Q1 2020 Earnings Call
Earning conference call.
Dazed conference is being recorded.
At this time I would like to during the conference over to aren't eight Grumman. Please go ahead.
Good afternoon. Good. Thank you for joining yesterday on emergency first quarter 2022 conference call. This.
This call is also being broadcast live over the web and can be accessed from being Investor Relations section of our website at www Dot immersion dot com.
With me on today's call is Ramsey item is president and feel.
During this call we may make forward looking statements, which may include any expectation projection.
Characterizations of future that we're circumstances and include statements regarding the impact the code with 19 on our business and the business of our customers and suppliers.
Well as long you <unk> in general and also include projected financial results were operating metres isn't it strategies litigation or absence of litigation.
Anticipated future products future expense reduction anticipated tax expensive anticipated market demands were opportunities are operating model and other forward looking topic.
These statements attempts to risks uncertainties and assumption.
Especially in light of the ongoing adverse effects of the <unk> 19 global content.
Many beeps This'll center uncertainties are beyond the control of immersion or a more detailed discussion of these factors and other factors that could cause actual results to very materially interested parties should review. The this factors listed in the press release, we issue today after market close.
Immersions annual report.
Foreign 10, K. for 2019, and it's most recent quarterly reports on foreign 10, Q., which are on file with the U.S. Securities and Exchange Commission.
Forward looking statements mentioned on this call reflected immersions believed prediction as of today, except as required by law emerging disclaims any obligation to update forward looking statements.
The result of financial business or any other development occurring after the data disbelief.
Worked to update the reason actual results could different materials those two competing for you.
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Even if new information becomes available in the future.
Additionally, please note that dream is called we made its best non gap financial managers for each non gap financial measured and stuff.
<unk> well most directly comparable gap financial measure and the reconciliation of the differences between the noncat temperature and stuff and the most directly comparable gap financial measure is available in today's press release with that that altering the call load or two Mandy.
Thanks, and thanks to everyone for joining up on the call today or listening to be a workout.
Burst I'd like to say about a hard go out those who have been personally affected by cold in 19.
At this time, maintaining health and safety <unk> is paramount.
You have implemented a work from home policy apart until you worldwide and have to spend it all travel.
Well focused on enhancing productivity and work from home experiences by making certain lab and I.T. equipment acceptable for home use.
And to connectivity enhancements to bolster our internal communications during this difficult time.
I am keys to report the emergence first quarter revenue group, 22% all the same quarter last year.
My mom gap operating expenses were down 40%.
In addition, we continue to make strong cronkright. Some further optimizing emergence cost structure as part of our commitment to maximizing shareholder dog.
This includes the identification of approximately $3 million, an additional savings and physical twentytwenty in areas, including legal and litigation.
Travel into entertainment and consulting and professional services.
Well also continued to enhance shareholder value creation throughout stock we purchase program.
Thanks, initiating buybacks in December up until the close up markets yesterday, we have reporters posed for 4.3 million shares of comments Bach for an aggregate purchase.
Approximately $26 million.
We expect to continue to be acted with regard to share buyback activity under the right conditions.
And there's a balance sheet remained strong and we have <unk> when we have approximately $7.1 million remaining under our authorized approaches program.
We remain very confident and I'm wasn't strategy that r. and R. fortunate as a licensing company will have been able to maintain contiguity and conducting I'll bring it despite the current environment.
We continue to lay the foundation for growth in several of our market and P. concrete strategy is working.
First.
Evident in the school dissolved.
<unk> revenue positively reflect the addition of significance of mobile over again license agreement that materialize. After the first quarter of last year.
An auto we recently expanded our product partnership with alpine.
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Together and religion, and I'll I'll find are developing solutions to deliver a high quality high fidelity and quick to respond <unk> effect for improved these experiences in automotive human machine interface.
I could spend thing technology isn't advancements beyond standard <unk> software technology.
It provides real time control over actuated vibrations, enabling clean create an instant respond to users interaction.
Hey, cheeses are robust algorithms to react to actually it is current state, making command decisions every five minutes to produce high fidelity topic effect.
As the first likely be of emerging act dispensing technology I outlined can provide advance realistic touch feedback solutions automotive H.M.I. applications for a button.
