Immersion Corporation Reports Fourth Quarter and Full Year 2018 Results
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 and year ended December 31, 2018.
Effective January 1, 2018, the company adopted a new revenue recognition
standard (“ASC 606”), which impacted the company’s recognition of
revenue from certain of its fixed-fee and per-unit license agreements.
The company adopted ASC 606 using the modified retrospective method,
which means that the total amount of revenue reported for the fourth
quarter and fiscal year ended December 31, 2017 have not been restated
in the current financial statements. In the interest of comparability
during the transition year to ASC 606, the company has provided fourth
quarter and fiscal year 2018 revenue, net income (loss) and earnings
(loss) per share information in accordance with both ASC 606 and revenue
recognition rules in effect prior to the adoption of ASC 606 (“ASC 605”).
Results for the quarter ended December 31, 2018
Total revenues for the fourth quarter of 2018 were $10.9 million.
Royalty and license revenues for the fourth quarter of 2018 were $10.8
million.
Net loss for the fourth quarter of 2018 was $(3.1) million, or $(0.10)
per diluted share.
Non-GAAP net loss for the fourth quarter of 2018 was $(678) thousand, or
$(0.02) per share. (See attached table for a reconciliation of GAAP to
non-GAAP financial measures.)
Results for the year ended December 31, 2018
Revenues for 2018 were $111.0 million. Royalty and license revenues for
2018 totaled $110.6 million.
Net income for 2018 was $54.3 million, or $1.73 per diluted share.
Non-GAAP net income for 2018 was $63.2 million, or $2.01 per diluted
share. (See attached table for a reconciliation of GAAP to non-GAAP
financial measures.)
As of December 31, 2018, Immersion’s cash, cash equivalents and
short-term investments were $124.9 million, compared to $46.5 million as
of December 31, 2017.
Management Commentary and Business Outlook
“I am thrilled to be leading Immersion at this pivotal time for the
company. I have been extremely impressed with the talent, innovative
haptic solutions, product roadmap, and strength and depth of the
foundational intellectual property portfolio,” said Ramzi Haidamus,
Chief Executive Officer of Immersion. “We see a tremendous opportunity
for Immersion to capitalize on these assets and lead the widespread
adoption of touch feedback and related technologies in a much broader
array of products and markets. We will work diligently to refine our
strategic approach to prioritize and capitalize on the market growth in
front of us while paving a path towards sustainable profitability. Over
the next few quarters, we have modest expectations for our revenue as we
build a more robust and valuable business for the future.”
“We are pleased with the financial results that Immersion achieved in
2018, which demonstrate the value proposition that we bring to our
customers and the market amidst the expanding adoption of haptics, as
well as the shareholder value that can be generated through our business
model,” said Nancy Erba, Chief Financial Officer of Immersion. “Our
revenue outlook for 2019 is anticipated to be in the range of $24
million to $30 million, predominantly consisting of per unit royalties.
This range reflects our expectations regarding the timing and structure
of new customer agreements, and the related revenue treatment under ASC
606. We expect 2019 non-GAAP net loss to be between ($19) million and
($28) million.”
Recent Business Highlights
-
Signed a license agreement with Dongwoon Anatech Co Ltd. (Dongwoon) to
make Immersion haptic patent licenses available to mobile phone and
wearable OEMs through Dongwoon. Under the agreement, mobile phone and
wearable OEMs that acquire certain Dongwoon haptic driver ICs will
have seamless access to Immersion’s 25 years of haptic experience and
portfolio. -
Filed a patent infringement lawsuit on February 25, 2019 against
Samsung Electronics GmbH in Mannheim District Court in Germany
alleging that certain Samsung touchscreen phones infringe our newly
issued German Patent 602008058897.1 (EP Patent 2463752), a counterpart
of U.S. Patent No. 8,619,051, “Haptic Feedback System with Stored
Effects,” which patent is being asserted against Samsung Electronics
America, Inc. and Samsung Electronics Co., Ltd. and was previously
asserted against Apple. -
Announced the addition of 500 patents in the past eight months
demonstrating the commitment to continuous innovation, and the
achievement of a milestone highlighting the growing impact of haptics
with 3,500 haptics patents issued or pending worldwide. -
Signed a license agreement with Seoyon, a leading international
supplier of automotive systems and products, providing access to
Immersion’s patented haptic technology for use in Seoyon’s in-vehicle
touch button panels, touch pads, and rotary switches. -
Entered into a multi-year agreement with Google under which the
companies will explore opportunities to collaborate on incorporating
haptics in Google’s next-generation hardware products. The agreement
also provides Google with a license to Immersion’s patent portfolio
for Google’s Pixel line of phones and other Google hardware.
