Immersion Corporation Reports Second Quarter 2022 Results

Aug 15, 2022 04:15 pm
AVENTURA, Fla. -- 

Immersion Corporation (NASDAQ: IMMR), a leading developer and provider of technologies for haptics, today reported financial results for the second quarter ended June 30, 2022.

Second Quarter Financial Summary:

  • Total revenues of $8.0 million, compared to $11.0 million in the second quarter of 2021. Royalty and license revenues were $7.9 million, compared to $10.9 million in the second quarter of 2021.
  • GAAP operating expenses of $3.9 million declined 25% from $5.2 million in the second quarter of 2021. Non-GAAP operating expenses of $2.9 million declined 23% from $3.8 million in the second quarter of 2021. (See attached table for a reconciliation of GAAP to non-GAAP financial measures.)
  • GAAP net loss was $1.8 million, or $0.05 per diluted share, compared to GAAP net income of $5.3 million, or $0.17 per diluted share, in the second quarter of 2021.
  • Non-GAAP net loss was $1.1 million, or $0.03 per diluted share, compared to non-GAAP net income of $7.2 million, or $0.23 per diluted share in the second quarter of 2021.
  • Cash, cash equivalents and short-term investments was $136.9 million as of June 30, 2022.

“It was a productive quarter for Immersion,” said Francis Jose, CEO. “Most notably, we took strong initial steps to ensure that our intellectual property for the AR/VR/metaverse market is recognized by filing a legal complaint in the United States District Court of the Western District of Texas against Meta Platforms, Inc. that alleges infringement on six Immersion patents. We look forward to prosecuting this case and seeking out other opportunities to monetize our intellectual property, either through the execution of licenses or by proactive enforcement.”

“Subsequent to quarter end, we were pleased to close a multi-year renewal license with Google / FitBit,” added Mr. Jose. “We also partnered with ELAN to make Immersion haptic patent licenses available to PC laptop OEMs through ELAN’s best-in-class Smart-Haptic Pad™ Technology. This is a new market opportunity for us and we believe PC laptop OEMs will benefit by providing a thinner and more compelling user experience.”

“Our core business continued to generate solid operating profits in the quarter, although these results were obfuscated by asset market volatility which led to negative mark-to-market results in our associated marketable securities portfolio. We repurchased 281,765 shares in the quarter for an average price of $5.45 per share, bringing the total shares repurchased this year to 1,220,546 shares at an average price of $4.90.”

Recent Business Highlights:

  • Renewed multi-year agreement with Google pursuant to which Google has obtained a license to Immersion’s patent portfolio for Google and Fitbit products. Other terms of the agreement are confidential.
  • Signed license agreement with ELAN Microelectronics Corporation, a leading human-machine interface solution provider, to make Immersion haptic patent licenses available to PC laptop OEMs through ELAN’s best-in-class Smart-Haptic Pad™ Technology.

About Immersion

Immersion Corporation (NASDAQ: IMMR) is a leading innovator of touch feedback technology, also known as haptics. The company invents, accelerates, and scales haptic experiences by providing technology solutions for mobile, automotive, gaming, and consumer electronics. Haptic technology creates immersive and realistic experiences that enhance digital interactions by engaging users' sense of touch. Learn more at www.immersion.com.

Use of Non-GAAP Financial Measures

Immersion reports all financial information required in accordance with generally accepted accounting principles (GAAP), but it believes that evaluating its ongoing operating results may be difficult to understand if limited to reviewing only GAAP financial measures. Immersion discloses this non-GAAP information, such as Non-GAAP net income and Non-GAAP net income per diluted share because it is useful in understanding the company’s performance as it excludes certain non-cash expenses like stock-based compensation expense and other special charges, such as deferred tax assets valuation allowance, depreciation and restructuring costs, that many investors feel may obscure the company’s true operating performance. Likewise, management uses these non-GAAP financial measures to manage and assess the profitability of its business. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results under GAAP. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Such non-GAAP financial measures are reconciled to their closest GAAP financial measures in tables contained in this press release.

Forward-looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements involve risks and uncertainties. Forward-looking statements are identified by words such as “anticipates,” “believes,” “expects,” “intends,” “may,” “can,” “will,” “places,” “estimates,” and other similar expressions. However, these words are not the only way we identify forward-looking statements. Examples of forward-looking statements include any expectations, projections, or other characterizations of future events, or circumstances.

Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Actual results could differ materially from those projected in the forward-looking statements, therefore we caution you not to place undue reliance on these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: the inability to predict the outcome of any litigation, the costs associated with any litigation and the risks related to our business, both direct and indirect, of initiating litigation, the effects of the COVID-19 global pandemic on the Company and its business, and on the business of its suppliers and customers; unanticipated changes in the markets in which the Company operates; the effects of the current macroeconomic climate (especially in light of the ongoing adverse effects of the COVID-19 global pandemic); delay in or failure to achieve adoption of or commercial demand for the Company’s products or third party products incorporating the Company’s technologies; the inability of Immersion to renew existing licensing arrangements, or enter into new licensing arrangements on favorable terms; the loss of a major customer; the ability of Immersion to protect and enforce its intellectual property rights and other factors. For a more detailed discussion of these factors, and other factors that could cause actual results to vary materially, interested parties should review the risk factors listed in Immersion’s Annual Report on Form 10-K for 2021 and in its most recent Quarterly Report on Form 10-Q which are on file with the U.S. Securities and Exchange Commission. Any forward-looking statements made by us in this press release speak only as of the date of this press release, and Immersion does not intend to update these forward-looking statements after the date of this press release, except as required by law.

Immersion, and the Immersion logo are trademarks of Immersion Corporation in the United States and other countries. All other trademarks are the property of their respective owners. The use of the word “partner” or “partnership” in this press release does not mean a legal partner or legal partnership.

(IMMR – C)

Immersion Corporation

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

June 30, 2022

 

December 31, 2021

 

(Unaudited)

 

 

(1)

ASSETS

 

 

 

Cash and cash equivalents

$

57,390

 

$

51,490

 

Marketable equity securities

 

79,476

 

 

86,431

 

Accounts and other receivables

 

1,923

 

 

1,970

 

Prepaid expenses and other current assets

 

9,550

 

 

13,432

 

Total current assets

 

148,339

 

 

153,323

 

Property and equipment, net

 

376

 

 

444

 

Long-term deposits

 

4,451

 

 

9,658

 

Marketable debt securities

 

17,147

 

 

7,286

 

Other assets, net

 

3,705

 

 

4,809

 

TOTAL ASSETS

$

174,018

 

$

175,520

 

LIABILITIES

 

 

 

Accounts payable

$

77

 

$

2

 

Accrued compensation

 

1,125

 

 

555

 

Deferred revenue

 

4,649

 

 

4,826

 

Other current liabilities

 

13,602

 

 

11,247

 

Total current liabilities

 

19,453

 

 

16,630

 

Long-term deferred revenue

 

14,334

 

 

16,699

 

Other long-term liabilities

 

494

 

 

896

 

TOTAL LIABILITIES

 

34,281

 

 

34,225

 

STOCKHOLDERS’ EQUITY

 

139,737

 

 

141,295

 

TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY

$

174,018

 

$

175,520

 

(1) Derived from Immersion’s annual audited consolidated financial statements.

Immersion Corporation

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

 

(1)

 

 

 

(1)

 

 

 

(2)

 

 

 

(2)

Revenues:

 

 

 

 

 

 

 

Royalty and license

$

7,918

 

 

$

10,881

 

 

$

15,148

 

 

$

17,949

 

Development, services, and other

 

65

 

 

 

129

 

 

 

143

 

 

 

220

 

Total revenues

 

7,983

 

 

 

11,010

 

 

 

15,291

 

 

 

18,169

 

Costs and expenses:

 

 

 

 

 

 

 

Cost of revenues

 

 

 

 

41

 

 

 

4

 

 

 

70

 

Sales and marketing

 

218

 

 

 

1,194

 

 

 

704

 

 

 

2,300

 

Research and development

 

355

 

 

 

1,332

 

 

 

864

 

 

 

2,639

 

General and administrative

 

3,304

 

 

 

2,636

 

 

 

6,010

 

 

 

4,860

 

Total costs and expenses

 

3,877

 

 

 

5,203

 

 

 

7,582

 

 

 

9,869

 

Operating Income

 

4,106

 

 

 

5,807

 

 

 

7,709

 

 

 

8,300

 

Interest and other income (loss), net

 

(6,099

)

 

 

40

 

 

 

(4,065

)

 

 

(276

)

Income (loss) before benefit from (provision for) income taxes

 

(1,993

)

 

 

