Immersion Corporation Reports Second Quarter 2014 Results

  Immersion Corporation Reports Second Quarter 2014 Results

                      Posts Record June Quarter Revenue

Business Wire

SAN JOSE, Calif. -- July 31, 2014

Immersion Corporation (NASDAQ:IMMR), the leading developer and licensor of
touch feedback technology, today reported financial results for the second
quarter ended June 30, 2014.

Results for the three months ended June 30, 2014

Total revenues for the second quarter of 2014 were $11.8 million, an increase
of 16% compared to $10.2 million for the second quarter of 2013. Royalty and
license revenues of $11.6 million for the second quarter of 2014 were up 16%
from the same period last year. Net income for the second quarter of 2014 was
$169,000, or $0.01 per diluted share. This compares to net income of $466,000,
or $0.02 per diluted share, for the second quarter of 2013.

Non-GAAP net income for the second quarter of 2014 was $1.5 million, or $0.05
per diluted share, compared with non-GAAP net income of $1.6 million, or $0.06
per diluted share, for the second quarter of 2013. (See attached table for a
reconciliation of GAAP to non-GAAP financial measures.)

As of June 30, 2014, Immersion’s cash, cash equivalents, and short-term
investments were $74.2 million, compared to $71.1 million as of December 31,
2013. During the June quarter, the Company used $109 thousand to buy back
approximately 11 thousand shares of its common stock under its stock
repurchase program.

Management Commentary

“We are pleased to report record June quarter revenues and our sixth
consecutive quarter of profitability,” said Vic Viegas, chief executive
officer of Immersion. “During the period, we continued to make great progress
in executing across our key initiatives with both our OEM customers and our
content business. This includes the launch of our new official business entity
in Shanghai as well as our entering into a new multi-year licensing agreement
with Huawei, one of the largest smartphone makers in the world.”

“We are very optimistic regarding the opportunities in front of us given the
headway we have made to date and our prospects for growth in the future.
However, due to the timing of new agreements and the pace of certain
negotiations, including our renewal negotiations with LG Electronics, we are
revising our 2014 financial outlook. We now expect revenues for 2014 to be in
the range of $51 million to $56 million, an increase of between 7% and 18%
over the prior year. Non-GAAP net income for 2014 is anticipated to be in the
range of $6 million to $12 million,” concluded Mr. Viegas.

Business Highlights

Recent business highlights demonstrate continued progress across Immersion’s
strategic initiatives, including:

  *The addition of new mobile licensee Huawei Device (Dongguan) Co., Ltd.,
    the third largest global supplier of smartphones according to IDC. This
    first direct license agreement with Huawei for Immersion’s haptic
    software, TouchSense 3000, enables Huawei to add tactile feedback to
    certain Huawei branded devices to create rich, multi-dimensional user
    experiences.
  *The expansion of Immersion’s haptic business in China with the opening of
    an official business entity. Immersion (Shanghai) Science & Technology
    Company, Ltd., a wholly owned subsidiary in China, expands the Company’s
    sales and support activities as it continues to grow its customer base in
    China, broadens its engagement with the Chinese mobile ecosystem, and
    establishes a new technology center and base of operations in the region.
  *Immersion’s entry into a content and media evaluation license agreement
    with a second significant mobile ad network, setting the stage for
    additional testing and integration work as the Company moves toward
    commercial launches of haptically-enhanced ads as early as this calendar
    year.

Conference Call Information

Immersion will host a conference call with company management on Thursday,
July 31, 2014 at 2:00 p.m. Pacific time (5:00 p.m. Eastern time) to discuss
financial results for the second quarter ended June 30, 2014. To participate
on the live call, analysts and investors should dial +1 888-455-2260
(conference ID: 2161690) 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 (www.immersion.com)

Founded in 1993, Immersion (NASDAQ:IMMR) is the leading innovator in haptic
technology; the company’s touch feedback solutions deliver a more compelling
sense of the digital world. Using Immersion’s high-fidelity haptic systems,
partners can transform user experiences with unique and customizable touch
feedback effects; excite the senses in games, videos and music; restore
“mechanical” feel by providing intuitive and unmistakable confirmation;
improve safety by overcoming distractions while driving or performing a
medical procedure; and expand usability when audio and visual feedback are
ineffective. Immersion’s TouchSense technology provides haptics in mobile
phone, automotive, gaming, medical and consumer electronics products from
world-class companies. With over 1,700 issued or pending patents in the U.S.
and other countries, Immersion helps bring the digital universe to life. Hear
what we have to say at blog.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 common share, because it is useful in understanding the company’s
performance as it excludes certain non-cash expenses and other special charges
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,
the statement regarding positioning Immersion to capitalize on exciting market
opportunities and a growing market awareness that Immersion’s touch
technologies can bring richness and realism to advanced user interfaces in a
wide variety of emerging industries and our expectation that revenues for 2014
will be in the range of $51 million to $56 million and non-GAAP net income for
2014 will be in the range of $6 million to $12 million.

