Immersion (IMMR) 16 Aug 212021 Q2 Earnings call transcript

Good day everyone and welcome to the Immersion's Second Quarter 2021 Earnings Call. At this time, I would like to turn the conference over to Aaron Akerman. Please go ahead.

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

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

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

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

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

and and developing are listening products us for reporting Aaron, webcast. Thanks thanks joining and customers mobile. the continued on of our and our today everyone markets performance the high success reflect that shipping results gaming haptic core partners call solutions automotive, of in we today and or The via in

second GAAP Automotive, revenue XX% grew And and to touch-based automotive licensees loss revenue in in to base, in million our Stanley, quarter cover at for Tier of addition In Alpine, XXXX. Stanley as compared of has our $X.X QX, GAAP growth compared products. income agreement Alps fiscal net on to the In core license to it provider our the many Continental The Stanley electronic existing components access we our innovative haptic strengthens to now a with market, automotive builds position including fiscal leading on X others. product. expanded Faurecia, technology our of we of all Our our markets. We in compared million for a remain the growth same $X.X quarter revenue net last track year. of percent of XXXX saw XXXX. was double-digit

We for haptics technology are interfaces. evaluating are Tier and new and Xs our with who several vehicles and engaged OEMs

sold, this platforms. our excited Sony in believe haptics to Gaming, the Immersion million to for making Interactive market. history. XX to PlayStationX them the surpass range recently automotive use DualSense that performance we're and are central industry continue are In Sony's PlayStationX in of innovations address of The Entertainment to gamers in ability potential benchmark become We purchasing console experience. announced controller long-term on units selling the it and fastest the a the has

DualSense from and be also gaming Sony implemented of the positions the us use innovations products of VR. is VR in and controller technology will haptic its success many nicely announced previously controller. that The with our Sony advanced of growing the forthcoming haptics new

technology We of Tightened advanced a also mobile are phone our haptics IP We in growth the footprint it today's expands Haptics, driving global and experiences. market to options, a high-definition in for and compared partnership offering share channel remain a partnership Haptics make to Canadian technology its percent TouchSense experiences, servicing wearable based to new company announced new gaming developed immersion multi-year of use Mobile, is mobile ASUS recently compelling of fiscal fiscal smartphones TITAN China to and to actuators powerful through on its OEMs including the incorporate mobile haptic its track This double-digit XXXX other to software licensing focus license revenue gaming achieve based China available channel haptic that the pleased on gaming. smartphone suppliers a executed program. actuators. We're markets. the in on products. channel to with behind motors essential to continue developer ROG In license that our renewal components the XXXX. deliver revenue growth we from

segment or revenue XXXX Our meet remains on mobile segment exceed our revenue. track to

experience Immersion interactive to leverage companies seeking technical leading to We technology interest the to a in a products. with license haptics that their markets QX. fitness share also user platform provider, adjacent improve from Peloton, executed I'm who in in see are feedback in pleased

As are the we support of agreement, providing products. engineering also new services to part development of

the approved coding candidate standards. continued a our forward developments support have results. over of we our initiative. we haptics which turn this MPEG of progress and our reported call of for now call the target leading are currently Aaron proposals segments, wins evaluation. across industry ecosystem. I'll long-term to of for keeping in our continued updated a Last As driving look advanced part QX for development you Multiple We effects. These under are demonstrate to quarter, proposals, to our companies market of on adoption haptic of adoption strategy submitted technology review

Thanks, Jared.

increased our afternoon's Total for Revenue same $X.X due this revenue of total XXXX referring quarter last the release licensees. existing from QX, revenues revenue in the by per year. mobility quarter, million Recurring from unit begin XXX% of $X.X to XX% XXXX year from payments QX, mainly $X.X compared fixed volume and million Fixed to license due months regarding last to year. performance. in QX, in XX% the information revenues increased press XX% second for or June to in million the in primarily arrangements fee XXth, to XXXX, million approximately revenues was revenue $XX ended period fee of represented licensees. compared from three up financial me you the same gaming increased XXXX royalty Let prior both automotive versus new quarter and XXXX of

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

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

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

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

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

and supply was recognized from impact may cautiously optimistic we Moving remain same basis QX and performance, and performance QX outstanding potential an off the the at see by we quarter revenue may also was the cash may from continued the $XX.X our increase this We to COVID QX variant XXst, equivalents the headwinds of tougher have as time but performance. of the as that the of quarterly a our on about resurfacing future We that a June of businesses, save million tough in better Overall, cost sheet. $XXX.X had impact positive total generate despite $XX.X structure ability result as cash issues our in and And business recent to we and manage the environment. than in originally coming on XXth, December revenue of million remain chain of licensees continue cash the our our Delta remain our uncertainty to on not and on increases balance of represents anticipated. a expect quarters, confident Overall, caused free million This XXXX. profitable XXXX. to to licensees. flow the

Aaron. Thanks

while to a the with We financial QX, We compared XX% balance generated over in significant and expenses growth pleased same our our reducing XX% operating are period. strengthened very in considerably sheet improvement our by revenue XXXX. results