Conference Call Information
Immersion will host a conference call with company management on
Tuesday, February 26, 2019 at 2:00 p.m. Pacific time (5:00 p.m. Eastern
time) to discuss financial results for the fourth quarter and fiscal
year ended December 31, 2018. To participate on the live call, analysts
and investors should dial +1 877‐260‐1479 (conference ID: 2589877) 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 3,500 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.
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 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. 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 company being uniquely positioned to continue to
innovate and lead in haptic technology, prioritizing and capitalizing on
the market growth in front of us which paving a path toward sustainable
profitability, demonstrating the value proposition that we bring to our
customers and the market amidst the expanding adoption of haptics, as
well as the shareholder value that can be generated through our business
model, our revenue outlook for 2019 anticipated to be in the range of
$24 to $30 million, predominantly consisting of per unit royalties,
reflecting our expectations regarding the timing and structure of new
customer agreements and related revenue treatment, and our expectation
that non-GAAP net loss will be between ($19) and ($28) million for 2019.
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; the impact of new accounting standards that will
affect key items such as revenue recognition and sales commissions;
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 2017 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) | ||||||||
| December 31, | ||||||||
| 2018 | 2017 | |||||||
| (1) | (1) | |||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 110,988 | $ | 24,622 | ||||
| Short-term investments | 13,930 | 21,916 | ||||||
| Accounts and other receivables | 1,051 | 806 | ||||||
| Prepaid expenses and other current assets | 9,856 | 736 | ||||||
| Total current assets | 135,825 | 48,080 | ||||||
| Property and equipment, net | 2,343 | 3,150 | ||||||
| Deferred income tax assets | 295 | 401 | ||||||
| Other assets | 7,532 | 344 | ||||||
| TOTAL ASSETS | $ | 145,995 | $ | 51,975 | ||||
| LIABILITIES | ||||||||
| Accounts payable | $ | 3,612 | $ | 6,647 | ||||
| Accrued compensation | 3,948 | 4,133 | ||||||
| Other current liabilities | 3,194 | 3,896 | ||||||
| Deferred revenue | 4,591 | 4,424 | ||||||
| Total current liabilities | 15,345 | 19,100 | ||||||
| Long-term deferred revenue | 30,203 | 22,303 | ||||||
| Other long-term liabilities | 787 | 915 | ||||||
| TOTAL LIABILITIES | 46,335 | 42,318 | ||||||
| STOCKHOLDERS’ EQUITY | 99,660 | 9,657 | ||||||
| TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | $ | 145,995 | $ | 51,975 | ||||
|
(1) Derived from Immersion’s annual audited consolidated financial statements. |
||||||||
| Immersion Corporation | ||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| (1) | (1) | (2) | (2) | |||||||||||||
| Revenues: | ||||||||||||||||
| Royalty and license | $ | 10,768 | $ | 6,662 | $ | 110,557 | $ | 34,089 | ||||||||
| Development, services, and other | 99 | 234 | 422 | 924 | ||||||||||||
| Total revenues | 10,867 | 6,896 | 110,979 | 35,013 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of revenues | 28 | 39 | 218 | 197 | ||||||||||||
| Sales and marketing | 1,664 | 3,374 | 6,118 | 13,516 | ||||||||||||
| Research and development | 2,575 | 2,621 | 9,727 | 11,759 | ||||||||||||
