Immersion (IMMR) 7 May 212021 Q1 Earnings call transcript

Good day, and welcome to the Immersion Q1 2021 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Chief Financial Officer, Aaron Akerman. Please go ahead, sir.

Good afternoon, and thank you for joining us today on Immersion's first quarter 2021 conference call. being from over of the at also can web our is ir.immersion.com. accessed be Investor call broadcast the live and website This Relations section Jared on our call me is With interim today's CEO. Smith,

expectations, the statements include or our may business, tax we on subject and and on well uncertainties in future especially statements, anticipated expenses, include of characterizations litigation our call, this COVID-XX to future customers in anticipated the demand and assumptions, as also the projections circumstances; and ongoing impact Many control as pandemic. make light other market and the expense During or these These or of our or are of of opportunities, reductions, risks other and regarding general; litigation, which suppliers adverse the forward-looking projected operating uncertainties are economy of may Immersion. business any statements anticipated the results financial global events and metrics, COVID-XX effects of of strategies, business operating include risks, products, absence model of future topics. beyond forward-looking or

detailed update law, a U.S. more of update file intend the its that quarterly other cause the report mentioned as recent by interested business future, these forward-looking result today issued available with actual most as to new required results from these on statements occurring this and or Annual factors anticipated and materially Immersion's discussion those even by and reasons and The forward-looking call which could listed beliefs could of materially, the law. Immersion's XX-K today. not other on Report statements except Except are becomes as in parties the in predictions to press XX-Q, XXXX the close, on after Exchange forward-looking on or as developments the financial, any for Form to these factors results vary differ Risk release if Form review of this Commission. date statements we Securities release of does information actual should reflect Immersion Factors a the For in after market required

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

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

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

to As our proud I beginning QX the following of our XXXX yielding our in markets. XX%, and income finished loss million compared by expenses a $X.X of in reflect to on become of economic pandemic markets. year-over-year the Despite would the XXXX, last same progress am core challenges worldwide we of last last Moreover, reduced non-GAAP core were impact over in net $X.X QX business growth in team's our at across transforming reported we today. at XX profitability year. operating net global what with quarter months a we of the deep since non-GAAP quarters we the In XX% million year, of in revenue XXXX, I the QX

markets XXXX, and user safety in differentiator, of over our flow experience of core $X experienced Additionally, with challenges severe yet our we we continued see powerful in haptics closed quarter in cash per a generated a positive feature. customers operating the as Many cash investment and a share.

to Let's usability improve in review In of markets. adoption our safety. our market automotive, developments core continued see technology and we

XXXX. revenue growth strong positioned well for double-digit are percent in We fiscal

recent forecast recovery pre-COVID growth previous highlighted levels calls, vehicle a market have IHS, based we XXXX. to believe from in from gradual as factors: First, data seen on we by outlook recover based is Our shipments COVID, on light three will and

years in stable shipments of ahead. vehicle growth expect also We the

of only relevance we designers shy existing visible tech haptic enables Celestiq background integrated puts supplied Second, BMW iX design, a to haptics new the of adoption Tier excited and will into to growing the that and they our share in its interfaces when initiative. touch-based controls Haptics key enhance of see control feature in introduced Vision BMW X by iNEXT the and discretely HMI haptics as needed. part BMW usability design its We're and new of them feature vehicle are functionality licensees. surfaces. technology elegantly highlighted makes the as Cadillac designs.

new unlocks and possibilities. technology user Our experience

on continue to our used we development for technologies Third, in unit hardware product our receive our and feedback touchscreen positive kit. automotive customer prototyping

be PlayStation X its for launch. adoption are will to continues Sony continue PlayStation to ship demand since its X after PlayStation expects Sony vehicle We be the units PlayStation the noted consumer console the more vehicles double-digit driven OEM demand. was DualSense OEMs and for during interfaces. are in X controller XXXX, X launch. PlayStation expect gaming on technology of Tier is gaming, in evaluating haptics expect who chain Tier controller, to additional and shipped the financial designs. of Based we that PlayStation Similar which we positive growth reviews and week, Sony of constraints, VR. its X than it high and throughout PlayStation number it of year we the X that where sold automotive, to latest last revenue X.X us full in ahead in year for DualSense Despite supply licensees Xs and and be the more haptics new launch, had currently a by after period published provides fiscal in percent life cycle primarily demand it with and engaged our shipments. successful very million catalyze generally increased X to results the high In In in the signing confidence reported same winning slightly This new that X up successful

market progress our and gaming look to with grow pipeline, China of of our the VR licensed on and through channel China from additional mobile, OEMs. I licensing This agreement OEM. products. sharing more In partner, expanded make you to in We offer smartphone our scope haptics in the enables partners technology We revenue engaged to to our recently components we haptic channel with with the our program program. is to role continue expanding forward a continue and who key mobile

see in which positive working high-quality adoption has in A meaningful of Android We a and working China participation a create experiences and standard this is systems. group one to beyond. for mobile mobile for mobile haptic devices. from China devices, been IEEE opportunities game the new ecosystem with experience to ecosystem haptic in will and barriers initiative market, on believe leading enable the continue new across growth We XXXX consistent key corresponding of gaming companies to growth advanced and is in momentum high-quality the revenue developing

products quarter, expects launch expect we up business of we this of one ramp continue recover quarter-over-quarter level. SXX. the in to As to It by sales mobile growth its the year the sales smartphones communications licensees, that Samsung, had pre-COVID quarter. A last market to touched underpinned its of to the recently new second largest mobile Galaxy on of Galaxy commented our

