Immersion Corporation Reports Fourth Quarter 2022 Results

GAAP Net Income of $19.7 million or $0.60 per diluted share

Non-GAAP Net Income of $14.8 million or $0.45 per diluted share

Declares Quarterly Dividend

Immersion Corporation (NASDAQ: IMMR), a leading developer and provider of technologies for haptics, today reported financial results for the fourth quarter ended December 31, 2022.

Fourth Quarter Financial Summary:

  • Total revenues of $9.2 million, compared to $9.7 million in the fourth quarter of 2021. Royalty and license revenues were $9.1 million, compared to $9.7 million in the fourth quarter of 2021.
  • GAAP net income was $19.7 million, or $0.60 per diluted share, compared to GAAP net income of $1.3 million, or $0.04 per diluted share, in the fourth quarter of 2021.
  • GAAP operating expenses of $3.4 million declined 14% from $3.9 million in the fourth quarter of 2021. Non-GAAP operating expenses of $2.6 million declined 21% from $3.2 million in the fourth quarter of 2021. (See attached table for a reconciliation of GAAP to non-GAAP financial measures.)
  • Non-GAAP net income was $14.8 million, or $0.45 per diluted share, compared to non-GAAP net income of $5.8 million, or $0.17 per diluted share in the fourth quarter of 2021.

Fiscal Year 2022 Financial Summary:

  • Revenues for 2022 were $38.5 million, compared to $35.1 million in 2021. Royalty and license revenues for 2022 totaled $38.2 million, compared to $34.7 million in 2021.
  • Net income for 2022 was $30.7 million, or $0.92 per diluted share, compared to net income of $12.5 million, or $0.39 per diluted share, for 2021.
  • Non-GAAP net income for 2022 was $29.4 million, or $0.88 per diluted share, compared to non-GAAP net income for 2021 of $20.6 million, or $0.65 per diluted share.
  • Cash, cash equivalents and short-term investments were $149.7 million as of December 31, 2022, an increase of $11.8 million from $137.9 million as of December 31, 2021.
  • Repurchased 2,542,065 shares in 2022 (7.4% of shares outstanding at December 31, 2021) at an average price of $5.20 per share.
  • Approved first quarterly dividend of $0.03 cents per share as well as a one-time special dividend of $0.10 cents per share, both of which were paid out on January 30, 2023.

Eric Singer, Chairman & CEO, stated, “By any measure, this was a successful quarter and year for Immersion. We improved our cash, cash equivalents and short-term investments sequentially by $16 million and ended the year with $157.7 million in stockholder equity, or $4.86 per share.”

“We are focused on protecting our intellectual property through the execution of new license agreements, the renewal of existing agreements, and by proactive enforcement. We also continue to pursue thoughtful capital allocation to increase long-term shareholder value, including, but not limited to, our $50 million stock repurchase program. Today, we are pleased to declare our second consecutive quarterly dividend of $0.03 cents per share,” said Singer.

The second quarterly dividend will be paid on April 28, 2023 to shareholders of record on April 13, 2023. Future quarterly dividends will be subject to further review and approval by the Board in accordance with applicable law. The Board reserves the right to adjust or withdraw the quarterly dividend in future periods as it reviews the Company’s capital allocation strategy from time-to-time. In addition, the Company’s current stock repurchase program allows for the repurchase of shares with an aggregate value of up to $50 million.

Recent Business Highlights:

  • Signed a license agreement with Vishay Intertechnology, Inc. (NYSE: VSH) to bundle Immersion haptic patent licenses for purchasers of Vishay’s solenoid-based haptic actuators, streamlining the design-in process for Vishay’s game-changing technology.
  • Renewed a multi-year license with Dongwoon Anatech, which creates analog integrated circuits (ICs) for phones, wearables, and other electronic devices, to make our haptic patent licenses available to mobile phone, wearable, and PC OEMs through Dongwoon.

About Immersion

Immersion Corporation (NASDAQ: IMMR) is a leading innovator of touch feedback technology, also known as haptics. The company invents, accelerates, and scales haptic experiences by providing technology solutions for mobile, automotive, gaming, and consumer electronics. Haptic technology creates immersive and realistic experiences that enhance digital interactions by engaging users' sense of touch. 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, Non-GAAP operating expenses and Non-GAAP net income 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, depreciation 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.