5,847

 

 

 

3,644

 

 

 

8,024

 

Benefit from (provision for) income taxes

 

174

 

 

 

(506

)

 

 

(387

)

 

 

(647

)

Net Income (loss)

$

(1,819

)

 

$

5,341

 

 

$

3,257

 

 

$

7,377

 

Basic net income (loss) per share

$

(0.05

)

 

$

0.17

 

 

$

0.10

 

 

$

0.25

 

Shares used in calculating basic net income (loss) per share

 

33,616

 

 

 

30,982

 

 

 

33,638

 

 

 

29,787

 

Diluted net income (loss) per share

$

(0.05

)

 

$

0.17

 

 

$

0.10

 

 

$

0.24

 

Shares used in calculating diluted net income (loss) per share

 

33,616

 

 

 

31,247

 

 

 

33,955

 

 

 

30,253

 

Immersion Corporation

Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

GAAP net income (loss)

$

(1,819

)

 

$

5,341

 

 

$

3,257

 

 

$

7,377

 

Add: Benefit from (provision for) income taxes

 

(174

)

 

 

506

 

 

 

387

 

 

 

647

 

Less: Non-GAAP provision for income taxes

 

(52

)

 

 

(15

)

 

 

(83

)

 

 

(44

)

Add: Stock-based compensation

 

791

 

 

 

1,051

 

 

 

1,932

 

 

 

1,582

 

Add: Restructuring expense

 

 

 

 

325

 

 

 

 

 

 

426

 

Add: Depreciation and amortization of property and equipment

 

33

 

 

 

26

 

 

 

68

 

 

 

50

 

Other nonrecurring charges

$

155

 

 

$

 

 

$

248

 

 

$

 

Non-GAAP net income (loss)

$

(1,066

)

 

$

7,234

 

 

$

5,809

 

 

$

10,038

 

Non-GAAP net income (loss) per diluted share

$

(0.03

)

 

$

0.23

 

 

$

0.17

 

 

$

0.33

 

Shares used in calculating Non-GAAP net income (loss) per diluted share

 

33,616

 

 

 

31,247

 

 

 

33,955

 

 

 

30,253

 

Immersion Corporation

Disaggregated Revenue Information

(In thousands)

(Unaudited)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Fixed fee license revenue

$

1,246

 

$

1,824

 

$

2,991

 

$

3,099

Per-unit royalty revenue

 

6,672

 

 

9,057

 

 

12,157

 

 

14,850

Total royalty and license revenue

 

7,918

 

 

10,881

 

 

15,148

 

 

17,949

Development, services, and other revenue

 

65

 

 

129

 

 

143

 

 

220

Total revenues

$

7,983

 

$

11,010

 

$

15,291

 

$

18,169

Immersion Corporation

Revenue by Line of Business

(Unaudited)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2022

 

2021

 

2022

 

2021

Mobility

58 %

 

61 %

 

59 %

 

64 %

Gaming

23 %

 

18 %

 

23 %

 

15 %

Automotive

10 %

 

21 %

 

12 %

 

20 %

Other

9 %

 

— %

 

6 %

 

1 %

Total revenues

100 %

 

100 %

 

100 %

 

100 %

Immersion Corporation

Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses

(In thousands)

(Unaudited)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

GAAP operating expenses

$

3,877

 

 

$

5,162

 

 

$

7,578

 

 

$

9,799

 

Adjustments to GAAP operating expenses:

 

 

 

 

 

 

 

Stock-based compensation expense - S&M

 

99

 

 

 

(313

)

 

 

2

 

 

 

(537

)

Stock-based compensation expense - R&D

 

23

 

 

 

(217

)

 

 

(81

)

 

 

(535

)

Stock-based compensation expense - G&A

 

(913

)

 

 

(521

)

 

 

(1,853

)

 

 

(510

)

Restructuring expense

 

 

 

 

(325

)

 

 

 

 

 

(426

)

Depreciation and amortization expense of property and equipment

 

(33

)

 

 

(26

)

 

 

(68

)

 

 

(50

)

Other nonrecurring charges

 

(155

)

 

 

 

 

 

(248

)

 

 

 

Non-GAAP operating expenses

$

2,898

 

 

$

3,760

 

 

$

5,330

 

 

$

7,741

 

 

Investor Contact:
Aaron Akerman
Immersion Corporation
514-987-9800 ext. 5110
[email protected]