Switching and texture.
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We currently have over 10, P., one automotive supply a lot.
515 liking to deal with like that screen that span button cluster and related control interfaces day range of old man's for premium vehicle.
The support grow we will likely additional to your one customers. They expand a number of suppliers would have to enable solution.
Well also are engaged with Oh yen to demonstrate the value of have six and influence their design decisions.
We'll look forward to keeping your updated on how our partnership and activities are converting entry additional design wins in the future.
In gaming would continue to be excited about the significant growth catalyst toward the end of this year.
Debated launch of Sony Playstation five gaming console.
Emergence dance the benefits from Sony Lightens up our hopping technology for gaming N.P.R. controllers.
We believe films, new controllers will Cadillac increase market demands boy advance interactive have pick experiences and this may lead to dictate additional opportunities for emerging in the future.
Lastly, as I mentioned alcohol during the first quarter, we were successful in forging a strategic commercial partnership with people robotics mocking emergents foray into licensing our technology for the multi billion dollar global policy like pocket.
This is just not first afterwards, monetizer English and the market opportunity I knew look forward to team effort unfold over the coming months or years.
As I said earlier on management team is working collaboratively what on the board to optimize our new business kind of cool profitability the maximize value for shareholders.
Until further notice when you're not going thing could survive driving your guidance and we're all withdrawing fire guidance as we continue to move forward would be <unk>.
Going forward with respect to be profitable on the nongaap basis for the fiscal year and intend to exit Twentytwenty with an annual Nongaap operating expense round break of approximately $21 million to $23 million.
I want to think our employees drop holding our commitment to our customers and continuing to support our business initiatives walk coping with the <unk>.
We remain confident and I'll strategy and our focus on executing across the opportunity to unlock immersion school profit and growth potential log deliberating longterm dot shareholder value.
With that I'm out turn to call over to Aaron for a review of our too long results before opening up the call to your question.
Thanks Ramsey.
Let me begin by referring you to this afternoon pressure for information regarding or two one twentytwenty financial performance.
Total revenue and fix point $3 million acute 120, Toby is up 22% and total revenue at five point $100 understanding core last year.
Rather than per unit loyalties means me.
Approximately $1.6 million or 48% right there with the priority a quarter, mainly driven by $2.5 million.
Recognized.
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Partially offset by declines in to the point reportedly royalty bearing shit.
Automotive and gaming licensing.
Revenue from fix latency arrangement.
Many 6% on a comparable basis.
Terribly due to a lump sum point $5 million. So I can see from one customer records noise in the first cold in the 2000 and those teams.
Recurring revenue is represented 96% of them <unk> versus 90%.
In the first quarter last year.
I revenue mix for each line of business typically fluctuates quarterly P.D. seasonality pattern and for the first quarter of 2020, a breakdown by line of business.
Total revenues, 77% for mobility, 12% from automotive and 11% from game.
Turning to operating expenses.
Gap operating expenses for the first quarter of 2020 or down 35% of $5.8 million.
Parable periods last year.
The reduction in expenses for the quarter reflected the impact of $4.2 million lower litigation costs.
$1.7 million lower passing maintenance and on that issue okay.
As well as $1.4 million and they were stuff based compensation expenses.
This is partially offset by point $5 million restructuring costs.
Later to the movement and administrative positions from San Jose to Montreal, and an incremental point $8 million other accelerated depreciation.
Hold improvements.
Understandable cuisine facility.
Other income decrease like point $8 million versus 212000 like.
Mainly due to unrealized foreign currency trends <unk> like $5 million, resulting from the impact of the week in Korean them on and Canadian dollar.
The U.S. dollars on certain balance sheet item.
And point $3 million investment Arnold income due to lower yields as lower cash and short term investing bounces in the first quarter of 2022 persons the second quarter of 2001.
Looking at our net result.
Net loss for the first quarter of Twentytwenty, what sport point $8 million for us to keep them for share.
54% improvement because I've got that lots of 11.
Or 35 cents per share in the same cold or 2019.
In addition to normal gap metrics, we use nine gap that lost and on gap net loss per share to track or business for for.
As a reminder, we define <unk> gap that loss adjusted to reflect cash taxistan duct tape confrontation appreciate depreciation and restructuring.
