[May 05, 2016] |
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Immersion Corporation Reports First Quarter 2016 Results; Files Second Complaint Against Apple Inc., AT&T Inc., and AT&T Mobility LLC with U.S. International Trade Commission and in U.S. Federal District Court
Immersion Corporation (NASDAQ:IMMR), the leading developer and licensor
of touch feedback technology, today reported financial results for the
first quarter ended March 31, 2016.
Results for the quarter ended March 31, 2016
Total revenues for the first quarter of 2016 were $13.6 million, a
decrease of 16% compared to $16.3 million for the first quarter of 2015.
Royalty and license revenues of $13.4 million for the first quarter of
2016 were down 16% from the same period last year, driven primarily by
the absence of revenue from Samsung (News - Alert).
Net loss for the first quarter of 2016 was $(2.7) million, or $(0.09)
per basic and diluted share. This compares to net loss of $(59)
thousand, or $0.00 per basic and diluted share, for the first quarter of
2015. Net loss for the first quarter of 2016 includes certain non-cash
tax expenses and benefits associated with the company's international
tax structure, resulting in an effective tax rate for the quarter of
38.7%.
Non-GAAP net loss for the first quarter of 2016 was $(1.2) million, or
$(0.04) per basic and diluted share, compared with non-GAAP net income
of $1.7 million, or $0.06 per diluted share, for the first quarter of
2015. (See attached table for a reconciliation of GAAP to non-GAAP
financial measures.)
As of March 31, 2016, Immersion's cash, cash equivalents and short term
investments were $60.8 million, down from $64.9 million as of December
31, 2015.
Litigation Update
Samsung: In the first quarter of 2016, Immersion initiated
arbitration against Samsung with the International Chamber of Commerce
to resolve a dispute around wind down rights under the license agreement
between Immersion and Samsung that expired at the end of 2015. Under
that agreement, Samsung had the right to purchase wind down rights prior
to the expiration of the agreement that would allow Samsung to continue
to sell certain Samsung products using Immersion technology for a period
of time after expiration of the agreement, but Samsung did not exercise
this right. Samsung continues to ship products that were licensed under
the agreement without a wind down right, and Immersion has filed
arbitration seeking damages. Samsung remains unlicensed for any new
products using Immersion technology that have been launched after the
end of 2015.
Apple (News - Alert): In the first quarter of 2016, Immersion filed a complaint
against Apple Inc., AT&T Inc. and AT&T Mobility LLC in the U.S.
International Trade Commission and in the U.S. District Court for the
District of Delaware alleging that the Apple iPhone (News - Alert) 6, Apple iPhone 6
Plus, Apple iPhone 6s, Apple iPhone 6s Plus, Apple Watch, Apple Watch
Sport and Apple Watch Edition infringe certain Immersion patents
covering haptic feedback systems and methods in electronic devices. The
ITC instituted an investigation on March 14, 2016, and scheduled a claim
construction hearing on July 20, 2016, a hearing on November 14-18,
2016, an initial determination date of February 17, 2017 and a target
date for completion of the investigation of June 19, 2017. The District
Court action has been stayed until the determination of the ITC becomes
final.
Immersion also announced today that it has filed a second complaint with
the ITC against Apple, AT&T, and AT&T Mobility LLC and a corresponding
patent infringement complaint against Apple, AT&T and AT&T Mobility in
the U.S. District Court for the District of Delaware. The complaints
allege that the Apple iPhone 6s, Apple iPhone 6s Plus, the MacBook and
the MacBook Pro with Retina Display infringe certain Immersion patents,
including patents covering pressure-related haptics.
