Immersion (IMMR) 10 May 202020 Q1 Earnings call transcript

Good day. And welcome to the Immersion Corporation Q1 2020 Earnings Conference Call. Today’s conference is being recorded.

At this time, I would like to turn the conference over to Aaron Akerman. Please go ahead.

afternoon. Good for on you XXXX first us call. conference joining thank Immersion’s today quarter And also live section being and is call This broadcast accessed at the website can over from Investor our Relations of www.immersion.com. be web the me and President Ramzi CEO. today’s is With on Haidamus, call

projections on our and and anticipated circumstances COVID-XX as expenses, business call, expectations, also of and projected forward-looking other financial the future and of regarding the impact or litigation, may of include products, our well include model tax litigation we of anticipated business market business characterizations metrics, this forward-looking topics. statements, operating demand statements other During include expense economy in may reductions, future anticipated suppliers, or as future on general results opportunities, and which customers make strategies, any or events absence or operating or our the

assumptions, ongoing global These of the uncertainties subject light uncertainties are Immersion. and risks, control COVID-XX the in of beyond of the statements to pandemic. risks effects and especially of these are Many adverse

and we listed and on Commission. the detailed after Form recent Securities interested XXXX should quarterly with today XX-Q, factors results Factors of the file these to that issued Form report parties factors For a Risk cause more which vary could annual close, release Exchange discussion market and Immersion’s U.S. materially, press report other the on for XX-K its most review are actual in on

information a business results update anticipated these of after Immersion today. any the this even to The reasons reflect update or if becomes forward-looking statements beliefs statements, from in those available by any Except as forward-looking in Immersion’s new future. of materially predictions as and mentioned required result the differ the disclaims release other developments or could statements to these as date law, occurring call actual financial, on obligation of forward-looking this

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

financial GAAP between non-GAAP directly discussed, a release. in the directly of discussed comparable the each differences measure GAAP non-GAAP comparable For available and most the is most measure and measure of measure today’s press financial financial presentation financial a reconciliation the

With the that to Ramzi. said, will call over turn I

on everyone webcast. listening or thanks for And today joining us Aaron. the call Thanks, via

our I’d to been At to go paramount. out like First, health time, say and personally that who employees safety heart our maintaining by have of those the this COVID-XX. affected is

suspended We a have policy all for worldwide implemented have our work-from-home employees and travel.

enhancements We and and work-from-home productivity use certain on are time. for our internal making communications this during by home through and to experiences connectivity enhancing focused equipment bolster accessible lab IT difficult

quarter first operating am XX% to year, I expenses over grew non-GAAP Immersion’s the pleased report were down same last revenue that XX%. quarter while

continue our maximizing to structure value. optimizing to make progress Immersion’s strong part commitment we addition, cost on In of as further shareholder

million approximately includes travel This litigation, consulting savings additional and in legal in in and identification of and and services. the fiscal including professional XXXX $X areas entertainment,

X.X to purchase We close close in also through shares approximately program. yesterday, until value for our the buybacks $XX repurchase common amount shareholder an Since initiating of stock market we million have creation to December, of million. stock aggregate of continue enhance up repurchased

and We repurchase program. share the authorized balance our expect approximately to under right to under regard we be remaining conditions. remains activity with million to buyback sheet continue Immersion’s $X.X strong active have

company, are We despite and the been -- our a remain fortunate, have in conducting the able to very in that current we maintain licensing are confident as business environment. continuity margin strategy

in our growth lay to see continue signs our the of several markets for that concrete and strategy is foundation We working.

significant that year. reflects mobile of the First, the OEM license addition this results, agreements as last mobility first our positively in quarter’s after evident materialized of revenue quarter

product we expanded recently partnership with Alps auto, Alpine. our In

licensing technology touch active Alpine Alps that feedback to devices. took software for We pleased its are a our license

in Alps quick machine and for developing to user Immersion respond tactile Together, experiences interfaces. deliver and effect fidelity improved solutions to high quality, human automotive are high Alpine

