Immersion(US:IMMR)2024-08-19 21:19Revenue and Financial Performance - Immersion's total revenues for the three months ended June 30, 2024, were $99.4 million, compared to $6.98 million in the same period in 2023, representing a significant increase[170] - Immersion's royalty and license revenue for the three months ended June 30, 2024, was $52.4 million, up from $6.98 million in the same period in 2023, driven by a 3790% increase in fixed fee license revenue[173][175] - Barnes & Noble Education contributed $47.02 million in revenues for the three months ended June 30, 2024, following its acquisition by Immersion[170] - Immersion's operating income for the three months ended June 30, 2024, was $25.4 million, compared to $3.11 million in the same period in 2023[170] - Immersion's net income attributable to stockholders for the three months ended June 30, 2024, was $28.95 million, up from $7.03 million in the same period in 2023[170] - Fixed fee license revenue increased by $47.5 million in Q2 2024 compared to Q2 2023, primarily due to new mobility license agreements[175] - Per-unit royalty revenue decreased by $2.1 million (37%) in Q2 2024 compared to Q2 2023, driven by declines in mobility, gaming, and automotive royalties[175] - Net income for Q2 2024 was $20.9 million, a 198% increase compared to $7.0 million in Q2 2023[199] - Total revenue for the period from June 10, 2024, to June 30, 2024, was $47.0 million, consisting of $45.1 million in product and other sales and $1.9 million in rental income[194] - Operating loss for the period from June 10, 2024, to June 30, 2024, was $12.8 million, with total operating expenses of $19.0 million[194] Geographic Revenue Distribution - Geographically, 98% of Immersion's Q2 2024 revenue came from Asia, compared to 14% in Q2 2023[175] Patent Portfolio and Licensing - Immersion holds over 800 issued or pending patents worldwide as of June 30, 2024, covering a wide range of digital technologies[172] - Immersion Corporation entered into a Patent License Agreement with Xiaomi Group on June 12, 2024, resolving patent infringement litigation and licensing Immersion's patent portfolio[241] - Immersion Corporation filed a patent infringement complaint against Valve Corporation on May 15, 2023, alleging infringement of seven patents related to haptic effects in AR/VR systems[246] - Valve filed multiple inter partes reviews (IPRs) targeting U.S. patents, with decisions on institution granted between July and August 2024, and responses due by October 2024[247] - The Court granted Valve's motion to stay the district court case pending the PTAB's decisions on the IPRs, with the motion to dismiss struck but allowed to refile later[248] - The company entered into a Patent License Agreement with Xiaomi Group on June 12, 2024, resolving patent infringement litigation and granting Xiaomi a non-exclusive license to use the company's patent portfolio[241] - The company filed a patent infringement lawsuit against Valve Corporation on May 15, 2023, alleging infringement of seven patents related to haptic effects in AR/VR systems and video game systems[246] - Valve filed multiple inter partes reviews (IPRs) challenging the validity of the company's patents, with decisions on institution granted between July 24, 2024, and August 13, 2024[247] Expenses and Costs - Immersion's selling and administrative expenses increased by 266% to $14.18 million in Q2 2024 compared to Q2 2023[173] - Selling and administrative expenses increased by $10.3 million (266%) in Q2 2024 compared to Q2 2023, driven by a $5.7 million increase in legal costs and a $4.9 million increase in compensation and benefits[178] - Selling and administrative expenses increased by $33.7 million (539%) in the first half of 2024 compared to the same period in 2023, primarily due to a $26.5 million increase in legal costs and a $7.6 million increase in compensation and benefits[179] - Interest and other income (loss), net decreased by $2.2 million in Q2 2024 compared to Q2 2023, primarily due to a $2.7 million decrease in net gains from marketable equity securities and derivative instruments[200] - Provision for income taxes increased by 188% in Q2 2024 compared to Q2 2023, driven by higher taxable income[199] - Provision for income taxes for the three months ended June 30, 2024 was primarily driven by higher U.S. taxable income due to increased U.S. passive income[202] - Unrecognized tax benefits under ASC 740 Income Taxes totaled approximately $7.6 million as of June 30, 2024, with $4.9 million potentially payable in cash[203] - Barnes & Noble Education recorded an income tax provision of $0.1 million on a pre-tax loss of $76.3 million, resulting in an effective income tax rate of (0.1)%[204] Cash Flow and Investments - Cash, cash equivalents, and investments-current totaled $133.4 million as of June 30, 2024, a decrease of $27.0 million from December 31, 2023[207] - Net cash used in operating activities was $56.0 million for the six months ended June 30, 2024, a $64.8 million decrease compared to the same period in 2023[208] - Net cash used in investing activities was $31.4 million for the six months ended June 30, 2024, primarily due to $87.4 million in cash used for marketable securities and derivative settlements[209] - Net cash provided by financing activities was $81.8 million for the six months ended June 30, 2024, mainly from $101.5 million in proceeds from borrowing under Barnes & Noble Education's credit facility[211] Barnes & Noble Education Operations - Barnes & Noble Education operates 1,163 physical, virtual, and custom bookstores, serving over 5.8 million students[181] - Barnes & Noble Education's BNC First Day programs provide course materials at below-market rates, with First Day Complete driving substantially greater