Immersion Corporation (NASDAQ: IMMR), the leading developer and
licensor of touch feedback technology, today reported financial
results for the third quarter ended September 30, 2017.
Results for the quarter ended September 30, 2017
Total revenues for the third quarter of 2017 were $11.9 million.
This compares to total revenues of $26.3 million for the third
quarter of 2016, which included a one-time license fee from Samsung
of $19.0 million.
Net loss for the third quarter of 2017 was $(5.3) million, or
$(0.18) per share. This compares to net income of $7.0 million, or
$0.24 per share, for the third quarter of 2016.
Non-GAAP net loss for the third quarter of 2017 was $(2.9)
million, or $(0.10) per share, compared with non-GAAP net income of
$9.9 million, or $0.34 per share, for the third quarter of 2016.
(See attached table for a reconciliation of GAAP to non-GAAP
financial measures.)
As of September 30, 2017, Immersion’s cash, cash equivalents and
short term investments were $48.1 million, down from $89.8 million
as of December 31, 2016.
Management Commentary
Chief Executive Officer Vic Viegas of Immersion said, “We
continue to make positive progress in furthering the value and
adoption of haptics across a growing number of markets, as we
added, renewed or expanded numerous licensing engagements during
our third quarter of 2017. This is further evidence of the value of
our technology, our resolute focus on the execution of our strategy
and achievement of our operational objectives even as we
aggressively pursue the protection of our intellectual
property.”
“We are updating our outlook for revenues for the year to be in
the range of $33 to $35 million. This update narrows the range and
increases the upper end of our previous revenue guidance. Based on
this forecast, we expect to generate improved annual bottom line
results of a non-GAAP net loss between $(24) million and $(29)
million,” concluded Mr. Viegas.
Recent Business Highlights
- Licensed Tencent to use Immersion’s
TouchSense technology to deliver next-generation interactive
experiences to its mobile QQ and NOW applications. Additionally,
Tencent has also licensed Immersion technology to incorporate
haptics into its Super NBA game.
- Extended TouchSense® Force solution to
game developers building on the Unity Technologies (Unity) engine.
With the TouchSense Force Haptic Lab, developers can easily design
and integrate high-quality touch effects into their games to
leverage the advanced capabilities of newer gaming consoles,
including those for the Nintendo Switch™ system.
- Renewed licensing agreement with
Perfect World, a top Chinese game developer/publisher. Immersion
expects Perfect World will expand adoption of Immersion's tactile
feedback technology in the mobile version of its well-known action
role-playing game, Torchlight.
- Expanded license agreement with LG
Electronics, Inc., one of the world's largest providers of mobile
devices, for use of Immersion's TouchSense® technology for
high-definition haptics in LG Electronics' premier mobile phones
including the LG V30, its next flagship smartphone.
Update on Apple Litigations
On October 31, 2017, Immersion received notification from the
Chief Administrative Law Judge (ALJ) at the U.S. International
Trade Commission (ITC) that the due date for the initial
determination in the ITC’s investigation of Immersion’s
infringement allegations against Apple, Inc. has been extended from
November 13, 2017 to January 31, 2018. The notification explained
that the Chief ALJ has assumed responsibility for the
investigations of a retiring judge, and needs to extend the dates
in order to afford him an adequate amount of time to complete the
additional investigations he is now responsible for, and to draft
the initial determination. As a result of this extension, the
target date for the completion of the investigation is now expected
to be May 31, 2018.
Additionally, Immersion today announces that it has filed a
patent infringement lawsuit in the Beijing High People's Court
against Apple Computer Trading (Shanghai) Co., Ltd., Apple
Electronic Product Commerce (Beijing) Co., Ltd., and Apple Trading
(Shanghai) Co., Ltd alleging that the iPhone 6s, iPhone 6s Plus,
iPhone 7, iPhone 7 Plus, iPhone 8 and iPhone 8 Plus infringe
Immersion’s Chinese patents ZL02821854.X and ZL200810008845.X.
Immersion is seeking a permanent injunction preventing the
importation, sale and offering for sale of the iPhone products
noted above in China as well as damages.
Conference Call Information
Immersion will host a conference call with company management at
2:00 p.m. Pacific time (5:00 p.m. Eastern time) today to discuss
financial results for the third quarter ended September 30, 2017.