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

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

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

[Operator you. And Anthony from Thank Stoss first go Instructions] to Craig-Hallum. we'll

Your is open. line

penetration for to, on quarter. sequentially up space? flat case typically down a you're September smartphone then forward, you tightened seasonally, side the the bit? for you and marketplace, nice just up first, time. then, that not maybe within things, remain the how reasonably quarter help your wouldn't you're expect QX, or be OpEx your TITAN think do Aaron, would will and or into much handset I related Thanks. the And of guiding Really one guess, and you this little be for you to guys. do Chinese it but Jared, know relatively going I Chinese Hi, Easy And

for the question, Thanks Okay. Tony.

be doing within We're OpEx. non-GAAP -- $XX while running So, previous below that to our -- and next the marketing first activities, more could now. other on we certainly issues. million we million guidance was quarter go -- of of not said more expect giving traveling that up $XX OpEx, and once And the lot some sustainably that it previously to a doing COVID of that we're of we start anticipating those given resurfacing

don't our on not the above compared and chain And we've previously quarter for a million significantly, I continue it QX. on accordingly was the it beat given licensees, range in we performance could to and us, while typically strong million issues QX of supply $XX So, COVID as respect true resurfacing the in to expect that but, outstanding -- basis longer may our is it's the increase term QX to of be seasonality, how $XX that sequential said. with to QX and expectations to

with time again, to -- I'm actuators licensing for going the it's new to -- -- participation. the their things we're and with -- actually coming of the see specific potential it take be grow we at able our On as with that angle the not some technology. overall It China With a impact to estimate adopted. is from pleased this technology the Yeah. But TITAN, program how may licensing. with channel are

I Okay. Then may, quick if two follow-ups.

in on two. that's being think the be it's Do about past And the if your case. mentioned you think other call a I'm other disclosed using of don't it? devices? the still smaller I segment the likely applications you Auto you think fastest license, this you've the you've commented how curious consumer albeit they than think will then, about past there's I are for kind in Peloton what growing,

time on the are it or the and it'll with that just in adoption we So, longer that longer consider to saying, based on There's a lag -- growing. Automotive, first keep what question OEMs do production time, a we the market.

grows that something that's just over time. steadily So,

specifically of I will core what to we So we're much devices haptics some -- that outside time your phones, but potential still our kind as can't -- other And markets. we other markets, potential far regards for in then, them, grow. and the markets of of as outside there. anticipate over second other but question, do In continue too see that is consumer doing talk about on to with in there gaming

keep So on. but about, that's potential customers And some eye some something that we longer-term to for that an we definitely. there talk do is

it. Jared. Thanks, Appreciate

[Operator Instructions] Colliers Next from Derek go to we'll Securities. Soderberg

Your line is open.

questions. I I to taking sort was the upside. there want about My you the in guys. any congrats could provide with well strong Hey detail for on Automotive. results. my on wondering Thanks on what's start if guys more of going as

touchscreen, where application think of Anything the segment. at there the the guys Is and upside? coming that that would great. that from you for could of if versus infotainment a payments guys be is segment revenue I in past wheel? growth it have And you in systems buttons screens the upfront primarily of now any and is received reason all much it how steering is by sort

Aaron. ahead Go Yeah.

So, it those the of earlier conversation. your first of fee in part that -- fixed there licensees. from Automotive alluded were part upfront payments were payments the I we couple received my in a which to question, sector, of of And automotive part

the the applications, different center seeing the dash screen applications, then applications, -- different -- a Regarding se. buttons application console it's whether it's actually on the or the in are we're button

distribution So modalities. applications of prevalent have at that different interest screens across end that in changes specific but as I continues. more kind still high cars, those would the screens over don't not are And that just become a I time, range. in the say then,

guys Got balance it. you at be to Got your looking I from going and it. cash And then just here. are cash think generating operating model,

money. just could why talked guys sustained on You if provide you some going guess are I raising reasons out guys about profitability. curious I you was and

like for Now, it acquisition. could me, to it be seems an

active Would And it You that detail space for of Thanks. guys of I'm -- case? any or would would just you in patents M&A. both, in that you're area the curious or guys be be sort more what and for if interest that be hardware helpful. then more

the and we're So, to activities, time and time. we with no time engaged engagements with open we from respect look out eyes nothing ongoing to M&A have keep on what's there. do things our that at there's at current But

complete to that. public [indiscernible], of respect our I with Now to refer you has filings, which information

far? at it. sort using that well? what's that any would with commentary offering? you -- then, do new And gone much you out Got timeline are have you on updated helpful of of How where be guys on sort And and as sold the you guys so that,

Yeah.

public this able file is So, to information in that the any filings. afternoon, disclose our well as we're of XX-Q our previous in as

Thanks. Okay.

it back And for at turn I'll this to time, remarks. Smith Jared closing

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

And your that you our does call Thank conclude for today. for participation.

disconnect. now may You