Forward-looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements involve risks and uncertainties. Forward-looking statements are identified by words such as “anticipates,” “believes,” “expects,” “intends,” “may,” “can,” “will,” “places,” “estimates,” and other similar expressions. However, these words are not the only way we identify forward-looking statements. Examples of forward-looking statements include any expectations, projections, or other characterizations of future events, or circumstances, including but not limited to statements about the Company’s focus on protecting its intellectual property, either through the execution of new or renewal license agreements or by proactive enforcement continuing to pursue thoughtful capital allocation to increase long-term shareholder value, and the timing of any dividend payments.

Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Actual results could differ materially from those projected in the forward-looking statements, therefore we caution you not to place undue reliance on these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: the inability to predict the outcome of any litigation, the costs associated with any litigation and the risks related to our business, both direct and indirect, of initiating litigation, the effects of the COVID-19 global pandemic on the Company and its business, and on the business of its suppliers and customers; unanticipated changes in the markets in which the Company operates; the effects of the current macroeconomic climate (especially in light of the ongoing adverse effects of the COVID-19 global pandemic); delay in or failure to achieve adoption of or commercial demand for the Company’s products or third party products incorporating the Company’s technologies; the inability of Immersion to renew existing licensing arrangements, or enter into new licensing arrangements on favorable terms; the loss of a major customer; the ability of Immersion to protect and enforce its intellectual property rights and other factors. 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 2021 and in its most recent Quarterly Report on Form 10-Q which are on file with the U.S. Securities and Exchange Commission. Any forward-looking statements made by us in this press release speak only as of the date of this press release, and Immersion does not intend to update these forward-looking statements after the date of this press release, except as required by law.

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. 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)

(Unaudited)

 

 

December 31,

2022

 

December 31,

2021

 

(1)

 

(1)

ASSETS

 

 

 

Cash and cash equivalents

$

48,820

 

 

$

51,490

 

Investments-current

 

100,918

 

 

 

86,431

 

Accounts and other receivables

 

1,235

 

 

 

1,970

 

Prepaid expenses and other current assets

 

9,347

 

 

 

13,432

 

Total current assets

 

160,320

 

 

 

153,323

 

Property and equipment, net

 

293

 

 

 

444

 

Investments-noncurrent

 

17,040

 

 

 

7,286

 

Long-term deposits

 

4,324

 

 

 

9,658

 

Deferred tax assets

 

7,217

 

 

 

2,115

 

Other assets

 

916

 

 

 

2,694

 

TOTAL ASSETS

$

190,110

 

 

$

175,520

 

LIABILITIES

 

 

 

Accounts payable

$

86

 

 

$

2

 

Accrued compensation

 

2,029

 

 

 

555

 

Deferred revenue-current

 

4,766

 

 

 

4,826

 

Other current liabilities

 

12,465

 

 

 

11,247

 

Total current liabilities

 

19,346

 

 

 

16,630

 

Deferred revenue - noncurrent

 

12,629

 

 

 

16,699

 

Other long-term liabilities

 

435

 

 

 

896

 

Total liabilities

 

32,410

 

 

 

34,225

 

STOCKHOLDERS’ EQUITY

 

157,700

 

 

 

141,295

 

TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY

$

190,110

 

 

$

175,520

 

(1) Derived from Immersion’s annual audited consolidated financial statements.

Immersion Corporation

Condensed Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended

December 31,

 

Years Ended

December 31,

 

2022

 

2021

 

2022

 

2021

 

(1)

 

(1)

 

(2)

 

(2)

Revenues:

 

 

 

 

 

 

 

Royalty and license

$

9,099

 

 

$

9,672

 

 

$

38,178

 

 

$

34,689

 

Development, services, and other

 

65

 

 

 

75

 

 

 

283

 

 

 

400

 

Total revenues

 

9,164

 

 

 

9,747

 

 

 

38,461

 

 

 

35,089

 

Costs and expenses:

 

 

 

 

 

 

 

Cost of revenues

 

 

 

 

10

 

 

 

4

 

 

 

88

 

Sales and marketing

 

229

 

 

 

498

 

 

 

1,215

 

 

 

3,241

 

Research and development

 

262

 

 

 

708

 

 

 

1,380

 

 

 

4,150

 

General and administrative

 

2,892

 

 

 

2,729

 

 

 

11,442

 

 

 

9,835

 

Total costs and expenses

 

3,383

 

 

 

3,945

 

 

 

14,041

 

 

 

17,314

 

Operating Income

 

5,781

 

 

 

5,802

 

 

 

24,420

 

 

 

17,775

 

Interest and other income (loss), net

 

8,958

 

 

 

(647

)

 

 

2,545

 

 

 

(485

)

Income before benefit from (provision for) income taxes

 

14,739

 

 

 

5,155

 

 

 

26,965

 

 

 

17,290

 

Benefit from (provision for) income taxes

 