To participate on the live call, analysts and investors should dial
+1 888-312-9863 (conference ID: 7290991) 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 2,600 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 $33 million to $35 million and
non-GAAP net loss for 2017 ranging from $(24) million to $(29)
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)
September 30, December 31, 2017 2016 (Unaudited) (1) ASSETS Cash
and cash equivalents $ 19,263 $ 56,865 Short-term investments
28,860 32,907 Accounts receivable, net 6,478 1,382 Prepaid expenses
and other current assets 978 2,876 Total current
assets 55,579 94,030 Property and equipment, net 3,405 4,016
Deferred income tax assets 437 359 Prepaid income taxes - 4,997
Intangibles and other assets, net 351 365
TOTAL ASSETS $ 59,772 $ 103,767 LIABILITIES Accounts payable
$ 4,835 $ 5,951 Accrued compensation 1,916 4,753 Other current
liabilities 4,015 4,409 Deferred revenue 4,885 5,909
Total current liabilities 15,651 21,022 Long-term deferred
revenue 23,335 26,393 Other long-term liabilities 937
1,012 TOTAL LIABILITIES 39,923 48,427 STOCKHOLDERS’
EQUITY 19,849 55,340
TOTAL LIABILITIES & STOCKHOLDERS’
EQUITY
$ 59,772 $ 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 Nine Months Ended September
30, Ended September 30, 2017 2016 2017 2016 Revenues: Royalty and
license $ 11,636 $ 26,049 $ 27,427 $ 47,112 Development, services,
and other 227 257 690
681 Total revenues 11,863 26,306
28,117 47,793 Costs and
expenses: Cost of revenues 61 52 158 139 Sales and marketing 3,376
3,535 10,142 10,735 Research and development 3,116 2,951 9,138
10,229 General and administrative 10,753 9,654
41,885 30,745 Total costs and
expenses 17,306 16,192 61,323
51,848 Operating income (loss) (5,443 )
10,114 (33,206 ) (4,055 ) Interest and other income 200
664 504 909
Income (loss) from continuing operations before benefit (provision)
for income taxes (5,243 ) 10,778 (32,702 ) (3,146 ) Benefit
(provision) for income taxes (44 ) (3,760 )
(295 ) 1,264 Income (loss) from continuing
operations (5,287 ) 7,018 (32,997 ) (1,882 ) Income from
discontinued operations - - - 649 Net
income (loss) $ (5,287 ) $ 7,018 $ (32,997 ) $ (1,233 )
Basic net income (loss) per share Continuing operations $
(0.18 ) $ 0.24 $ (1.13 ) $ (0.07 ) Discontinued operations $ 0.00
$ 0.00 $ 0.00 $ 0.02 Total $ (0.18 ) $
0.24 $ (1.13 ) $ (0.05 ) Shares used in calculating basic
net income (loss) per share 29,245 28,849
29,155 28,726 Diluted net
income (loss) per share Continuing operations $ (0.18 ) $ 0.24 $
(1.13 ) $ (0.07 ) Discontinued operations $ 0.00 $ 0.00
$ 0.00 $ 0.02 Total $ (0.18 ) $ 0.24 $
(1.13 ) $ (0.05 ) Shares used in calculating diluted net income
(loss) per share 29,245 29,298
29,155 28,726
Immersion
Corporation Reconciliation of GAAP Net Income (loss) to
Non-GAAP Net Income (loss) (In thousands, except per share
amounts) (Unaudited) Three Months Nine Months
Ended September 30, Ended September 30, 2017 2016
2017 2016 GAAP net income (loss) $ (5,287 ) $
7,018 $ (32,997 ) $ (1,233 ) Add: Stock-based compensation
1,338 1,214 4,073 4,803 Add: Provision (benefit) for income
taxes 44 3,760 295 (1,264 ) Less: Non-GAAP benefit
(provision) for income taxes on continuing operations (at 19%)
996 (2,048 ) 6,213 598
Non-GAAP net (income) loss
$
(2,909 ) $
9,944 $ (22,416
) $ 2,904
Non-GAAP earnings (loss) per share $ (0.10 ) $ 0.34 $ (0.77
) $ 0.10 Shares used in calculating Non-GAAP earnings
(loss) per share 29,245 29,298
29,155 28,726
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