Immersion Corporation Reports Fourth Quarter 2019 Results

  • Achieved Positive GAAP Net Income
  • Revenue of $11.5 million up 5% over the comparable quarter last year
  • GAAP net income (loss) per share of $0.03 versus $(0.10) last year
  • Non-GAAP net income (loss) per share of $0.10 versus $(0.02) last year

SAN JOSE, Calif.–(BUSINESS WIRE)–Immersion Corporation (NASDAQ: IMMR), the leading developer and licensor of touch feedback technology, today reported financial results for the fourth quarter ended December 31, 2019.

“Immersion ended the year with a positive fourth quarter, with revenue of a recurring nature up 24% over the prior year period, the further optimization of our cost structure, and the commencement of stock repurchases,” said Ramzi Haidamus, Immersion’s President and CEO. “We have made tremendous headway over the past year in carving a path to profitable growth and long-term value creation for the company. We are very excited and confident in our new strategic initiatives and are focused on executing across our plans while continuing to strengthen our organization.”

Fourth Quarter Financial Summary

  • Total revenues grew five percent to $11.5 million, compared to $10.9 million in the fourth quarter of 2018. Royalty and license revenues were $11.4 million, compared to $10.8 million in the fourth quarter of 2018.
  • GAAP net income was $979 thousand, or $0.03 per diluted share, compared to GAAP net loss of $3.1 million, or $0.10, in the fourth quarter of 2018.
  • Non-GAAP net income was $3.1 million, or $0.10 per diluted share, compared to non-GAAP net loss of $678 thousand, or $0.02, in the fourth quarter of 2018. (See attached table for a reconciliation of GAAP to non-GAAP financial measures.)
  • As of December 31, 2019, cash, cash equivalents and short-term investments totaled $89.5 million. During the fourth quarter, the company used $3.2 million in cash flow in operations and used approximately $2.7 million to purchase approximately 387 thousand shares of its common stock.

Fiscal Year 2019 Financial Summary

  • Revenues for 2019 were $36.0 million, compared to $111.0 million in 2018. Royalty and license revenues for 2019 totaled $35.6 million, compared to $110.6 million in 2018. Revenues for 2018 included a material fixed fee license agreement entered into in the first quarter of 2018.
  • Net loss for 2019 was $20.0 million, or $0.64 per diluted share, compared to net income of $54.3 million, or $1.73 per diluted share, for 2018.
  • Non-GAAP net loss for 2019 was $13.2 million, or $0.42 per diluted share, compared to non-GAAP net income for 2018 of $63.2 million, or $2.01 per diluted share. (See attached table for a reconciliation of GAAP to non-GAAP financial measures.)

Recent Business Highlights

  • Underlying its commitment to enhancing shareholder value, Immersion repurchased 975,298 shares of common stock from December 2019 to March 4, 2020 for an aggregate purchase price of $7,164,060.
  • Demonstrated the ability to incorporate a variety of haptic effects on a large touchscreen using a single piezoelectric actuator at the Consumer Electronics Show 2020. The reference design demonstrator showcased the use of advanced haptics to create realistic touch feedback for buttons, dials, switches, and textures in programmable automotive human-machine interfaces (HMIs).
  • Appointed Aaron Akerman as Chief Financial Officer. Akerman brings over 15 years of leadership experience in corporate finance, accounting, treasury, financial and strategic planning, and operations.
  • Signed an agreement with Continental, a leading international supplier of human-machine interface solutions for automobiles. The agreement renewal grants Continental access to Immersion’s advanced haptic technologies for its automotive interfaces.
  • Hosted an Analyst and Investor Day on November 18, 2019, providing an overview of the company’s new strategic initiatives. Archived links from the event are accessible as follows: slide presentation and audio webcast.

Outlook

While the specific impacts of the COVID-19 virus on its customers’ activities and shipment volumes is difficult to forecast, Immersion is accounting for broader variability in its 2020 outlook and is projecting total revenues for the year of $31 to $35 million. Non-GAAP net income per diluted share is anticipated to be in the range of $0.04 to $0.19.

