IMMR — Immersion Corporation

Summary of IMMR Q2 2021 Earnings Call

1. Key Financial Results and Metrics

• Total Revenue: $11 million, a 94% increase from $5.7 million in Q2 2020.
• GAAP Net Income: $5.3 million, compared to a net loss of $0.7 million in the same quarter last year.
• Non-GAAP Net Income: $7.2 million or $0.23 per diluted share, up from $0.8 million or $0.03 per diluted share in Q2 2020.
• Recurring Revenues: Represented 91% of total revenues, down from 98% in the prior year.
• Cash and Cash Equivalents: Increased to $107.3 million from $59.5 million at the end of 2020.

2. Strategic Updates and Business Highlights

• Automotive Segment: On track for double-digit revenue growth in fiscal 2021, with new licensing agreements, including an expansion with Stanley for automotive products.
• Gaming Segment: Benefiting from the success of Sony's PlayStation 5, which has sold over 10 million units, with Immersion's technology integral to the DualSense controller.
• Mobile Segment: Focused on growth in China through a new partnership with TITAN Haptics, enhancing access to mobile OEMs.
• New Licensing Agreements: Peloton signed a technology license, indicating potential for haptics in fitness and other consumer devices.

3. Forward Guidance and Outlook

• Cautious Optimism: While Q2 performance exceeded expectations, management expressed caution regarding potential impacts from the Delta variant and supply chain issues on future revenue growth.
• Operating Expenses: Expected to remain flat, with guidance of $17 million to $19 million for non-GAAP operating expenses in the longer term.

4. Bad News, Challenges, or Points of Concern

• COVID-19 Impact: The resurgence of COVID-19 and supply chain disruptions could hinder revenue growth in upcoming quarters.
• Revenue Growth Uncertainty: Management indicated that Q3 may not see sequential revenue increases due to external pressures, despite typically being a strong quarter.

5. Notable Q&A Insights

• Operating Expenses: Management indicated that while they are currently below previous guidance for operating expenses, they do not expect significant increases in the near term due to ongoing COVID-related challenges.
• Automotive Revenue Growth: Upfront payments contributed to revenue growth; however, the automotive segment's growth trajectory is expected to be steady rather than rapid due to longer production timelines.
• M&A Activity: No current engagements in M&A, although the company remains open to opportunities.
• Future Applications of Haptics: Management sees potential for haptics in consumer devices beyond core markets, although specific details about new applications remain limited.

Overall, Immersion reported strong financial performance in Q2 2021, with significant revenue growth and a return to profitability, but faces challenges from external market conditions that may impact future growth.