Immersion Corporation Q1 FY2021 earnings call

• Jared Smith noted progress in transforming the business to profitability, with 14% year-over-year revenue growth in core markets in Q1 2021 and operating expenses reduced by over 50%, resulting in non-GAAP net income of $2.8 million vs. a loss of $2.6 million in Q1 2020. • In automotive, continued market adoption of haptics technology, with growth outlook based on market recovery from COVID, growing adoption relevance in new vehicle designs, and positive customer feedback on hardware units. • In gaming, PlayStation 5 in high demand, expected double-digit revenue growth in fiscal 2021 driven by full year of PlayStation 5 DualSense controller shipments. • In mobile, growing revenue from China market via channel licensing program, expansion of agreement with a key partner, positive momentum in China mobile market, and involvement in IEEE working group developing haptic standards. • Advancements in industry standards, with MPEG approving a call for proposals for coding of haptic effects, and numerous patents issued for new inventions relevant to various sectors.

Total revenue for Q1 2021 was $7.2 million, up 14% from $6.3 million in the same quarter last year. Revenue from per unit royalty arrangements increased approximately $0.9 million or 18% compared with the prior year quarter. Recurring revenues represented 99% of revenues in Q1 2021. Breakdown by line of business as a percentage of total revenues: 68% from mobility, 19% from gaming, 13% from automotive.

• Expect continued improvement in profitability on both GAAP and non-GAAP bases in coming quarters. • On track to deliver double-digit percent year-over-year growth in revenue and profitability. • Mobile business on track to meet or exceed 2020 mobile revenue. • Automotive expected to have strong double-digit percent revenue growth in fiscal 2021.

• Forward-looking statements subject to risks, uncertainties, and assumptions, especially due to COVID-19 global pandemic. • Many risks and uncertainties beyond Immersion's control; detailed in press release, 10-K, and 10-Q filings.

Q: Jared, can you give a sense of the size of the China mobile opportunity and thoughts on haptics in gaming and Android in China?

A: China mobile opportunity has big potential with 600 million phones manufactured by China mobile OEMs; IEEE working group on haptic standards in China aims to drive consistent high-quality haptics, benefiting Immersion. On Android haptics, market pressure for better experiences helps up-level haptics and requires advanced hardware.

Q: Derek Soderberg asked about automotive mid-tier adoption, Apple CarPlay, and cash plans.

A: Expect mid-tier adoption of haptics technology this year; current automotive model focuses on Tier 1 licensees; cash balance is reviewed by Board and management for capital allocation to maximize shareholder value, but specific plans not disclosed before public announcements.