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; delay in or failure to achieve commercial
demand for Immersion’s or its licensees’ products; a delay in or failure to
achieve the acceptance of force feedback as a critical user experience;
unexpected difficulties in monetizing the patent portfolio; the commercial
success of applications or devices into which Immersion’s technology is
licensed; potentially lengthy sales cycles and design processes; unanticipated
difficulties and challenges encountered in development efforts; unexpected
costs; failure to retain key personnel; competition; the inherently uncertain
nature of litigation which makes future outcomes and timing difficult to
predict; the impact of global economic conditions 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 2013 which
is 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, TouchSense, HD Haptics and Reverb 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)
                                                      
                                   June 30,                  December 31,
                                   2014                      2013
                                   (Unaudited)               (1)
ASSETS
Cash and cash equivalents          $     17,217              $   14,136
Short-term investments                   56,980                  56,976
Accounts and other                       1,348                   598
receivables, net
Deferred income taxes                    7,784                   7,784
Prepaid expenses and other              1,094                  690       
current assets
Total current assets                     84,423                  80,184
                                                             
Property and equipment, net              1,364                   944
Deferred income tax assets               28,031                  29,066
Intangibles and other assets,           345                    381       
net
                                                             
TOTAL ASSETS                       $     114,163             $   110,575   
                                                             
LIABILITIES
Accounts payable                   $     1,366               $   682
Accrued compensation                     2,060                   4,680
Other current liabilities                2,119                   1,653
Deferred revenue                        18,020                 8,920     
Total current liabilities                23,565                  15,935
                                                             
Long-term deferred revenue               10,462                  13,441
Other long-term liabilities             476                    528       
TOTAL LIABILITIES                        34,503                  29,904
                                                             
STOCKHOLDERS’ EQUITY                    79,660                 80,671    
                                                             
TOTAL LIABILITIES &                $     114,163             $   110,575   
STOCKHOLDERS’ EQUITY
                                                             
(1) Derived from Immersion’s annual audited consolidated financial statements,
as adjusted for change in accounting method.



Immersion Corporation
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
                                                           
                       Three Months                  Six Months
                       Ended June 30,                Ended June 30,
                        2014         2013         2014         2013   
Revenues:
Royalty and license    $ 11,602       $ 9,980        $ 26,759       $ 23,629
Product sales            0              13             0              32
Development,            229          208          508          400    
services, and other
Total revenues          11,831       10,201       27,267       24,061 
                                                                    
Costs and expenses:
Cost of revenues         101            127            221            275
Sales and marketing      2,637          2,294          5,400          4,541
Research and             3,006          2,663          6,064          5,236
development
General and              5,950          4,649          12,471         11,827
administrative
Amortization of         20           20           40           40     
intangibles
Total costs and         11,714       9,753        24,196       21,919 
expenses
                                                                    
Operating Income         117            448            3,071          2,142
Interest and other      144          28           137          38     
income
                                                                    
Income before
provision for income     261            476            3,208          2,180
taxes
                                                                    
Provision for           (92    )      (10    )      (1,175 )      (27    )
income taxes
                                                                    
Net Income             $ 169         $ 466         $ 2,033       $ 2,153  
                                                                    
Basic net income per   $ 0.01        $ 0.02        $ 0.07        $ 0.08   
share
Shares used in
calculating basic       28,383       28,146       28,376       27,787 
net income per share
                                                                    
Diluted net income     $ 0.01        $ 0.02        $ 0.07        $ 0.07   
per share
Shares used in
calculating diluted     29,210       29,293       29,330       28,912 
net income per share
                                                                    

                                                              
Immersion Corporation
Reconciliation of GAAP Net Income to Non-GAAP Net Income
(In thousands, except per share amounts)
(Unaudited)
                                                                      
                               Three Months              Six Months
                               Ended June 30,            Ended June 30,
                               2014       2013         2014       2013
                                                                      
GAAP Net Income                $ 169        $ 466        $ 2,033      $ 2,153
                                                                      
Stock-based compensation        1,344       1,151       2,927       2,189
                                                                      
Non-GAAP Net Income            $ 1,513      $ 1,617      $ 4,960      $ 4,342
                                                                      
Non-GAAP Earnings Per          $0.05        $0.06        $0.17        $0.15
Share
                                                                      
Shares used in calculating      29,210      29,293      29,330      28,912
Non-GAAP Earnings per Share
                                                                      

Contact:

Media Contact:
Edelman
Reagan Crossley, +1 650-762-2955
reagan.crossley@edelman.com
or
Investor Contact:
The Blueshirt Group
Jennifer Jarman, +1 415-217-5866
jennifer@blueshirtgroup.com
 
Press spacebar to pause and continue. Press esc to stop.