Active actuator vibrations, instant algorithm sub the uses haptic clean, technology to and standard response react command Sensing high is to decisions produce state, enabling an over It real-time It actuator’s control advancement users’ interaction. crisp technologies. to haptic making current a effect. beyond software robust millisecond to every provides fidelity

can suspended and applications Sensing As technology, of the for services. automotive and solutions HMI buttons, licensee advanced in realistic first dials, Immersion’s provide for touch Active displays Alps feedback touch switches Alpine textures

have Tier over automotive X licensees. XX currently supplier We

vehicles. touch premium Our range to growth, of of Tier we touch screens, the enabled a clusters expand will To supply to interfaces control haptic license customers number existing button suppliers support licensees OEMs additional solutions. pads, related with for and X

with engaged haptics into forward additional demonstrate design and how We wins design look decisions. influence you of converting updated value and their to OEMs on the partnership are also keeping to the activities our future. We are in

the toward technology with In this stands of and VR Sony’s X gaming, to year console, gaming excited license we of the for launch anticipated benefit end significant gaming where about Immersion controllers. continue haptic the our to growth PlayStation Sony’s of catalyst from be

believe increased and We advanced interactive experiences market Sony’s new this demand haptic future. Immersion opportunities may the additional lead catalyze controllers in for for to will

just the to commercial our during I Immersion’s foray adult global months efforts and strategic technology coming on first multi-billion our market. as over unfolds seeing forging toward this with opportunity the monetizing market This Lastly, quarter, is mentioned marking device forward in years. partnership our or look we first a the our dollar successful to step we FeelRobotics, licensing into call, were new

guidance with guidance and to profitability shareholders. Until team value As not for efforts. maximize is Board revenue to new improve prior further do collaboratively I we forward we notice, and with to intend new provide our move business earlier, said continue optimize our are withdrawing to these management have our we working as

rate $XX operating approximately expect to a year annual profitable run of exit Going million basis an non-GAAP the expense fiscal to to and we on with for forward, be intend $XX XXXX non-GAAP million.

and focused on Immersion’s our customers our executing initiatives upholding long-term our our while our growth pandemic. shareholder coping support business and across are to and delivering the We in employees continuing the value. confident want to I full potential opportunity unlock like remain strategy with to Coronavirus thank commitment profit to for

I review our will the over turn that, call a QX before questions. now for of up opening the results With Aaron call to your to

Thanks, Ramzi.

total to XXXX last Let financial QX press release of me referring $X.X up QX begin $X.X revenue Total by million XX% for this of XXXX in same you revenue regarding year. million the afternoon’s information for our quarter was from performance.

in licensees. mobile licensees XXXX by XX%, $X.X the automotive Revenue royalty offset reported and from per by signed recognized approximately up compared declines the quarter, bearing $X.X prior revenues was partially by in million and royalty or unit year million with by gaming mainly arrangement in shipments driven

license the XXXX. customer arrangement from comparable first on Revenue to of recognized fee a from $X.X primarily was XX% quarter due one basis, a in lump down fixed license fee million sum

Recurring revenues in XX% represented XXXX last versus revenues in QX of XX% revenues of quarter the year. first

mix XX% percentage each fluctuates revenues for quarter seasonality breakdown of business, the from to XX% Our due of as for of and first patterns typically was XX% total quarterly from from automotive of business mobility, a and line revenue a by gaming. line XXXX,

expenses down litigation reflected costs, maintenance the from the million legal patent $X.X $X.X as compensation for operating year. XX% operating reduction of million lower period last first in and expenses as comparable million million impact $X.X XXXX the quarter lower the $X.X to to The expenses. Turning quarter well lower GAAP non-litigation of were for stock-based costs, expenses.

Montreal our This in to improvements positions depreciation facility. an and of offset restructuring the million from administrative $X.X Jose San movement San Jose was by of of accelerated leasehold $X.X partially million to costs related incremental on

investment decreased dollar the on and translation XXXX, items balances U.S. dollar of weakening sheet income lower to Korean XXXX the yuan certain mainly $X.X Canadian first cash Other yields against foreign $X.X unrealized million the of of million of income quarter losses resulting and and to versus $X.X XXXX. million, versus in impact from the lower by quarter the lower QX and due balance same investment currency due short-term

per XXXX over the a at of net million GAAP or first for share, Looking net XXXX. improvement of XX% quarter loss results, $XX quarter $X.X in GAAP share per our or of net was $X.XX $X.XX same the million loss

metrics, loss loss track share normal per to our performance. addition net In net GAAP non-GAAP use non-GAAP to and business we

