Record Annual Revenues up 48% over Prior Year; Financial Results Reflect Impact of Change in Accounting Method and Release of Tax Valuation Allowance
SAN JOSE, Calif. — (BUSINESS WIRE) — February 20, 2014 — 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, 2013.
Results for the three months ended December 31, 2013
Total revenues for the fourth quarter of 2013 were $12.1 million, an increase of 36% compared to $8.9 million for the fourth quarter of 2012. Royalty and license revenues of $11.6 million for the fourth quarter of 2013 were up 52% from the same period last year.
Net income for the fourth quarter of 2013 was $37.4 million, or $1.26 per diluted common share, compared to a net loss of $(402,000), or $(0.01) per share, for the fourth quarter of 2012. Net income for the fourth quarter of 2013 included an income tax benefit of $36.8 million, or $1.24 per diluted common share, resulting primarily from the release of a tax valuation allowance relating to net deferred tax assets. In addition, these results reflect the impact of a change in accounting method we adopted in the fourth quarter of 2013, pursuant to which we now expense external legal fees incurred in applying for patents and maintaining our IP portfolio in the period incurred, rather than capitalizing them and then amortizing them over time.
Adjusted EBITDA for the fourth quarter of 2013 was $2.0 million, compared to $610,000 in the fourth quarter of 2012, in each case reflecting the change in accounting method.
Results for the twelve months ended December 31, 2013
Revenues for fiscal 2013 were $47.5 million, an increase of 48% as compared to $32.2 million for fiscal 2012. Royalty and license revenue for fiscal 2013 totaled $46.2 million, an increase of 59% over $29.0 million for fiscal 2012.
Net income for fiscal 2013 was $40.2 million, or $1.37 per diluted common share, as compared to a net loss of $(7.2) million, or $(0.26) per share, for fiscal 2012, in each case reflecting the change in accounting method. Net income for 2013 included an income tax benefit of $36.5 million, or $1.24 per diluted common share, resulting primarily from the release of a tax valuation allowance relating to net deferred tax assets.
Adjusted EBITDA for fiscal 2013 was $8.9 million, compared to a loss of $(2.9) million in fiscal 2012, in each case reflecting the change in accounting method.
As of December 31, 2013, Immersion’s cash, cash equivalents, and short-term investments were $71.1 million, compared to $43.5 million as of December 31, 2012.
Management Commentary
“2013 was a breakthrough year for Immersion as we delivered record revenues within the upper end of our guidance range. Excluding the impact of a change in accounting method adopted in the fourth quarter, Adjusted EBITDA for 2013 was also within our guidance range,” said Vic Viegas, chief executive officer of Immersion. “During the year, Immersion successfully executed our Basic Haptics licensing strategy and saw the continued success of products in the market using Immersion TouchSense software. We made strong progress in further validating the importance of haptics in our key mobile, gaming and automotive verticals as well as expanding the market for our technology in evolving categories such as wearables. In addition, we began to lay the foundation to capitalize on longer-term growth opportunities in the area of mobile content, which is a natural fit for our solutions.”
Business Outlook
"We are extremely confident in the prospects for our business in 2014 and beyond and believe that we have the right combination of talent, resources and targeted investments in place to continue a trajectory of strong profitable growth. Based on our current outlook, we expect revenues for 2014 to be in the range of $54 million to $62 million, reflecting growth of 14% to 31% over the prior year, which included a one-time benefit of more than $2.0 million related to a contract renewal transition, and we expect Non-GAAP Net Income for 2014 to be in the range of $8 million to $15 million, which results in Non-GAAP earnings per share of $0.27 to $0.50, assuming 30 million shares outstanding,” concluded Mr. Viegas.
Business Highlights
During the fourth quarter, Immersion made notable progress within key verticals and continued to lay the foundation to capitalize on strategic opportunities, including:
- Appointing Jason Patton to the new role of Vice President and General Manager of Content & Media. Patton will spearhead business development and operational execution for the company’s mobile ads and entertainment initiative.
- Establishing a regional headquarters in Shanghai to further expand its sales and technical teams to support mobile OEMs in the region.
- Forging new multi-year licensing agreements with industry leading automotive suppliers Tokai Rika and Continental to create haptic-enabled touch surfaces in automotive interfaces.
- Launching an automotive haptics portal offering technical and integration recommendations, user experience guidelines, and research that evaluates the impact of haptics in automotive environments.