| General and administrative | 10,146 | 11,458 | 41,815 | 53,343 | ||||||||||||
| Restructuring Costs | – | 1,620 | – | 1,620 | ||||||||||||
| Total costs and expenses | 14,413 | 19,112 | 57,878 | 80,435 | ||||||||||||
| Operating income (loss) | (3,546 | ) | (12,216 | ) | 53,101 | (45,422 | ) | |||||||||
| Interest and other income | 483 | 107 | 1,634 | 611 | ||||||||||||
| Income (loss) before provision for income taxes | (3,063 | ) | (12,109 | ) | 54,735 | (44,811 | ) | |||||||||
| Provision for income taxes | (79 | ) | (185 | ) | (392 | ) | (480 | ) | ||||||||
| Net income (loss) | $ | (3,142 | ) | $ | (12,294 | ) | $ | 54,343 | $ | (45,291 | ) | |||||
| Basic net income (loss) per share | $ | (0.10 | ) | $ | (0.42 | ) | $ | 1.78 | $ | (1.55 | ) | |||||
| Shares used in calculating basic net income (loss) per share | 30,814 | 29,250 | 30,459 | 29,179 | ||||||||||||
| Diluted net income (loss) per share | $ | (0.10 | ) | $ | (0.42 | ) | $ | 1.73 | $ | (1.55 | ) | |||||
| Shares used in calculating diluted net income (loss) per share | 30,814 | 29,250 | 31,407 | 29,179 | ||||||||||||
| (1): Unaudited quarterly financial data | ||||||||||||||||
|
(2): Derived from Immersion’s annual audited consolidated financial statements. |
||||||||||||||||
| Immersion Corporation | ||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||
| Three Months Ended December 31, | ||||||||||||||||
| 2018 | 2017 | |||||||||||||||
|
As Reported |
Adjustments* | ASC 605* |
As Reported |
|||||||||||||
| (1) | (1) | (1) | (1) | |||||||||||||
| Revenues: | ||||||||||||||||
| Fixed fee license revenue | $ | 1,618 | $ | 2,315 | $ | 3,933 | $ | 1,419 | ||||||||
| Per-unit royalty revenue | 9,150 | (4,208 | ) | 4,942 | 5,243 | |||||||||||
| Total royalty and license revenue | 10,768 | (1,893 | ) | 8,875 | 6,662 | |||||||||||
| Development, services, and other | 99 | – | 99 | 234 | ||||||||||||
| Total revenues | 10,867 | (1,893 | ) | 8,974 | 6,896 | |||||||||||
| Total costs and operating expenses | 14,413 | – | 14,413 | 19,112 | ||||||||||||
| Operating loss | (3,546 | ) | (1,893 | ) | (5,439 | ) | (12,216 | ) | ||||||||
| Interest and other income | 483 | – | 483 | 107 | ||||||||||||
| Loss before provision for income taxes | (3,063 | ) | (1,893 | ) | (4,956 | ) | (12,109 | ) | ||||||||
| Provisions for income taxes | (79 | ) | – | (79 | ) | (185 | ) | |||||||||
| Net loss | $ | (3,142 | ) | $ | (1,893 | ) | $ | (5,035 | ) | $ | (12,294 | ) | ||||
| Basic net loss per share | $ | (0.10 | ) | $ | (0.06 | ) | $ | (0.16 | ) | $ | (0.42 | ) | ||||
| Diluted net loss per share | $ | (0.10 | ) | $ | (0.06 | ) | $ | (0.16 | ) | $ | (0.42 | ) | ||||
| Year Ended December 31, | ||||||||||||||||
|
2018 |
2017 | |||||||||||||||
|
As Reported |
Adjustments* | ASC 605* |
As Reported |
|||||||||||||
| (2) | (2) | (2) | (2) | |||||||||||||
| Revenues: | ||||||||||||||||
| Fixed fee license revenue | $ | 83,573 | $ | (68,094 | ) | $ | 15,479 | $ | 12,575 | |||||||
| Per-unit royalty revenue | 26,984 | (8,482 | ) | 18,502 | 21,514 | |||||||||||
| Total royalty and license revenue | 110,557 | (76,576 | ) | 33,981 | 34,089 | |||||||||||
| Development, services, and other | 422 | – | 422 | 924 | ||||||||||||
| Total revenues | 110,979 | (76,576 | ) | 34,403 | 35,013 | |||||||||||
| Total costs and operating expenses | 57,878 | – | 57,878 | 80,435 | ||||||||||||
| Operating income (loss) | 53,101 | (76,576 | ) | (23,475 | ) | (45,422 | ) | |||||||||