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

first was million of $X.X period year. the quarter same per XX% or improvement per $X.X last in the loss a net net non-GAAP $X.XX share $X.XX in share, million Non-GAAP loss over or

under XXXX. deposit balance other On million the quarter pay agreed the Immersion’s LGE behalf. asset we a X, Korean provisional on sheet. April will withholding long-term Let’s second approximately on recorded $X balance LGE to to XXXX, in on the our sheet to The had of taxes of to deposit be to assets, authorities for a tax move provide

noted ultimately in appeal do do raised by there will our tax we we Korean provide these reimbursed expense appeal more the that reported in our additional claims will extent provided. deposit believe which to not tax we court, the on in case, are the under defenses appealing in the which previous we Korean than the our that, of expect in the in ultimately our we statement Korean courts. in agreement in be authorities are period As the likely filings, Note LGE, The not with will and court. as operations the be event that to the in we valid not Korean we income be prevail the

This our $XX.X cash repurchase XXXX. million reduction from during million as XXXX. driver XX, of cash $XX total with the million key sheet was is remained quarter. in as of of stock the $XX.X of strong our used March $XX December a Overall, XX, equivalents reduction program balance The million and cash

in questions, open Ramzi, we note circumstances I given if Before circumstances, the and call support the team locations. up are like separate that the all for -- to and I’d

appreciate your we with in little extra bear question answers your to please and So real time us We deliver process take time. as patience. a

With Q&A. that, I turn over call will the to to start operator Operator? the

take Dougherty question ahead. Derek Instructions] Soderberg [Operator Thank Company. now We our you. & first go Please from can

my Hi, everyone. questions. Thanks for taking

that cuts will have harder So are then year’s achieve or given strategies Day that goals Analyst to at and you follow. guys expenses, I laid a operating last to there the any any out substantial be

happened effort. with -- the all. the of be quite Not initiatives. OpEx expense and has in are really reduction the cutting we accelerated Board line what pretty just time that the this with has -- to place cost lot been much initiatives a in strategy, changes, but under for These plan going significant are much are some Actually at going

strategy the employees and continue to Shareholder going other to XX% at be savings, the sure we made all example, to for Montreal communicated the than which moving sooner intact. off that very pay to happen while XX% long-term, making are auditors changes that changing For continue a the planned Day to significant in

Got the then, that auto -- it. gaining the be pandemic. market? and will your strength due Are adult in accelerating And clearly, pandemic the the Thanks. to prospects pandemic in you mobile seeing in by impacted

please -- I am cut was sorry, bad. your a repeat you the question? bit Could connection you

Yeah.

are by to and going be auto mobile clearly, impacted pandemic. So, the

On the gaming then is other the strength prospects your also accelerating in and in seeing you are adult pandemic market? side, the

excitement a leveraging signals on as will controllers with on all that offers plan of planned and will So, lot Sony are experiences, launch It to uptick to haptics the be rich there. launch set new PSX the is the the there features gaming that side, platform. there in and building

and software shelter-in-place already -- side We benefit a continue believe benefit lot that on that we stay-at-home gaming could there activity are seeing on of as software the hardware the be well. will the to of

we in well-positioned. like feel we So are gaming

adult with our And the action be as market, strong. continues FeelRobotics as far to

communications daily them, is market the clearly, with on is team sales growing and significantly. Our

world So we in tracking in to adult the plan much right pretty now. are gaming the

far As much major met we automotive our have concerned, milestone. is the pretty all as

Xs up to signed a we in Tier planned We the up sign have the that lot year. of

next board adoption We and communicating Audi, with step high mid-tier. within haptic as been the OEM on with both the -- to well Mercedes OEMs have OEMs as such the is BMW, as increasing the more the end, get

engaged the the increase to in Tier salesperson the in OEMs will a Europe hired Xs and who have We both be the adoption.

any you fundamental if margins, the the again, So, on a to plan look we are don’t demand see haptic. at and take at changes internally tracking we

Great. Thanks.

Sure.

would call. you There conclude further conference. like your [Operator for I Instructions] today’s questions are the no Thank participation. on now

may disconnect. You now