Fourth Quarter Earnings Conference Call and Webcast

Immersion will host a conference call with company management today at 2:00 p.m. PT (5:00 p.m.. ET) to discuss financial results for the fourth quarter ended December 31, 2019. To participate on the live call, analysts and investors should dial +1 800-367-2403 (conference ID: 9038518) at least ten minutes prior to the start of the call. A recorded webcast of the conference call will also be available for 90 days within the “News and Events” section of Immersion’s investor relations website at https://ir.immersion.com/news-and-events.

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. Immersion’s technology has been adopted in more than 3 billion digital devices, and provides haptics in mobile, automotive, gaming, medical and consumer electronics products. Immersion is headquartered in San Jose, California with offices worldwide. 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 (loss) and Non-GAAP net income (loss) 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 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. The Company has not reconciled the non-GAAP financial measures guidance to the corresponding GAAP measures on a forward-looking basis due to the uncertainty and the potential variability of many of the costs and expenses that may be incurred in the future. Accordingly, reconciliations of the Company’s forward-looking non-GAAP financial measures to the corresponding GAAP measures are not available without unreasonable effort.

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, statements regarding our belief that our revenue outlook for 2020 is anticipated to be in the range of $31 to $35 million, and our expectation that non-GAAP net income per diluted share is anticipated to be in the range of $0.04 and $0.19 for 2020. 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, the inability of Immersion to enter into new and renewed licensing arrangements with its existing licensees and additional third parties for its touch-enabling technologies, the loss of a major customer, potential and actual claims and proceedings, including litigation involving Immersion’s intellectual property, the ability of Immersion to protect and enforce its intellectual property rights, changes in patent law, companies choosing to implement haptics without Immersion’s software or a license to Immersion’s patents, the ability of Immersion to return to consistent profitability in the future, the inability of Immersion to retain or recruit necessary personnel 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 2018 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. Except as required by law, 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 or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

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)
 
 

December 31,2019

December 31, 2018

(1)

(1)

ASSETS
Cash and cash equivalents

$

86,478

$

110,988

Short-term investments

 

3,019

 

13,930

Accounts and other receivables

 

3,385

 

1,051

Prepaid expenses and other current assets

 

14,078

 

9,856

Total current assets

 

106,960

 

135,825

Property and equipment, net

 

1,226

 

2,343

Other assets

 

16,662

 

7,827

TOTAL ASSETS

$

124,848

$

145,995

LIABILITIES
Accounts payable

$

809

$

3,612

Accrued compensation

 

2,844

 

3,948

Other current liabilities

 

3,478

 

3,194

Deferred revenue

 

4,692

 

4,591

Total current liabilities

 

11,823

 

15,345

Long-term deferred revenue

 

25,952

 

30,203

Other long-term liabilities

 

3,316

 

787

TOTAL LIABILITIES

 

41,091

 

46,335

STOCKHOLDERS’ EQUITY

 

83,757

 

99,660

TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY

$

124,848

$

145,995

(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 Year
Ended December 31, Ended December 31,

2019

2018

2019

2018

 
Revenues:
Royalty and license

$

11,379

 

$

10,768

 

$

35,643

 

$

110,557

 

Development, services, and other

 

85

 

 

99

 

 

310

 

 

422

 

Total revenues

 

11,464

 

 

10,867

 

 

35,953

 

 

110,979

 

 
Costs and expenses:
Cost of revenues

 

53

 

 

28

 

 

170

 

 

218

 

Sales and marketing

 

1,550

 

 

1,664

 

 

6,426

 

 

6,118

 

Research and development

 

1,774

 

 

2,575

 

 

7,840

 

 

9,727

 

General and administrative

 

7,609

 

 

10,146

 

 

42,968

 

 

41,815

 

Total costs and expenses

 

10,986

 

 

14,413

 

 

57,404

 

 

57,878

 

 
Operating income (loss)

 

478

 

 

(3,546

)

 

(21,451

)

