Immersion Corporation
Aug 3, 2017

Immersion Corporation Reports Second Quarter 2017 Results

Files Lawsuits against Samsung Electronics and Motorola Mobility

SAN JOSE, Calif.--(BUSINESS WIRE)-- Immersion Corporation (NASDAQ: IMMR), the leading developer and licensor of touch feedback technology, today reported financial results for the second quarter ended June 30, 2017.

Results for the quarter ended June 30, 2017

Total revenues for the second quarter of 2017 were $7.0 million, a decrease of 11% compared to $7.9 million for the second quarter of 2016. Royalty and license revenues of $6.8 million for the second quarter of 2017 were down 11% from the same period last year.

Net loss for the second quarter of 2017 was $(14.8) million, or $(0.51) per share. This compares to net loss of $(5.6) million, or $(0.20) per share, for the second quarter of 2016.

Non-GAAP net loss for the second quarter of 2017 was $(10.8) million, or $(0.37) per share, compared with non-GAAP net loss of $(5.8) million, or $(0.20) per share, for the second quarter of 2016. (See attached table for a reconciliation of GAAP to non-GAAP financial measures.)

As of June 30, 2017, Immersion's cash, cash equivalents and short term investments were $62.0 million, down from $89.8 million as of December 31, 2016.

Management Commentary

Chief executive officer Vic Viegas of Immersion said, "During the quarter we had a number of positive developments, including the addition of several license agreements with new customers in key markets. We also renewed and expanded agreements with existing customers. We remain steadfast in our resolve to bring value to our shareholders through the adoption and monetization of haptics."

"Taking into consideration our litigation with Apple, Samsung, Motorola, and Fitbit, we are updating our 2017 guidance. We expect revenues to be in the range of $30 to $34 million. Based on this forecast, we expect to generate bottom line results of between a non-GAAP net loss of $28 million and $36 million."

"We continue to take a fiscally responsible approach as we utilize our strong balance sheet to support our objectives in driving value for our shareholders while positioning Immersion for continued long-term success," concluded Mr. Viegas.

Recent Business Highlights

Complaints against Samsung and Motorola

Immersion also announced that it has filed a complaint in the United States District Court for the Eastern District of Texas against Samsung Electronics Co., Ltd. and Samsung Electronics America, Inc. and a complaint in the United States District Court for the District of Delaware against Motorola Mobility LLC and Motorola Mobility Holdings LLC. The complaints allege that certain Android-based smartphones infringe five Immersion patents that cover various uses of haptic effects in connection with touchscreens. In the complaints, Immersion is seeking to stop Samsung and Motorola from further infringement, as well as the recovery of damages.

The complaints against Samsung and Motorola assert infringement of the following patents:

Conference Call Information

Immersion will host a conference call with company management on Thursday, August 3, 2017 at 2:00 p.m. Pacific time (5:00 p.m. Eastern time) to discuss financial results for the second quarter ended June 30, 2017. To participate on the live call, analysts and investors should dial +1 877-627-6590 (conference ID: 2001577) at least ten minutes prior to the start of the call. A live and archived webcast of the conference call will also be available for 90 days within the investor relations section of Immersion's corporate Web site at www.immersion.com.

About Immersion

Immersion Corporation (NASDAQ: IMMR) is the leading innovator of touch feedback technology, also known as haptics. The company provides technology solutions for creating immersive and realistic experiences that enhance digital interactions by engaging users' sense of touch. With more than 2,400 issued or pending patents, Immersion's technology has been adopted in more than 3 billion digital devices, and provides haptics in mobile, automotive, advertising, gaming, medical and consumer electronics products. Immersion is headquartered in San Jose, California with offices worldwide. Learn more at www.immersion.com

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.

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 loss and Non-GAAP net loss per share, because it is useful in understanding the company's performance as it more closely reflects its expected long-term effective tax rates and excludes certain non-cash expenses and other special charges, such as deferred tax assets valuation allowance, 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. Investors are encouraged to review the related GAAP financial measures.

Forward-looking Statements

This press release contains "forward-looking statements" that involve risks and uncertainties as well as assumptions that, if they never materialize or prove incorrect, could cause the results of Immersion Corporation and its consolidated subsidiaries to differ materially from those expressed or implied by such forward-looking statements.

All statements, other than the statements of historical fact, are statements that may be deemed forward-looking statements, including, but not limited to, our expectation that revenues for 2017 will be in the range of $30 million to $34 million and non-GAAP net loss for 2017 ranging from $28 million to $36 million and statements regarding litigation outcomes.

