Immersion (IMMR) 2 Aug 182018 Q2 Earnings call transcript

Good day, and welcome to the Immersion Corporation Q2 2018 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jennifer Jarman. Please go ahead.

Thank you, Victoria. you conference us call. thank second on and XXXX quarter afternoon, for today joining Immersion's Good Investor the This over can the the is web, section call also and be being accessed www.immersion.com. website at company's broadcast live Relations of from call Erba, With Nancy Interim CEO Board; Carl and me is Schlachte, of Chairman on the today's CFO. and

and litigations, Accordingly, include other uncertainties demand or operating results this we make may financial statements market These call, topics. and could anticipated forward-looking business forward-looking projected materially. anticipated strategies, are During or risks, products, opportunities, statements, actual which may to differ future metrics, subject results assumptions.

identified For a we issued the after see filed please Form press market listing this, today XX-Q close. the factors of with the could well in cause most as recent that release our SEC, risks the as

Additionally, during please financial may measures. discuss we non-GAAP call, note this that

between measure discussed press GAAP GAAP financial is today's reconciliation release. of For directly turn most each available I'll the that Carl. financial a And differences now comparable non-GAAP the non-GAAP over presentation directly call said, and in comparable a the of most to the measure financial financial measure discussed, with the and measure

ability financial so. steadfast skill of afternoon. and do history the on storm knowhow opportunities demonstrated everyone, grow, are joining Jennifer, and strength than in The to seize technology to a emerged focused has the front in are energized driving most Directors ever we for now confident Thanks, to stronger management the and Immersion business in company us. have in commitment and with us our you weathered and this has we and long-term value. recent Board to The thank significant its build and of sustainable more our shareholder profitable leadership

next with of with pleased year. during our very into made the XXXX us customer the perspective, remainder coupled agreements new quarter which from well technology for and a progress development are position second We

We are addressable markets excited scope us. of the before by the

with Our products OEMs. ability success benefits change and Immersion to conversation subject of is other mobile allowed their of the value our the discussions. now has with productive The of to and Apple encouraging us to add the focus Technology

ecosystem actuator, Vendors uniquely the our mobile positioned customers. to and possible the of IC solutions OEMs, best to shape We the present are for

We the market of have we X% adopted that than the haptic begun just technology. market to has tap automotive into where less estimate

Our vehicles. agreements more adoption us suppliers X with Tier into the grow position haptics and mainstream as moves to succeed of

quarter, Calsonic happy core We for Gaming, including are announced VR, Japan. have very and in and more AR Toyodenso to us. this agreements remain automotive several markets technology

opens that for in Fitbit shape coming to Our share to regarding XX wearables the knowhow with drive enable settlement we our continue and years. innovation expect announced licensees have us, to license to additional quarters. is especially agreement future valued we and out will and recently space, X in this The market to us the more

can technology us us development XXXX sharply questions. Immersion potential efforts our make financials call discussions our growth been will on collaborative key and and the successful. before through and Nancy? are to opening now new for with them view Nancy on and help innovation in markets customers your the our walk focused Our enabling current focused have how

Carl. Thanks

for illustrate ASC year our to the a period XXX. me our QX financial Let begin you including revenue regarding for performance, by of press of highlighting the the our the referring comparison adoption quarter information second this that impact afternoon’s to release ago, tables of same

of million down $X.X of period. revenue of revenue from for XXXX the XX% year ago Our was $X in QX million

basis. on modified call, retrospective adopted we XXX a QX As we discussed in our ASC

the year meaningful. is to comparison ago quarter a particularly a So, same not

by ASC the revenue. three fixed XXX, table, executed refer was under in-part during primarily driven customer a comparable the new you increased basis license which revenue earned This due revenue to to quarter. fee agreements from on if depicts increase XX%, However, revenue

XX, the attributable XXXX. to increase June million ended fee months For six six to increased June $XX.X revenue or the primarily million This license XXXX, ended months a was in total of XX, million $XX.X revenue. increase XXX%, fixed compared $XX.X

revenue As QX contribute of in prior with results results. to our discussed treatment lumpiness fee call, arrangements in and ASC expected of drive lack comparability XXX the to we the under fixed is our year our and

the with activity in see Apple same December reduction restructuring we to in XX% year from second a expenses, impact for the expenses, operating expenses quarter of took settlement down as with the ago. were the we operating Turning continue the XXXX, quarter to coupled litigation the resulting from