<unk> well from the first quarter it was 2.6.
Or eight cents per share a 70% improvement doesn't know I'm guessing that laws to be Pittsburgh, which are 28 cents per share in the same period last year.
Let's move onto the balance sheet.
On April 8th 2000, or something you agreed to provide are provisional deposited <unk>, Oh, Gee, what buttons to be $5 million.
Holding taxes, Oh, Gee, you have to be pretty intact.
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The deposit will be recorded on our balance sheet under other after a long term.
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As noted in our previous fun, we believe that there are valid defenses to the claims me by the cooling taxes.
Appealing to the cream of course.
Note that under our agreement with them too easy.
We'll be we endorse to use that we per day.
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We <unk>, we expect more likely than not be the case.
In the event that do what ultimately <unk> pretty open or Appeals court.
Deposit it'd be recorded 'cause additional income taxes games on their statements about solution.
Period, which we do not.
Yeah.
Overall balance sheet remains strong total cash and cash equivalent of $76.2 million as of March.
This is a $13 million reduction from $89.5 million.
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The key driver of the cash reduction $12 million used in her stock purchase program during the quarter.
Before we open up to call for question I'd like to know that the circumstances.
Certain things and then you know and it's a quirky glow and stuff that location.
So please bear with us.
A little extra utterance a process your question.
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We appreciate patients.
With that <unk>, operator whispered chewing.
Operator.
Thank you if you would like to ask a question on today's Con you think now now I think style one on your telephone keypad.
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One the question.
He will pause for one moment.
He wants to take now.
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Childline.
We can now take our first question direct.
Doherty and company you go ahead.
Hi, everyone. Thanks for taking my questions. So given the substantial cuts to operating expenses.
Are there any strategies are cool, but you guys laid out.
Last years, it'll stay that will be any harder to achieve.
And then I have a follow up.
I'm not at all actually the the expense.
Opic's cutting plan has been in place.
For quite some time and what has happened over the you know board changes they pretty much accelerated lot or the initiative.
Initiatives there are.
In in line with a strategy, but just not going to be.
I went on hunger and much.
Significant cost reduction effort for example, moving it to use to Montreal, whether 35% to 10% savings changing auditorium, which which we made happen sooner than planned.
And other very significant changes that I'm going to continue to pay off in the long term all the while making sure that the strategy and.
Communicated the shareholder day continued to be intact.
Got it and then you know clearly auto auto admirable will be in fact that by the pandemic are you seeing strengthened and and that.
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I'm sorry, you cut it you you connection was a bit back from two people see the question.
Yeah, So really auto unfold bowl for getting the impact that side of sat down next other side. You know are you seeing strengthens the income and then also as a pandemic accelerating your prospects any adult market.
So I'm again inside with a lot of excitement building on the new features but to launch a with the P.S.Y. platform. It offers Richard Gere anything leveraging <unk> controllers and all the signal all of that Sony Yeah, We're planning to launch plan and that there'll be optic there are we seeing the benefit of.
The shelter and place on software <unk> software already and will believe that there will continue to be a lot of stay at home activity that could benefit the hardware tied as well.
Phones gaming.
Well position.
And as far as the.
Adult Mark that are interaction.
Continues to be strong are 15 minutes daily communications with them and clearly the market.
Growing significantly so we are <unk> pretty much tracking plan and the gaming to me in adult World right now.
As far as the automotive is concerned.
We have.
Really much may met all on major milestones with stand up a lot of the tear ones that would like to sign up in the year.
We have been communicating with the Oh yen, such as all D.B. and W. Mercedes and the next step is to get the <unk> on board with increasing happy good option, both within haagen as well as the next year, they've hired and sales person in Europe Kobe engage in both for T. ones and you know U.M.C. increases adoption. So again, if you take a look.
Internally immersion, we're tracking the plan and we don't see any fundamental changes to demand on <unk>.
Great. Thanks.
Sure.
After a mind carry if you like like a question. These past star fines on your telephone keypad.
Dar one question.
That's the time airline try if you look like ask the question.
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Yeah, I know factor question on Faith conference like now like.
Content to call. Thank you for your participation you may now just kidding.
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