Immersion's actual results might differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with Immersion's business, which include, but are not limited to, potential and actual claims and proceedings, including litigation involving Immersion's intellectual property; the impact of litigation developments on existing and potential customers; delay in or failure to achieve commercial demand for Immersion's or its licensees' products; unexpected difficulties in monetizing the patent portfolio; the commercial success of applications or devices into which Immersion's technology is licensed; the continued popularity of mobile games and wearables; potentially lengthy sales cycles and design processes; unanticipated difficulties and challenges encountered in development efforts; unexpected costs; the fact that certain target markets are still relatively nascent; risks associated with doing business internationally; litigation costs in any current or future litigation; failure to retain key personnel; ability to retain personnel; competition; the inherently uncertain nature of litigation which makes future outcomes and timing difficult to predict; the impact of global economic conditions and foreign currency exchange rates and other factors. Many of these risks and uncertainties are beyond the control of Immersion.

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 2016 and its most recent Quarterly Report on Form 10-Q which are on file with the U.S. Securities and Exchange Commission. The forward-looking statements in this press release reflect Immersion's beliefs and predictions as of the date of this release. Immersion disclaims any obligation to update these forward-looking statements as a result of financial, business, or any other developments occurring after the date of this release.

Immersion, the Immersion logo and TouchSense are trademarks or registered 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)

   
June 30, December 31,
2017 2016
(Unaudited) (1)
ASSETS
Cash and cash equivalents $ 33,152 $ 56,865
Short-term investments 28,863 32,907
Accounts receivable, net 3,335 1,382
Prepaid expenses and other current assets   989   2,876
Total current assets 66,339 94,030
 
Property and equipment, net 3,638 4,016
Deferred income tax assets 437 359
Prepaid income taxes - 4,997
Intangibles and other assets, net   363   365
 
TOTAL ASSETS $ 70,777 $ 103,767
 
LIABILITIES
Accounts payable $ 10,237 $ 5,951
Accrued compensation 2,355 4,753
Other current liabilities 3,886 4,409
Deferred revenue   5,004   5,909
Total current liabilities 21,482 21,022
 
Long-term deferred revenue 24,369 26,393
Other long-term liabilities   963   1,012
TOTAL LIABILITIES 46,814 48,427
 
STOCKHOLDERS' EQUITY   23,963   55,340
 

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$ 70,777 $ 103,767
 
(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 Six Months
Ended June 30, Ended June 30,
2017 2016 2017 2016
Revenues:
Royalty and license $ 6,785 $ 7,615 $ 15,791 $ 21,063
Development, services, and other   245     249     463     424  
Total revenues   7,030     7,864     16,254     21,487  
 
Costs and expenses:
Cost of revenues 54 61 97 87
Sales and marketing 3,461 3,397 6,766 7,200
Research and development 2,826 2,966 6,022 7,278
General and administrative   15,600     11,001     31,132     21,091  
Total costs and expenses   21,941     17,425     44,017     35,656  
 
Operating loss (14,911 ) (9,561 ) (27,763 ) (14,169 )
Interest and other income   165     33     304     245  
 
Loss from continuing operations before benefit (provision) for income taxes (14,746 ) (9,528 ) (27,459 ) (13,924 )
 
Benefit (provision) for income taxes   (99 )   3,323     (251 )   5,024  
 
Loss from continuing operations (14,845 ) (6,205 ) (27,710 ) (8,900 )
 
Income from discontinued operations - 649 - 649
       
Net loss $ (14,845 ) $ (5,556 ) $ (27,710 ) $ (8,251 )
 
Basic and diluted net loss per share
Continuing operations $ (0.51 ) $ (0.22 ) $ (0.95 ) $ (0.31 )
Discontinued operations $ 0.00   $ 0.02   $ 0.00   $ 0.02  
Total $ (0.51 ) $ (0.20 ) $ (0.95 ) $ (0.29 )
 
Shares used in calculating basic and diluted net loss per share   29,193     28,834     29,109     28,663  
 
Immersion Corporation
Reconciliation of GAAP Net Loss to Non-GAAP Net Loss
(In thousands, except per share amounts)
(Unaudited)
       

Three Months

Six Months
Ended June 30, Ended June 30,
2017   2016 2017   2016
 
GAAP net loss $ (14,845 ) $ (5,556 ) $ (27,710 ) $ (8,251 )
 
Add: Stock-based compensation 1,178 1,255 2,735 3,589
 
Add: Provision (benefit) for income taxes 99 (3,323 ) 251 (5,024 )
 

Less: Non-GAAP benefit for income taxes on continuing operations (at 19%)

  2,802     1,810     5,217     2,646  
 
Non-GAAP net loss $ (10,766 ) $ (5,814 ) $ (19,507 ) $ (7,040 )
 
Non-GAAP loss per share $ (0.37 ) $ (0.20 ) $ (0.67 ) $ (0.25 )
 
Shares used in calculating Non-GAAP loss per share   29,193     28,834     29,109     28,663  
 

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or
Investor Contact:
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Source: Immersion Corporation

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