Immersion Corporation Reports Fourth Quarter and Fiscal 2014 Results

Record December Quarter Revenue of $13.6 million and Eighth Consecutive Quarter of Profitability;
Record Fiscal 2014 Revenue of $52.9 million

SAN JOSE, Calif. — (BUSINESS WIRE) — February 26, 2015 — Immersion Corporation (NASDAQ: IMMR), the leading developer and licensor of touch feedback technology, today reported financial results for the fourth quarter and year ended December 31, 2014.

Results for the three months ended December 31, 2014

Total revenues for the fourth quarter of 2014 were $13.6 million, an increase of 13% compared to $12.1 million for the fourth quarter of 2013. Royalty and license revenues of $13.3 million for the fourth quarter of 2014 were up 15% from the same period last year.

Net income for the fourth quarter of 2014 was $1.0 million, or $0.04 per diluted share. This compares to net income of $37.4 million, or $1.26 per diluted share, for the fourth quarter of 2013. Net income for the fourth quarter of 2013 included an income tax benefit of $36.8 million, or $1.24 per diluted share, resulting primarily from the release of a tax valuation allowance relating to net deferred tax assets.

Non-GAAP net income for the fourth quarter of 2014 was $2.3 million, or $0.08 per diluted share, compared with non-GAAP net income of $38.6 million, or $1.30 per diluted share, for the fourth quarter of 2013. Non-GAAP net income for the fourth quarter of 2013 included an income tax benefit of $36.8 million, or $1.24 per diluted share, resulting primarily from the release of a tax valuation allowance relating to net deferred tax assets. (See attached table for a reconciliation of GAAP to non-GAAP financial measures.)

Results for the twelve months ended December 31, 2014

Revenues for fiscal 2014 were $52.9 million, an increase of 12% as compared to $47.5 million for fiscal 2013. Royalty and license revenue for fiscal 2014 totaled $51.8 million, an increase of 12% over $46.2 million for fiscal 2013.

Net income for fiscal 2014 was $4.1 million, or $0.14 per diluted share, as compared to $40.2 million, or $1.37 per diluted share, for fiscal 2013. Net income for 2013 included an income tax benefit of $36.5 million, or $1.24 per diluted share, resulting primarily from the release of a tax valuation allowance relating to net deferred tax assets.

Non-GAAP net income for fiscal 2014 was $9.4 million, or $0.32 per diluted share, as compared to $44.8 million, or $1.53 per diluted share. Non-GAAP net income for 2013 included an income tax benefit of $36.5 million, or $1.24 per diluted share, resulting primarily from the release of a tax valuation allowance relating to net deferred tax assets. (See attached table for a reconciliation of GAAP to non-GAAP financial measures.)

As of December 31, 2014, Immersion’s cash, cash equivalents, and short-term investments were $57.3 million, compared to $71.1 million as of December 31, 2013. As of February 24, 2015, Immersion’s cash, cash equivalents, and short-term investments were $79.8 million. During fiscal 2014, the Company used $15 million to buy back approximately 1.5 million shares of its common stock under its stock repurchase program.

Management Commentary

“Fiscal 2014 was another period of strong progress for Immersion as we continued on a trajectory of profitable growth, culminating in record annual revenues,” said Vic Viegas, chief executive officer of Immersion. “Over the course of the year, we saw momentum growing for haptics in our markets, expanded our footprint with device manufacturers and began to prove the value of our solutions for mobile content providers and advertisers. In addition, we further strengthened our management team, expanded our software solutions and continued to build on our rich history of IP innovation.”

Business Outlook

"Immersion is on a path to achieve another year of strong, profitable growth in 2015 as we continue to capitalize on the growing opportunities in front of us. Based on our current outlook, we expect revenues for 2015 to be in the range of $56 million to $60 million, reflecting growth of 6% to 13% over the prior year. Assuming an effective tax rate of 35%, we expect Non-GAAP net income for 2015 to be in the range of $4 million to $8 million, which results in Non-GAAP earnings per share of $0.13 to $0.27, assuming 30 million diluted shares outstanding,” concluded Mr. Viegas.

Business Highlights

Recent developments reflect the continued expansion of Immersion’s global mobile OEM customer base in key growth regions and the strengthening of the company’s senior leadership team and Board, including:

  • New license agreements with OEMs in China for use of Immersion’s TouchSense® TS3000 software with MEIZU and Gionee.
  • New license agreement with LeTV, a leading Chinese entertainment company, to bring tactile video to its customers using Immersion’s TouchSense Engage solution.
  • The addition of Mahesh Sundaram as Vice President of Worldwide OEM Sales. An experienced and accomplished executive in the mobile and consumer entertainment markets, Mahesh is leading Immersion's worldwide OEM sales organization to support the growing opportunities for Immersion technology.
  • The election of John Veschi to the Board of Directors. With deep experience in IP and technology management in the mobile market, John will contribute to Immersion’s efforts to expand and monetize its comprehensive IP portfolio.

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