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Immersion Corp. Reports Operating Results (10-Q)

August 07, 2012 | About:
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10qk

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Immersion Corp. (IMMR) filed Quarterly Report for the period ended 2012-06-30.

Immersion Corporation has a market cap of $160 million; its shares were traded at around $5.54 with and P/S ratio of 5.2.

Highlight of Business Operations:

We increased our royalty and license revenue by 1%, but our overall revenue decreased by 3% for the second quarter ended June 30, 2012 compared to the second quarter ended June 30, 2011. The increase in royalty and license revenue during such period was mainly due to increased revenue primarily from our mobility, medical, and automotive licensees, partially offset by decreased revenue from our gaming licensees. This increase in royalty and license revenue was offset by a 37% decrease in product sales mainly due to decreased sales of our Virtual IV simulation product. We increased our royalty and license revenue by 5%, but our overall revenue decreased by 2% for the six months ended June 30, 2012 compared to the six months ended June 30, 2011. The increase in royalty and license revenue during such period was mainly due to increased revenue primarily from our gaming and medical licensees. This increase was offset by a 60% decrease in product sales, mainly due to decreased sales of our Virtual IV simulation product.

We categorize our geographic revenue information into four major regions: North America, Europe, Far East, and Rest of the World. In the second quarter ended June 30, 2012, revenue generated in North America, Europe, Far East, and Rest of the World represented 38%, 11%, 51%, and 0% of total revenue, respectively, compared to 44%, 12%, 44%, and 0% of total revenue, respectively, for the second quarter ended June 30, 2011. The shift in revenues among regions was mainly due to a decrease in royalty and license revenue and product sales in North America and a decrease in contract revenue in Europe, offset primarily by an increase in royalty and license revenue in the Far East. The decrease in North American royalty and license revenue was primarily from decreased royalties from gaming licensees partially offset by an increase in medical royalty revenue. The decrease in North American product sales was primarily due to a reduction in sales of our Virtual IV medical simulator products. The decrease in European contract revenue was primarily due to reduced contracted services and the timing of revenue recognition. The increase in royalty and license revenue from the Far East was mainly due to increased royalties from mobility and automotive licensees.

In the six months ended June 30, 2012, revenue generated in North America, Europe, Far East, and Rest of the World represented 44%, 12%, 44%, and 0% of total revenue, respectively, compared to 43%, 16%, 41%, and 0% of total revenue, respectively, for the six months ended June 30, 2011. The shift in revenues among regions was mainly due to a decrease in product sales in North America and a decrease in royalty and license revenue in Europe offset by an increase in royalty and license revenue in North America and the Far East. The decrease in product sales was primarily due to a reduction in sales of our Virtual IV medical simulator products. The decrease in European royalty and license revenue was primarily due to decreased mobile device revenue arising from the timing of revenue recognition. The increase in North American royalty and license revenue was primarily from increased royalties from gaming and medical licensees. The increase in royalty and license revenue from the Far East was mainly due to increased royalties from mobility and automotive licensees.

The decrease in sales and marketing expense for the six months ended June 30, 2012 as compared to the six months ended June 30, 2011 was primarily due to decreased compensation, benefits, and other related costs of $373,000 mainly due to decreased sales and marketing headcount and benefits, partially offset by increased travel costs of $25,000 and increased marketing, advertising, and public relations costs of $15,000 due to current marketing initiatives.

Net cash used in operating activities during the six months ended June 30, 2012 was $1.0 million, a decrease of $4.1 million from the $3.1 million provided by operating activities during the six months ended June 30, 2011. Cash used in operating activities during 2012 was primarily the result of our net loss of $2.4 million, a decrease of $1.3 million due to a change in accounts and other receivables mainly due to the timing of customer billings, a decrease of $532,000 due to a change in accrued compensation and other current liabilities, a decrease of $502,000 due to a change in deferred revenue and customer advances primarily due to recognition of deferred revenue, and a decrease of $264,000 due to a change in prepaid expenses and other current assets. These decreases were partially offset by an increase of $1.1 million due to a change in accounts payable mainly from increased litigation activity, and an increase of $359,000 primarily due to a change in other long-term liabilities due to an increase in deferred rent. Cash used in operating activities during 2012 was also affected by noncash charges of $2.5 million, including $1.5 million of noncash stock-based compensation, $734,000 in amortization, impairment, and abandonment of intangibles, $327,000 in depreciation and amortization and partially offset by a credit of $153,000 from a gain on sale of discontinued operations.

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