Communication smartphone and and pleased Mobile We're emerging in renewed continued We functionality, customer to this is continue renewals. reflected to its its haptics to technology continue see that of to licensing growing utilize in will Panasonic recently share relevance agreement smartphones.

growth with and market. mobile the from mobile are XXXX business is on revenue, or to we particularly meet Our licensing channel track of China pleased revenue stemming exceed our our the

long-term Android for our will MPEG, our leading of achieved Apple, haptics, The was group advanced call we Last developed as comprised coding a support proposals approved InterDigital, and a strategy opportunities of in to our of well expanded our target standards. of our initiatives through Friday, adoption from products. support of market target effects. licensing development milestone. an haptic implementation Immersion others. software by working haptics growth patents for a future proposal in part as of development representatives As are continued segments, standardized a MPEG industry

addition relevant results. call drive in gaming, automotive, and I'll our standards. now growth. playback and to we to long-term distribution we content haptics review patents of for Aaron had QX use continue innovation numerous over new to to turn the In Last quarter, and mobile, issued inventions new of standards, to research support for a

Jared. Thanks,

revenues in increased of revenue me QX Total begin performance. you Recurring royalty for afternoon's referring year. release or from by first $X.X prior to of last revenues in quarter arrangements revenue revenue million the quarter the approximately quarter, total XX% last Revenue due $X.X per XX% year the with financial XXXX QX versus this of in Let for of information to compared up press XX% revenues million from licensees. from QX XXXX XX% million new primarily represented regarding XXXX year. was the same unit $X.X our

XXXX. revenue XX% mix XXXX, profit profit fluctuates to in Our as was of of gross quarter business million revenues from from the from the XX% of was And a first line quarter line follows: of $X.X breakdown a business for quarterly mobility, total due by XX% as to Gross each gaming, same automotive. million percentage of compared $X.X seasonality for typically of patterns.

lower which lower patent $X $X.X $X.X focus for professional and million general expenses; resulted lower last on Turning down in comparable quarter million expenses; amortization; million year. expenses. in the facilities the from XX% reduction GAAP $X.X in leasehold period were service of initiatives, $X.X as legal first expenses. other lower $X.X million cost $X.X related through to reflected litigation, million reduction well million reduction $X.X our improvement our cost operating XXXX as quarter lower or and salaries million benefits operating expenses disciplined expenses costs; for the costs; various The million

net same Looking loss million at net quarter $X.XX $X.X GAAP XXXX first in $X or million diluted net share income per share compared quarter for XXXX. our the of was or results. of $X.XX the to of per GAAP

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

non-GAAP GAAP compensation, net million a first $X.X we had non-GAAP loss $X.XX $X.XX As non-GAAP compared expense per income share in adjusted income $X.X per On of the reflect net period in depreciation or basis, restructuring to cash and million net of income diluted as to quarter a net year. reminder, same expenses. we the or tax last less share stock-based define

profitability our the in GAAP see on to quarters. in expect improvement and continued coming basis non-GAAP both We

Moving cash of balance total $XXX.X share outstanding XX, of growing $X to our December a is over as XXXX, the XXXX. XX, March $XX.X of Overall, increase million per sheet from stronger as million cash with $XX.X the balance sheet. equivalents and million

to despite in business environment. expect We cash flow free the tough generate to the coming quarters, continue positive

Aaron. Thanks,

in resulting results improvement cutting positive financial XX%, are our generated to We strong QX growth expenses cash and revenue in the XXXX. profitability while compared very flow. pleased We our by operating with significant XX% over

also equivalents. per the share quarter $X with closed and of We cash over cash

We structure. continue to are achieve double-digit operating that in on year-over-year profitability. percent sustained track and progress. updated our I'm profitability excited forward optimized keeping growth I to look revenue to our you under deliver on we

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

please real extra in Q&A. answers So appreciate the process time a bear With Operator? deliver patience. to little take your start us to as to the I call your with time. will we over turn We that, questions operator and

our Craig-Hallum. first of take Anthony question We'll Instructions] Stoss from [Operator

more a big things size of found China haptics How embedding What us could opportunity in how also, and sense comments on press it release. think after expectations kind I'd Android. several your times then that of in here. do couple I A prepared remarks hear then you gaming and in those and for curious, be topics, mentioned of a already? related the that. has you it side, pay your each love are little And and China. maybe the of might Can talking bit a about your it of gaming Google the to mobile Android in you give China? Jared, to been on follow-up haptics and on

the we when as program partners as standpoint years. mobile the grown or is initial of of the China channel can't channel are manufactured the market from started by comment partners quite the significantly on it channel There far said, I opportunity, really how phones licensing looks like. that we've As the or past it our signed in couple up from big I XXX what recent million about China OEMs. will be

big a the the channel at of do front as can. idea market. certainly So it the in because potential of is, from, to It We're year. you and what that. grown gives we to channel we lot end we've this And an want size through as that of licensing a where where and terms licensing much we expanding of of program has can we growth of capture started the

the think number, per give a is pretty I can't So you big. I potential se.

the As we your the Android was mentioned specifically -- Is China. far haptics about question about -- haptics as correct? second that that

Yes.

