEMs to try to expand globally beyond their reach where they don't have strong market shares. They're clearly very strong in China. They're reasonably strong in Southeast Asia. They're not that strong in the rest of the world, with the exception that you could say at the very low end, like in Africa and emerging markets. If you look in the premium segment, which is where your question is, right, they have very little position in developed countries. Those countries are dominated by Apple, Samsung, and to some degree, Motorola and Google. Frankly, Google's doing OK right now with the Pixel. Our target customers are these Chinese OEMs for the most part. We talk to others, but for the most part, Chinese OEMs. I think as we go to an IP sale, it expands that horizon for us. If you look at the specific Chinese OEMs, they're in a hyper-competitive market. My personal belief is you'll see consolidation in that market either through attrition or M&A. There's one or two too many large or larger companies, but the market's not there to support all of them, in my opinion. What you're going to see is a hyper-competitive environment. In the premium segment, they're going to want to differentiate, and especially in the geopolitical environment we're in, showing technology leadership. Buying a standard product that is similar across the board doesn't give them that differentiation. The current two AP manufacturers really don't give them much differentiation because they sell them the same APs across the board. One way for them to differentiate, and if you go look at these customers and their premium phones, they're not just putting a custom visual processor in. I think one of Xiaomi's last phones, they announced four custom chips inside their phone from pre-ISP, AI enhancement, visual processing, what they call a display chip, which is their own custom DDIC. These Chinese manufacturers are very focused on trying to bring their own intellectual property into the phone. One way to do it is work with partners like us on custom solutions. OK, that's very helpful, Todd. Just as a follow-up on that, after you do this design work for a customer, would you be the one manufacturing the chips and selling it to them, or is this meant to be more of a royalty model where the customer takes over the manufacturing? There are only two Chinese OEMs that produce their own SoCs. In that particular case, it'd be design services and IP, although they still use external visual processors. None of them have integrated our capabilities into the AP yet. The other manufacturers are going to differentiate by ancillary chips. To answer your specific question, if it's an ancillary chip opportunity, we would do the production. If it's somebody who is trying to integrate this into their own AP's SoC, it would probably be a combination of IP and design services. OK. Maybe a question for Haley. The transcoding one-time customer, you have the PO now. Is that revenue hitting in the third quarter or the fourth quarter? Maybe you can give us some idea of the magnitude of how much that's helping the second half. Yeah, that would be hitting in the fourth quarter. Magnitude, I don't know that we're going to share the magnitude right now. OK. Maybe one last one for Todd, and I'll pass it along. Todd, you said the Pixelworks post the what's going on with the Shanghai division restructuring-wise or strategically would make a kind of a different post that transaction Pixelworks. Maybe you can give us some sense of how Pixelworks would be different pre and post that transaction to the best of your ability. I know it's an ongoing process, but it would be helpful to understand. It's too early to give any color on that, Suji. I appreciate the question. As soon as I'm in a position to give color in that regard, I will. That's fine. Thanks, everyone. Thank you. Our next question comes from Nick Doyle of Needham & Company. Your line is open. Hi, guys. Thanks for taking my questions. Really interesting commentary on the ASIC design and IP. I mean, I guess my question would be, how broad does that go with these prospective customers? Is it limited to the smartphone AP, or can your IP be used in other components or other markets? Thank you. Good question, Nick. No, it is not limited to smartphone only. We've already had some of the prescriptive engagements we've had in the tablet area. There's a clear need to improve the performance, display performance, visual performance in tablets, and it's a growing segment. This up-and-coming AR/VR market, whether it's augmented reality glasses or complete virtual reality headsets, there is a need to utilize technology like ours in these applications. There's also more, I'll call them journeyman markets, from LED panel walls to monitors, gaming monitors. We clearly are too small to go build products for all these environments. If we open up from an IP and design services and collaboration standpoint, we can pursue more of these adjacent markets. Yeah, a lot of potential customers, a bigger market there. Thank you. Seeing strength in the home and enterprise market, can you just talk about the product market fit with your new SoC that's driving this recovery? What about the new product is driving that strength? Thanks. Yeah, no problem. I don't want to be misrepresented here. The overall market, we have a strong position in the 3LCD, well over 90% share, OK, from what I can tell. The overall market, even though our core sequentially, and then even with guidance, we're going up a little bit, our overall market, I would say, is flat, OK, the market we sell into. When we are ramping a new SoC, which happens to be a higher ASP than our old SoC, initially, the customers need to put in a production-based inventory, some buffer inventory. They'll pull harder on those new chips than what their actual production is, at least for a period of time, right? We see the reason we're seeing some growth is partly because of the higher ASP of the mix and partly because of the stocking of this new chip. Whether that sustained pull-through in 2026 or not will completely depend on the end markets. Understood. Thank you for that. If I could just squeeze one last one, can you just confirm if you did any EOL business in 2Q, or we're waiting till 4Q to see that? Thanks. What we were saying is we EOLed the last of our consumer visual video delivery products, our transcoding chips. That was a process of notification to customers in early 2024, and they had to take last shipments by the end of 2024. That was all complete. We had a couple of customers that came back, which is almost predictable anytime you end of life a series of devices like this that have been in the market for well over 10 years, that somebody comes back, even though you've notified them, and says, hey, we need more. Oh, hey, we have a new program. Hey, can you support us on some derivative program? We've had two customers that we've engaged in those discussions. As long as you have the ability to go back to our supply chain and manufacture it, which we have validated, we can do it. Because you're no longer supporting this as a standard product, the engagement with those customers is a very specific engagement where they have to take the liability of the production. They have to make it. There are usually large minimum orders required and certain delivery lead times, which they're probably going to have to inventory the devices if they want them. If it's a large opportunity, it's a lot for a customer to bite off on. They need to think about it. That's the terms of coming back after an EOL is done. Got it. Thank you. Thanks for the question. Thank you. I show no further questions at this time. I'd like to turn it back to management for closing remarks. Thanks. We clearly have a lot of activity over here. I look forward to updating you most probably on the strategic process before our next quarterly call. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.