For the XXXX, down operating XX, six XX%. months expenses were ended June

effectively of to is manage markets reduced levels reflective and on sharped business continue at our in these which spend, the focus key We initiatives.

as second June reform Moving quarter, on income made significant, XX, the our call the act the valuation of not have of and we against to full the we carry is all act, substantially deferred to effects of quarter XXXX, six ended our the act the the but and impact estimate taxes assets. of months for allowance the tax last discussed the effects of on reasonable due a tax

to tax adjustment to when appropriate. We or assess valuation related continue realizability an is factors deferred determine of to the to our allowance assets our if

ability diluted six net to reminder, including the or $X.XX asset, our million impact carryforward. deferred loss million utilize loss income not was GAAP operating tax per ended our XX, June share. net a quarter allowance the for As the $X.X for months $X $XX.X was GAAP valuation XXXX does share. per net or

maintain pleased are our we sheet. the of sheet, our focus balance the with balance on strength and to Turning

$XXX.X on monitor with including was is remain ensure discretionary million cash We $XXX continue from the and of short-term end focus utilization to to and Our March. down key the investments at strategic cash of closely spend in million, aligned management, only vigilant our portfolio, cash initiatives. slightly cash

settlement strategic future consideration well consider Fitbit, of any with our monitor buybacks million. stock for balance $XXX factors continue as million carefully results forward we into of Taking to cash, with of and remain and of previously recently $XXX we half range use to stock. comfortable we of cash annual our we move first price, XXXX, As guidance our half provided as announced conditions nonoperational including XXXX market into the revenue second will the the and as

discussed structure in treatment the As XXX. for revenue the agreements fluctuate our QX and and year new the revenue could second based timing customer ASC related half under of call, the on of

$X year we valuation and estimate $XX excluding stock-based we full Regarding GAAP Due allowance the to to expense between million and $X million $XX going to forecasting expenses, $X of tax are expense approximately expense, litigation the to for of compensation $XX operating million. million now cash be litigation forward million. million $XXX,XXX.

net income to a we and non-GAAP less reflect restructuring income as net As stock-based tax define expenses. adjusted compensation GAAP cash reminder,

million We and continue non-GAAP to to XXXX. expect net $XX for between $XX income million be

independent business. like our outlook is litigation any currently line emphasize Finally, our to possible we that outcomes would in of ongoing mobility additional of largest

litigation to to comments. current continue sustained us in positions that believe back We model now final operations I the for generate well our business call positive post turn will Carl for settlements, some flow the future. cash

which success regarding sharing our Thanks accomplishment. coming and you market Nancy. our X,XXX issued our penetration. in to the no a with innovation growing In forward is and in pending more we patents progress portfolio, our excess Immersion quarters in holds tremendous closing, and haptic look of in

our approach monetize ability portfolio highly to to market. We continue to the through value our our hybrid

best one Company. of to your to to innovatively from We’ll enabling the the order & haptic culture push challenge is in the you. comes first open ourselves call technology with and Operator? Our think us the bring Instructions] change driving ecosystem for that to customers. market Thank Anderson our [Operator Our questions. will Charlie question Dougherty and now

your see I for portion bit penetration my now as is there, all sort market, had at Carl, a thanks then wonder right rough lot detail vehicles? I questions. really a if thought taking is a X%. if auto got And And what via elaborate the I some of have maybe the a the on any partners been of total potential it you it for of agreements certainly little today? of coverage follow-up. you appreciate that on, vehicles Yes, market wonder of, could on you I’ve finding you

cut mean question off you signed. lot us in tackle and the Tier of One Didn't suppliers fashion. the in marketplace is we gives two Charlie. Yes, automotive to the kind that so X with into the best multiple a contract I would per suppliers in of sorry. Yes, working that leverage feel we’re

through tiers for working successful been the has So emphasis very in us. that

some level your and The second – fashion important. and on aspect which very of feedback, there vehicle touching you this the being focused while are becomes think not within button mentioned road multiple that on distracted each while question I've This our eyes driving I’d get call. opportunities, a to answer being able haptics previous I are are is of in the