The complaints assert infringement by the Apple iPhone 6s and Apple
iPhone 6s Plus of the following three Immersion patents:
U.S. Patent No. 8,749,507, "Systems and Methods for Adaptive
Interpretation of Input from a Touch-Sensitive Input Device"
U.S. Patent No. 7,808,488, "Method and Apparatus for Providing Tactile
Sensations"
U.S. Patent No. 8,581,710, "Systems and Methods for Haptic Confirmation
of Commands"
The complaints also assert infringement by the Apple MacBook and Apple
MacBook Pro with Retina display of the following Immersion patent:
U.S. Patent No. 7,336,260, "Method and Apparatus for Providing Tactile
Sensations"
Sony: In the first quarter of 2016, Immersion received a
favorable ruling in an arbitration against Sony Computer Entertainment
America, LLC and Sony Computer Entertainment, Inc. resolving whether
certain Sony products sold in Japan were covered by one of Immersion's
Japanese patents and thus were royalty-bearing products under the 2007
license agreement between the parties. On April 26, 2016, the District
Court for the Northern District of California issued an order granting
Immersion's petition to confirm the arbitral award and denying Sony's
motion to vacate the award.
Management Commentary
"I am pleased with the results we achieved in the March quarter despite
a change in customer mix as we work to protect and preserve our
intellectual property with top-tier mobile OEMs," said Vic Viegas, chief
executive officer of Immersion. "During the quarter, we continued to see
momentum in our business, including the launch of new mobile devices
featuring our TouchSense software, multiple haptically-enabled
advertising campaign wins and the addition of new content gaming
partners. With our latest win against Sony, we also achieved another
proof point that our gaming intellectual property portfolio remains
relevant."
"Based on our March quarter performance and current outlook, we remain
on track towards our 2016 revenue outlook of $55 million to $65 million,
with non-GAAP net income ranging from non-GAAP net loss of $(8) million
to non-GAAP net income of $3 million. Our healthy business fundamentals
and strong financial position provide a solid platform to make the
necessary yet fiscally responsible investments to strengthen and
position our business for long-term, profitable growth," concluded Mr.
Viegas.
Recent Business Highlights
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Immersion renewed its license agreement with MEIZU Technology Co.
Ltd., a leading manufacturer of mobile devices in China, for the use
of Immersion TouchSense®
technology in MEIZU branded smartphones. MEIZU's recently launched
PRO 6 series feature a number of different use cases with Immersion's
haptic technology, such as the back button, long-click home button,
incoming calls, dial pad and keyboard.
-
Immersion and CRI (News - Alert) Middleware Co., Ltd., a leading provider of audio
and video solutions for the gaming industry in Japan, signed an
agreement to enable game developers using CRI Middleware platform's
CRIWARE to incorporate Immersion's TouchSense® technology in their
Android (News - Alert) mobile games.
-
Immersion's TouchSense® haptic technology was featured in Kyocera's
New DuraForce XD Smartphone. This full-feature smartphone uses
Immersion's TouchSense Haptic Enabling Kit to enhance user
functionality with touch feedback. Immersion's haptic technology
precisely controls the actuator(s) in the device to create nuanced
tactile effects that simulate the connected experience of the physical
world.
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Immersion delivered eight advertising campaigns with haptics in the
first quarter of 2016 through Opera Mediaworks' ad network and TF1,
the largest broadcast network channel in France, spanning multiple
industries including consumer brands, automotive and entertainment.
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Immersion's TouchSense® Technology was featured in the in-app mobile
ad for the Lexus GS F. Lexus, in partnership with its advertising
agency Team One, has launched a haptic ad campaign for the first-ever
Lexus GS F that currently runs on Opera Mediaworks-enabled Android
mobile apps in the United States. Team One, Immersion and Opera
Mediaworks worked together to enhance the Lexus mobile ad with
sophisticated tactile effects to capture how it feels to drive the
most powerful Lexus sedan.
Conference Call Information
Immersion will host a conference call with company management on
Thursday, May 5, 2016 at 2:00 p.m. Pacific time (5:00 p.m. Eastern time)
to discuss financial results for the first quarter ended March 31, 2016
and the second complaint filed against Apple, Inc., AT&T Inc. and AT&T
Mobility LLC. To participate on the live call, analysts and investors
should dial +1 888-505-4368 (conference ID: 2420849) at least ten
minutes prior to the start of the call. A live and archived webcast of
the conference call will also be available for 90 days within the
investor relations section of Immersion's corporate Web site at www.immersion.com.