 

53,101

 

Interest and other income (loss)

 

772

 

 

483

 

 

1,878

 

 

1,634

 

 
Income (loss) before provision for income taxes

 

1,250

 

 

(3,063

)

 

(19,573

)

 

54,735

 

 
Provision for income taxes

 

(271

)

 

(79

)

 

(471

)

 

(392

)

 
Net income (loss)

$

979

 

$

(3,142

)

$

(20,044

)

$

54,343

 

Basic net income (loss) per share

$

0.03

 

$

(0.10

)

$

(0.64

)

$

1.78

 

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

 

31,731

 

 

30,814

 

 

31,529

 

 

30,459

 

Diluted net income (loss) per share

$

0.03

 

$

(0.10

)

$

(0.64

)

$

1.73

 

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

 

31,904

 

 

30,814

 

 

31,529

 

 

31,407

 

Immersion Corporation
Disaggregated Revenue Information
(In thousands)
(Unaudited)
 

Three Months Ended

Year Ended

December 31,

December 31,

2019

2018

2019

2018

 
Fixed fee license revenue

$

2,517

$

1,618

$

12,627

$

83,573

Per-Unit royalty revenue

 

8,862

 

9,150

 

23,016

 

26,984

Total royalty and license revenue

 

11,379

 

10,768

 

35,643

 

110,557

Development, services, and other revenue

 

85

 

99

 

310

 

422

Total revenues

$

11,464

$

10,867

$

35,953

$

110,979

Immersion Corporation
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)
(In thousands, except per share amounts)
(Unaudited)
 
Three Months Year
Ended December 31, Ended December 31,

2019

2018

2019

2018

 
GAAP net income (loss)

$

979

 

$

(3,142

)

$

(20,044

)

$

54,343

 

 
Add: Provision for income taxes

 

271

 

 

79

 

 

471

 

 

392

 

 
Less: Non-GAAP provision for income taxes

 

(72

)

 

(35

)

 

(218

)

 

(213

)

 
Add: Stock-based compensation

 

1,093

 

 

2,420

 

 

5,464

 

 

8,686

 

 
Add : Restructuring

 

844

 

 

 

 

1,093

 

 

 

 
Non-GAAP net income (loss)

$

3,115

 

$

(678

)

$

(13,234

)

$

63,208

 

 
Non-GAAP net income (loss) per diluted share

$

0.10

 

$

(0.02

)

$

(0.42

)

$

2.01

 

 
Dilutive shares used in calculating Non-GAAP net income (loss) per share

 

31,904

 

 

30,814

 

 

31,529

 

 

31,407

 

Immersion Corporation
Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses
(In thousand)
(Unaudited)
 
Three Months Ended Year Ended
December 31, December 31,

2019

2018

2019

2018

 
GAAP operating expenses

$

10,933

 

$

14,385

 

$

57,234

 

$

57,660

 

 
Adjustments to non-GAAP operating expenses:
 
Stock-based compensation expense – S&M

 

(247

)

 

(271

)

 

(947

)

 

(946

)

 
Stock-based compensation expense – R&D

 

(249

)

 

(566

)

 

(1,304

)

 

(1,948

)

 
Stock-based compensation expense – G&A

 

(597

)

 

(1,583

)

 

(3,213

)

 

(5,792

)

 
Depreciation and amortization expense

 

(702

)

 

(208

)

 

(1,290

)

 

(855

)

 
Non-GAAP operating expense

$

9,138

 

$

11,757

 

$

50,480

 

$

48,119

 

Immersion Corporation
Revenue by Line of Business
(Unaudited)
 
Three Months Ended Year Ended
December 31, December 31,

2019

2018

2019

2018

Mobility

67%

45%

63%

81%

Gaming

6%

14%

16%

5%

Automotive

27%

36%

21%

13%

Medical

–%

5%

–%

1%

 

Contacts

Investor Contact:
The Blueshirt Group

Jennifer Jarman

+1 415.217.5866

jennifer@blueshirtgroup.com

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