So, within each multiple are haptic there vehicle opportunities.

sit you are in available total down sheer stare at buttons need We a car, to that at of available. our you of as the that market. number part If look

I covering multiple we in talk marketplace, of we're that. it are within from I’ll when of vehicle be kind on how So, the we out about vehicles each but X%, it want see of, call really the the many of viewpoint that top clear opportunities to standpoint traditional

we the half on remind us segments? been QX of maybe and quarter litigation where to Nancy little Can do as of and on then gap maybe for bridging for increased increase first on you And question between see QX a the sort a then the you Perfect. OpEx the rest basis I on the relative of OpEx. spending year what has well, sort maybe a bit per just think

the quarterly closing I full-year. Yes. was, can But, then of of split the the and weighted with well. the And as year the we litigation first first Fitbit said, haven't expense year I given litigation, half the like was of of towards say Apple litigation out we’ve the that half given out the

comfortable to narrow. that So, very with the very X we obviously felt range, XX it’s

the we performed in the seen fact that we an that so that than about we’ve the year. side We to perspective. of comp beginning well in stock-based the had expected originally what – advantage traditionally from much stock talked higher On people given of OpEx increase option's the taking has the have be saw and

last then Got just And it. question…

spend is on will The traditional more I a salaries R&D and more, marketing rest sales comment. a rest I spend, G&A. say and is other The and should traditional just

tight it areas. very those keeping under budget is and or either in other at We’re

what just of larger help And versus revenue half or in is maybe Excellent. what’s variability much how key us on contracted of you of influence QX the whether in QX that to to factors little larger seems to swinging be understand terms bit? going of the sign, just a is you is contracts then Perfect. still need back the year, that could the to, speak

between this the and forecast we the just ASC than year, Well of think close going but to predict pipeline second we been know less into QX. is relative expect to signed talking out is visibility a have the certainly guidance to to to about XXXX. and variability that I lumpy the adoption and changing in it’s half our then QX. yet things but QX that it, QX been of from us full-year we the QX to point of have difficult are to that pretty in that I be it’s the as back I for not of that half stronger side obviously of the year, at get we’ve see remainder lumpiness for would our challenging example is good signed based things we be already XXX, on sell on

much. helpful. That's Thank you it. Got so

Thanks Charlie.

Riley. will question our Thank We next with you. take B. Marc from Instructions] [Operator Wiesenberger

When really that maintaining or the QX, litigation failed very noted much. is in something might you not while license guidance the it that guidance, that excluded and Fitbit imply have else provided Thank you’re to it materialize? does you possible was outcomes that material

a and us. recognize XXXX, the believe It is certainly revenue that in too into QX but can wearables up fee the of for valid through the fact only XXX the value to the characterizes Obviously, read to for in XXXX Fitbit included We and both that and included comment I in portion to XXXX now market still range. that that Fitbit getting included of QX. between Fitbit more also wouldn't be be we is the fixed then hasn't opportunities and other it but range the agreements revenue similar ability over end remainder expect term us but QX range the that much I perspective, provides now even XXX of not of that for our done be the changed, would will and for agreement? of the from into us a opened would now

about deploy That’s now? strategy allocation Can you you helpful. talk seeing you. and Thank are cash to best capital right your opportunity the where

we Well we're watching cash very commented carefully as on.

cash core our we’re expecting evaluating innovation my strategy. Carl core will investment a strategy XXXX both core refocused through this further, our in perspective, I but and that’s year and now course we about the maintaining then those and be We uses returns as to cash ongoing two has basis therefore and confident and in we comment litigations make our restructuring We’ve our Motorola. play already certainly a where and and on a our we’ll strength we’ve that and move comfortable our competencies of markets best that competency next we are very with from We lot from just started. that the can in execute as forward ongoing the litigations, those and of on how balance perspective, the position in strength an the see feel dollars. look investments where investment and of out From Samsung sheet and right want both still the on the focusing own through evaluate year sure have in litigation perspective ability innovation strategic talked to have R&D