About Immersion
Founded in 1993, Immersion (NASDAQ: IMMR)
is the leading innovator in haptic technology. The company's touch
feedback solutions deliver a more compelling sense of the digital world.
Using Immersion's high-fidelity haptic systems, partners can transform
user experiences with unique and customizable touch feedback effects;
excite the senses in games and videos; restore "mechanical" feel by
providing intuitive and unmistakable confirmation; may improve safety by
reducing distractions while driving; provide realistic touch feedback
when performing robotic medical procedures and training simulations; and
expand usability when audio and visual feedback are ineffective.
Immersion's technology has been adopted in more than 3 billion digital
devices, and provides haptics in mobile phone, automotive, gaming,
medical, and consumer electronics products from world class companies.
With over 2,200 issued or pending patents in the U.S., China and other
countries, Immersion helps bring the digital universe to life. 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 and
Non-GAAP net income per diluted share, because it is useful in
understanding the company's performance as it more closely reflects its
expected long-term effective tax rates and excludes certain non-cash
expenses and other special charges 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. Investors are encouraged to review the related GAAP
financial measures.
Forward-looking Statements
This press release contains "forward-looking statements" that involve
risks and uncertainties as well as assumptions that, if they never
materialize or prove incorrect, could cause the results of Immersion
Corporation and its consolidated subsidiaries to differ materially from
those expressed or implied by such forward-looking statements.
All statements, other than the statements of historical fact, are
statements that may be deemed forward-looking statements, including, but
not limited to, the statements regarding the momentum of Immersion's
business, the benefits of the outcome of the arbitration against Sony,
the relevance of our intellectual property portfolio and our expectation
that revenues for 2016 will be in the range of $55 million to $65
million and non-GAAP net income for 2016 ranging from a non-GAAP net
loss of $8 million to non-GAAP net income of $3 million.
Immersion's actual results might differ materially from those stated or
implied by such forward-looking statements due to risks and
uncertainties associated with Immersion's business, which include, but
are not limited to, potential and actual claims and proceedings,
including litigation involving Immersion's intellectual property; delay
in or failure to achieve commercial demand for Immersion's or its
licensees' products; a delay in or failure to achieve the acceptance of
force feedback as a critical user experience; unexpected difficulties in
monetizing the patent portfolio; the commercial success of applications
or devices into which Immersion's technology is licensed; ability to
track and retain partners, the continued popularity of mobile games,
mobile advertisements and wearables; potentially lengthy sales cycles
and design processes; unanticipated difficulties and challenges
encountered in development efforts; unexpected costs; the fact that
certain target markets are still relatively nascent; risks associated
with doing business internationally; litigation costs in any current or
future litigation; failure to retain key personnel; ability to retain
personnel; competition; the inherently uncertain nature of litigation
which makes future outcomes and timing difficult to predict; the impact
of global economic conditions and foreign currency exchange rates and
other factors. Many of these risks and uncertainties are beyond the
control of Immersion.
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 2015 which is on file with the U.S. Securities and Exchange
Commission. The forward-looking statements in this press release reflect
Immersion's beliefs and predictions as of the date of this release.
Immersion disclaims any obligation to update these forward-looking
statements as a result of financial, business, or any other developments
occurring after the date of this release.