Yes.

interesting that's hardware aspects something that's varied that's effort the subsystems on been the is other It's of time for they those some for a this going challenge and the a has difficult companies. very really yes, So and is performance been use because so much. haptics that

As the experience. be big able to for like to is -- have company an consistent China gaming able users example, Tencent, who to in a be gaming

experience. need into subsystems do really which they're is, pushing big happen it this enable haptic then it haptic more for will what into that able So our that standard is consistent a and whether all it because IT. utilizes they it to us question? moves forward be systems, haptic advances third that'll drive higher-end your consistent more because And to is what good -- was That's to phones, advanced which high-quality step just

Android related embedding comments Android making to just making me, software. -- next-generation in Google Really excuse comments haptics

scenario. Just pay to so you that can

a up-level again the in of standpoint iOS mobile flow customers handset or our through the where because more monetizing experiences in they've the on advanced experience and mobile that they And is of what the there's observed we're to Android upgrade. standpoint lot going IT do ecosystem requires use the that just That's the a kind of think this through to from Well, I from market that haptics both of any pressure -- from to up-leveling features. better us other that's help platforms. technology been ones of kind hardware by just and get of market standpoint -- and the which

for gaming the maybe lastly, or then accessory and And other on pull-through PSX Okay. the controllers. other

expect Soon on licensees we'll Immersion of selling this approaching haptics be other come Christmas new different types Do from for season you licensing into controllers to again. game board, fall?

engagements, sparking when trigger we're StrikerVR, -- our a the but makes a be I but Yes. have talking number company others We would in And comment I discussions when I specific in their controller comment ongoing terms collaboration timing can that's can't we certainly among accessory intersect season, players third-party manufacturers. announce going might they on have market. with other to a those DualSense hit. what technology which would that to interest of shipment can't our in on, of plans technology. the lot that they is with whether did of holiday a peripheral that of utilize of comment is just don't on terms

Derek We'll from move Instructions] next Securities. [Operator Soderberg of question to Colliers our

Last I like XXXX quarter, pretty wanted a about the talk automotive. setup to it bit was sounded nice.

mid-tier end. the for acceleration opportunity a the Or of adoption? future would bit quarter, down premium an for have us couple line? But that on to further You expect little a wins of vehicles you this year more see this is

to being expect new would that expect continued see of even seeing and we of this forward And see and start luxury mid-tier do or see we then we're they'll mid-tier. announcements looking different year that or down the years. into some mid-tier more the all this the licensees also We that see from advanced OEMs to following supplying. year, the this And as standpoint you this both this to revenue we year. yet. in the But vehicles in programs So gets actually from into be luxury adopted adoption adoption mid-tier, technology do

mid-tier to pickup. going see the you're So

with chunk Is curious then to that there for seems if potential like would Apple as guys? that? automotive, Or their on you It for guys? any and you renewal market. is a opportunity systems. the a have it. Is Got have they And of CarPlay decent an for wait well on I'm upside we this opportunity

we manufacturers, ship licensed automotive component the Tier is to current right, market cars. haptic Xs into in those so in model our that the Well, the

driving any implementations in would see more haptic at our that. that's implementations and we specifically and model. that ones, technologies the that, To focused hardware the and better those from more But are benefit current -- extent that's revenue So market from other where is of we the that currently we're growth on the haptic side.

are seen factors. -- is -- ecosystem but of to the in on or are other we've haptics, haptics So of helping things engage actually again, elsewhere that where more are implementing that rely what they everywhere that that things beginning happen in the parts their systems drive ecosystem adoption advanced and

net cash. then repurchase this of be above considering your And some use shares? your $XXX out about option it. year. what Looks of bit as plans portfolio wanted anything that position to ask there to to to Curious your like there Are supplemental for finally, buy? to a Is cash is you to may million. are Got cash just cash the spend

So typically do on we capital management balance looking before, our policies our to cash actually continuously our sure Board we But it certainly, public comment of shareholders. maximize for we through value cash allocation our use and make team are announcements. and at that don't

are questions no there queue. further And in

management turn So over statements. for I'll back closing to it

adoption you you, effort all our future with on results. financial today. Thank this continued very thank our progress updates the in Thanks, to core Company. markets sharing joining We and call I'm to forward grow and operator, for of positioned We're excited and haptics this drive goodbye. us continued look in calls. and to on

and ladies Thank teleconference. gentlemen, you, for attending today's

now disconnect. You may