any technology trends you. for And from leave if that customers non-traditional does monetization any potential are there. Excellent. looking license to increased point so, to one, I’ll efforts? the Thank future And interest potential seeing you it last and

is Carl. I did that think before. into do. And look [ph] terms we’ve heart focused we printer is you I it ready vision of IOT with it forays in watching XXth And that the on yes, was short this of market and very call a haptics a that of closely, more accept the the space It’s in, think to I rarely of of the marketplace. market you’ll part the the The here attention see about it that ubiquitous Marc, It’s believe as talked we answer I’ll the our first Hi The haptics. press not your is, we been if on sense. we’ve that that to one back goes thing something to direct Stanley. of that’s you’ll release the deployment company in see recently, would in very, being was a in traditionally

on tactile So, if you start of you're to think about just the in were in places the sheer and number those things of types as marketplace. touching enabled buttons to haptic start more start about indicators sense, or you enabled day-to-day economic in you industrial the that the changing a basis that of and a think that first would interactions happen space to see look to it more being really leading IOT

as or of break I’m the us. it’s indicator but not pointing for where at and that it’s about is excited certainly good pretty see particularly a So, future I’m to to that going us, excited limited open one. It’s very space up agreement. a that company's It’s headed anything make

Instructions] Thank Magajne next Our Financial. you. question with from [ph] comes [Operator LPL Mark

an the with go that Hi, agreement the new thanks or is that asked I’ve lumpiness, basics Fitbit, to to lessen a of them. performance in some the settlement these proceeding general customers instead but focused how would more regards the, even licensees encourage on trying call. up something instead the and of I obligation that are licensing b, a? for with my follow with Nancy a taking you to in got know in of question Fitbit, from obligation was

we’re is to the say structure. accounting business the and that I’ll allowing not there rule first drive the business Well,

term leverage so the the for technology of I a to I as whether us the be from We’re going we a their won't an said, these either but the sign team ratable the the ways to that structure find into contracts more, for most contract working that certainly craft solution language to the standpoint are a of entering to that to opportunities with am have which makes determine sense over us understanding allows it per in time. agreements Immersion sales there would us we’re total. That a the it portion that ways agreements call on can in or would allow the recognized of objectives fee unit, on fixed of to new

we’ve revenue as is are but model, to so not line. the of are first growth certainly ways as predictability year and of We in it agreements structure, revenue to we looking that in the quite this to lumpy, the certainly seeing at given just some these the implemented and size least find that XXX add

follow-up a call, settlement since has used I’ll mobile changed, start the at to of in extraordinary the to growing, specifically you the at the discussion Could be address what a color? taking they going with give rate, terms companies Carl could is customer, how market? Chinese over And OEM Okay. conversations of the said are how there it’s growing [Indiscernible] the share Apple of are you with market OEMs? any fast number fast Chinese you

supported that we Sure. of our very to successful make specifics deployment our to technology a there served in lot discussions focused I discussions you see-change discussions would and leading technology We’ve property. the in get we get by color, then I with around, having we're discussions but what limited the intellectual to lost way other perspective, same saying to In the our us then want we weeks a I relative the were Not that was deployment I with what into to supporting most it customer parties, partners get and our really Enabling best times in and for in tour been of property that resources, importantly I some technology the too have help discussions us on that really and between before positioned don't those of and recent some the doing internally from along us there lot with that the with and understanding that really ago tends were well perspective market it, our a the the technology ecosystem limited support in-depth be we versus the conversation it be intellectual you for trying to and many flipping both for leave but that the [ph] the can sure Asia we is can have marketplace. having of and I requires needs want because support more oh primarily what a partners. and is our through a this from thing that these in our to couple discussions, had to the resources customers think other words, the had scale. was now. give a of the say

I have promises any want going. where don't report don't feel of the changes to I our that advance make I think conversations to anything in of dynamic a And but with very I significantly. are conversations on comfortable the yet. success that lot concrete there, of

you. Thank Okay.

Thank you, Mark.

for closing turn no comments. it like further There questions. you. Thank to are any to back I’d management

in thank forward you on you. all Thank the to quarters. joining Well And the for you again today. updating we call us future look