Immersion, the Immersion logo and TouchSense are trademarks or
registered 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)
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Immersion Corporation
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Condensed Consolidated Balance Sheets
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(In thousands)
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March 31,
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December 31,
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2016
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2015
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(Unaudited)
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(1)
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ASSETS
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|
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Cash and cash equivalents
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$
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20,879
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$
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25,013
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Short-term investments
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39,927
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39,918
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Accounts receivable, net
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4,774
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|
1,213
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Prepaid expenses and other current assets
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2,679
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|
|
2,790
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Total current assets
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68,259
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68,934
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|
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Property and equipment, net
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4,412
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4,589
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Deferred income tax assets
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26,262
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24,633
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Prepaid income taxes
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|
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6,270
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6,995
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Intangibles and other assets, net
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245
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264
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TOTAL ASSETS
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$
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105,448
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$
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105,415
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LIABILITIES
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Accounts payable
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$
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2,978
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$
|
650
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Accrued compensation
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|
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2,769
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|
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4,840
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Other current liabilities
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2,782
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2,999
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Deferred revenue
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6,943
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6,696
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Total current liabilities
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15,472
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15,185
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Long-term deferred revenue
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1,121
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|
|
2,516
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Other long-term liabilities
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837
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|
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1,099
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TOTAL LIABILITIES
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17,430
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18,800
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STOCKHOLDERS' EQUITY
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88,018
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86,615
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TOTAL LIABILITIES &
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|
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STOCKHOLDERS' EQUITY
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$
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105,448
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$
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105,415
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(1) Derived from Immersion's annual audited consolidated financial
statements.
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Immersion Corporation
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Condensed Consolidated Statements of Operations
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(In thousands, except per share amounts)
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(Unaudited)
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Three Months
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Ended March 31,
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2016
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2015
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Revenues:
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Royalty and license
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$
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13,448
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$
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16,012
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Development, services, and other
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175
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275
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Total revenues
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13,623
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16,287
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Costs and expenses:
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Cost of revenues
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|
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23
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|
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115
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Sales and marketing
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3,803
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4,210
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Research and development
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4,312
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3,727
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General and administrative
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10,090
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8,293
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Amortization of intangibles
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3
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|
|
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12
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Total costs and expenses
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18,231
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|
|
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16,357
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Operating loss
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|
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(4,608
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)
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(70
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)
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Interest and other income (expense)
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|
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212
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|
|
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(25
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)
|
|
|
|
|
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Loss before benefit for income taxes
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|
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(4,396
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)
|
|
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(95
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)
|
|
|
|
|
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Benefit for income taxes
|
|
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1,701
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|
|
|
36
|
|
|
|
|
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Net loss
|
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$
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(2,695
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)
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$
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(59
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)
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|
|
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Basic and diluted net loss per share
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|
$
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(0.09
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)
|
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$
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0.00
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Shares used in calculating basic and diluted net loss per share
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|
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28,493
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|
|
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27,818
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|
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Immersion Corporation
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Reconciliation of GAAP Net Loss to Non-GAAP Net Income (loss)
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(In thousands, except per share amounts)
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(Unaudited)
|
|
|
|
|
|
|
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Three Months
|
|
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Ended March 31,
|
|
|
2016
|
|
2015
|
|
|
|
|
|
GAAP net loss
|
|
$
|
(2,695
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)
|
|
$
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(59
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)
|
|
|
|
|
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Add: Stock-based compensation
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|
|
2,334
|
|
|
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1,740
|
|
|
|
|
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Less: Benefit for income taxes
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|
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(1,701
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)
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|
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(36
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)
|
|
|
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Add: Non-GAAP benefit for income taxes (at 19%)
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|
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835
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18
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|
|
|
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Non-GAAP net income (loss)
|
|
$
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(1,227
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)
|
|
$
|
1,663
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|
|
|
|
|
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Non-GAAP earnings (loss) per share
|
|
$
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(0.04
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)
|
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$
|
0.06
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|
|
|
|
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Shares used in calculating Non-GAAP earnings (loss) per share
|
|
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28,493
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|
|
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28,587
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Note: Shares used in calculating Non-GAAP earnings per share have
been adjusted for the three months ended March 31, 2015 period for
potentially dilutive securities of 227,000 shares for restricted
stock units and 542,000 shares for stock options that are not
included in GAAP net loss per share calculation.
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View source version on businesswire.com: http://www.businesswire.com/news/home/20160505006596/en/
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