| Interest and other income | 1,634 | – | 1,634 | 611 | ||||||||||||
| Income (loss) before provision for income taxes | 54,735 | (76,576 | ) | (21,841 | ) | (44,811 | ) | |||||||||
| Provisions for income taxes | (392 | ) | – | (392 | ) | (480 | ) | |||||||||
| Net income (loss) | $ | 54,343 | $ | (76,576 | ) | $ | (22,233 | ) | $ | (45,291 | ) | |||||
| Basic net income (loss) per share | $ | 1.78 | $ | (2.51 | ) | $ | (0.73 | ) | $ | (1.55 | ) | |||||
| Diluted net income (loss) per share | $ | 1.73 | $ | (2.51 | ) | $ | (0.73 | ) | $ | (1.55 | ) | |||||
|
*The Company is presenting the ASC 606 results together with the adjustments made to reconcile the ASC 606 presentation to the results that would have been applicable under ASC 605. The ASC 605 information should be considered in addition to, not as a substitute for, nor superior to or in isolation from, the financial information prepared in accordance with ASC 606. |
||||||||||||||||
| (1): Unaudited quarterly financial data | ||||||||||||||||
|
(2): Derived from Immersion’s annual audited consolidated financial statements and notes. |
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| Immersion Corporation | ||||||||||||||||
|
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss) |
||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| GAAP net income (loss) | $ | (3,142 | ) | $ | (12,294 | ) | $ | 54,343 | $ | (45,291 | ) | |||||
| Add: Provision for income taxes | 79 | 185 | 392 | 480 | ||||||||||||
| Less: Non-GAAP provision for income taxes | (35 | ) | (71 | ) | (213 | ) | (268 | ) | ||||||||
| Add: Restructure Costs | – | 1,620 | – | 1,620 | ||||||||||||
| Add: Stock-based compensation | 2,420 | 2,029 | 8,686 | 6,102 | ||||||||||||
| Non-GAAP net income (loss) | $ | (678 | ) | $ | (8,531 | ) | $ | 63,208 | $ | (37,357 | ) | |||||
| Non-GAAP net income (loss) per share | $ | (0.02 | ) | $ | (0.29 | ) | $ | 2.01 | $ | (1.28 | ) | |||||
|
Dilutive shares used in calculating Non-GAAP net income (loss) per share |
30,814 | 29,250 | 31,407 | 29,179 | ||||||||||||
| Immersion Corporation | ||||||||||||||||||||
| Revenue by Line of Business | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Q1’17 | Q2’17 | Q3’17 | Q4’17 | Q1’18 | Q2’18 | Q3’18 | Q4’18 | FY’17 | FY’18 | |||||||||||
| Mobility | 32% | 44% | 71% | 39% | 90% | 45% | 66% | 45% | 48% | 81% | ||||||||||
| Gaming | 47% | 25% | 17% | 37% | 2% | 27% | 15% | 14% | 31% | 5% | ||||||||||
| Automotive | 12% | 22% | 9% | 22% | 8% | 27% | 17% | 36% | 15% | 13% | ||||||||||
| Medical | 9% | 9% | 3% | 2% | 0% | 1% | 2% | 5% | 6% | 1% | ||||||||||
| Immersion Corporation | ||||||||||||||||
|
Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses |
||||||||||||||||
| (In thousand) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| GAAP operating expenses | $ | 14,385 | $ | 19,073 | $ | 57,660 | $ | 80,238 | ||||||||
| Adjustments to non-GAAP operating expenses: | ||||||||||||||||
| Stock-based compensation expense – S&M | (271 | ) | (217 | ) | (946 | ) | (1,025 | ) | ||||||||
| Stock-based compensation expense – R&D | (566 | ) | (201 | ) | (1,948 | ) | (981 | ) | ||||||||
| Stock-based compensation expense – G&A | (1,583 | ) | (1,611 | ) | (5,792 | ) | (4,096 | ) | ||||||||
| Depreciation and amortization expense | (208 | ) | (239 | ) | (855 | ) | (968 | ) | ||||||||
| Non-GAAP operating expense | $ | 11,757 | $ | 16,805 | $ | 48,119 | $ | 73,168 | ||||||||
Contacts
Investor Contact:
The Blueshirt Group
Jennifer Jarman
+1
415.217.5866
jennifer@blueshirtgroup.com