unit sales and sell-through[185][188] - Barnes & Noble Education expects to expand e-commerce capabilities and accelerate growth through its relationship with Fanatics and Lids, focusing on improving the student and customer experience[183] - Barnes & Noble Education's goodwill from acquisition was $14.2 million, with intangible assets including trade names and customer relationships valued at $95.0 million[219] - Revenue from digital textbooks is recognized when the customer accesses the digital content, with a software feature embedded to restrict access after the term expires[224] - Revenue from physical textbook rentals is deferred and recognized over the rental period, typically a single semester, with a buyout option available at the end of the rental period[225] - Revenue recognition for BNC First Day offerings is consistent with Barnes & Noble Education's policies, with cash collection timing shifting due to school adoption and drop/add dates, particularly impacting the third quarter[226] - Barnes & Noble Education estimates returns based on historical experience, with provisions for anticipated merchandise returns reducing sales and cost of goods sold in the period sales are recorded[227] - Logo general merchandise sales fulfillment transitioned to Lids and Fanatics in April 2021, with commission revenue recognized on a net basis[229] - Merchandise inventories are stated at the lower of cost or market, with cost determined primarily by the retail inventory method and textbook inventories valued using the LIFO method[230] - Reserves for non-returnable inventory are based on historical liquidation data, with calculations sensitive to assumptions like markdowns, sales below cost, and inventory aging[231] - Physical bookstore inventory shortage rates are estimated and accrued based on historical rates, with potential material impacts if estimates are incorrect[232] - Textbook rental inventories are amortized over the rental period, with amortization expense included in cost of goods sold and potential material impacts if residual value estimates are incorrect[233] - Barnes & Noble Education completed a business combination with Barnes & Noble Education on June 10, 2024, and is integrating internal controls over financial reporting[237] - Barnes & Noble Education's four largest retail suppliers accounted for approximately 28% of its merchandise purchased in fiscal 2024, with the largest supplier contributing 7%[252] - Barnes & Noble Education's wholesale business sources over 95% of its inventory from two primary channels: 55% from third-party suppliers and 40% from retail bookstores[252] - Barnes & Noble Education does not have long-term arrangements with most suppliers, which could lead to disruptions in merchandise availability due to supplier bankruptcies or liquidity constraints[253] - Political or financial instability, trade restrictions, and other factors related to foreign trade could disrupt Barnes & Noble Education's supply of foreign-sourced merchandise[254] - The company completed the acquisition of approximately 42.0% of Barnes & Noble Education's common stock on June 10, 2024, which may expose it to additional compliance costs and resource allocation challenges[251] - The company is currently assessing and integrating Barnes & Noble Education's internal controls over financial reporting, with no material changes reported during the quarter ended June 30, 2024[237] Stock Repurchase and Shareholder Information - The company repurchased 1,217,774 shares of its common stock for $8.3 million at an average price of $6.77 per share in 2023, with $41.7 million remaining available for repurchase as of June 30, 2024[257] - The Board approved an amendment to extend the expiration date of the December 2022 Stock Repurchase Program to December 29, 2024[256] - The company repurchased 1,217,774 shares of its common stock for $8.3 million in 2023 at an average price of $6.77 per share, with $41.7 million remaining under the stock repurchase program as of June 30, 2024[257] Legal and Tax Matters - The company provided a provisional deposit of KRW 5,916,845,454 (approximately $5.0 million) to LG Electronics (LGE) in 2020 related to withholding tax disputes for the period 2012-2014[242] - The Korea Administrative Court ruled in favor of the company on June 8, 2023, canceling withholding taxes and penalties imposed on LGE for the 2012-2017 period, but the Korean tax authorities appealed the decision[243] - The company provided a provisional deposit of KRW 3,024,877,044 (approximately $2.3 million) to LGE in 2023 related to withholding tax disputes for the period 2018-2022[244] - The company acquired approximately 42.0% of Barnes & Noble Education's common stock on June 10, 2024, incurring significant legal and accounting expenses as a public company[251] Corporate Governance and Compliance - Amended and Restated Bylaws of Immersion Corporation effective as of August 12, 2022[260] - Amended and Restated Certificate of Incorporation of Immersion Corporation[260] - Certificate of Designation of the Powers, Preferences and Rights of Series A Redeemable Convertible Preferred Stock[260] - Amended and Restated Certificate of Designations of Series B Participating Preferred Stock of Immersion Corporation[260] - Standby, Securities Purchase and Debt Conversion Agreement dated as of April 16, 2024[260] - Certification of Eric Singer, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002[260] - Certification of J. Michael Dodson, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002[260] - Certification of Eric Singer, Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002[260] - Certification of J. Michael Dodson, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002[260] - Inline XBRL Report Instance Document[260]