4,963

 

 

 

(3,819

)

 

 

3,699

 

 

 

(4,806

)

Net Income

$

19,702

 

 

$

1,336

 

 

$

30,664

 

 

$

12,484

 

Basic net income per share

$

0.61

 

 

$

0.04

 

 

$

0.92

 

 

$

0.40

 

Shares used in calculating basic net income per share

 

32,327

 

 

 

33,735

 

 

 

33,280

 

 

 

31,459

 

Diluted net income per share

$

0.60

 

 

$

0.04

 

 

$

0.92

 

 

$

0.39

 

Shares used in calculating diluted net income per share

 

32,584

 

 

 

33,851

 

 

 

33,508

 

 

 

31,769

 

(1) unaudited quarterly financial data

(2) Derived from audited annual consolidated financial statements

Immersion Corporation

Reconciliation of GAAP Net Income to Non-GAAP Net Income

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended

December 31,

 

Years Ended

December 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

GAAP net income

$

19,702

 

 

$

1,336

 

 

$

30,664

 

 

$

12,484

 

Add: Provision for (benefit for) income taxes

 

(4,963

)

 

 

3,819

 

 

 

(3,699

)

 

 

4,806

 

Less: Non-GAAP provision for income taxes

 

(746

)

 

 

(66

)

 

 

(1,408

)

 

 

(205

)

Add: Stock-based compensation

 

756

 

 

 

341

 

 

 

3,417

 

 

 

2,338

 

Add: Restructuring expense

 

 

 

 

78

 

 

 

 

 

 

690

 

Add: Depreciation and amortization of property and equipment

 

45

 

 

 

24

 

 

 

140

 

 

 

99

 

Other nonrecurring charges

 

27

 

 

 

269

 

 

 

322

 

 

 

369

 

Non-GAAP net income

$

14,821

 

 

$

5,801

 

 

$

29,436

 

 

$

20,581

 

Non-GAAP net income per diluted share

$

0.45

 

 

$

0.17

 

 

$

0.88

 

 

$

0.65

 

Shares used in calculating Non-GAAP net income per diluted share

 

32,584

 

 

 

33,851

 

 

 

33,508

 

 

 

31,769

 

Immersion Corporation

Disaggregated Revenue Information

(In thousands)

(Unaudited)

 

 

Three Months Ended

December 31,

 

Years Ended

December 31,

 

2022

 

2021

 

2022

 

2021

Fixed fee license revenue

$

1,300

 

$

1,497

 

$

11,953

 

$

5,843

Per-unit royalty revenue

 

7,799

 

 

8,175

 

 

26,225

 

 

28,846

Total royalty and license revenue

 

9,099

 

 

9,672

 

 

38,178

 

 

34,689

Development, services, and other revenue

 

65

 

 

75

 

 

283

 

 

400

Total revenues

$

9,164

 

$

9,747

 

$

38,461

 

$

35,089

Immersion Corporation

Revenue by Line of Business

(Unaudited)

 

 

Three Months Ended

December 31,

 

Years Ended

December 31,

 

2022

 

2021

 

2022

 

2021

Mobility

39

%

 

50

%

 

60

%

 

60

%

Gaming

30

%

 

18

%

 

21

%

 

21

%

Automotive

26

%

 

32

%

 

13

%

 

19

%

Other

5

%

 

%

 

6

%

 

%

Total revenues

100

%

 

100

%

 

100

%

 

100

%

Immersion Corporation

Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses

(In thousands)

(Unaudited)

 

 

Three Months Ended

December 31,

 

Years Ended

December 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

GAAP operating expenses

$

3,383

 

 

$

3,935

 

 

$

14,037

 

 

$

17,226

 

Adjustments to GAAP operating expenses:

 

 

 

 

 

 

 

Stock-based compensation expense - S&M

 

(41

)

 

 

(67

)

 

 

(61

)

 

 

(745

)

Stock-based compensation expense - R&D

 

(21

)

 

 

(89

)

 

 

(117

)

 

 

(742

)

Stock-based compensation expense - G&A

 

(694

)

 

 

(185

)

 

 

(3,239

)

 

 

(851

)

Restructuring expense

 

 

 

 

(78

)

 

 

 

 

 

(690

)

Depreciation and amortization expense of property and equipment

 

(45

)

 

 

(24

)

 

 

(140

)

 

 

(99

)

Other nonrecurring charges

 

(27

)

 

 

(269

)

 

 

(322

)

 

 

(369

)

Non-GAAP operating expenses

$

2,555

 

 

$

3,223

 

 

$

10,158

 

 

$

13,730

 

 

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