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IC

IMMERSION CORP (IMMR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY2025 (three months ended October 31, 2024) delivered a step-change from legacy IMMR as consolidated BNED drove total revenues to $616.2M, GAAP net income to $27.2M, and diluted EPS to $0.83 .
  • Expense structure scaled with BNED; GAAP opex rose to $86.3M, but operating income reached $64.4M; non-GAAP EPS was $1.22, reflecting add-backs to align with underlying performance .
  • Capital allocation highlighted by a special dividend of $0.245/share declared in November 2024; a tenth quarterly dividend of $0.045/share was later affirmed in March 2025 .
  • Post-quarter, an 8‑K disclosed an ongoing BNED investigation into potential AR overstatement (~$23M) and expected material weaknesses in ICFR; management does not expect impacts to total revenue or cash/debt, but this is an overhang until resolved .

What Went Well and What Went Wrong

What Went Well

  • Scale and profitability inflection: Consolidation of BNED drove total revenue to $616.2M and operating income to $64.4M in Q2, with GAAP EPS of $0.83 and non‑GAAP EPS of $1.22 .
  • Segment contributions: BNED Product & Other revenue of $559.7M and Rental Income of $42.4M complemented IMMR’s $14.1M royalty/licensing base, evidencing diversified revenue streams .
  • Capital returns: Special cash dividend of $0.245/share announced (payable January 24, 2025), underscoring cash‑flow confidence; later, the Board approved a tenth quarterly dividend of $0.045/share for April 25, 2025 .
  • Management tone: “Immersion executed well against its key business objectives… We will continue to pursue thoughtful capital allocation as we aim to build our business and create long term shareholder value,” — Eric Singer, Chairman & CEO .

What Went Wrong

  • Cost structure escalation: GAAP operating expenses rose to $86.3M (non‑GAAP opex $73.2M), reflecting BNED consolidation and higher SG&A/D&A; the heavier cost base will require margin discipline .
  • Post‑quarter control issues at BNED: Investigation into a potential AR overstatement (up to $23.0M) and expected material weaknesses in ICFR related to manual journal entry controls; uncertainty persists until investigation concludes .
  • Estimate transparency: No Wall Street consensus from S&P Global was available for Q2 FY2025 EPS or revenue, limiting near‑term “beat/miss” read‑throughs to the market; future accessibility may improve after reporting cadence stabilizes .

Financial Results

Quarterly Comparison (oldest → newest)

MetricQ1 FY2025 (three months ended Jul 31, 2024)Q2 FY2025 (three months ended Oct 31, 2024)Q3 FY2025 (three months ended Jan 31, 2025)
Revenue ($USD Millions)$399.9*$616.249 $474.762
Net Income attributable to IMMR ($USD Millions)$27.16*$27.157 $15.472
Diluted EPS ($)$0.825*$0.83 $0.47
Operating Income ($USD Millions)N/A*$64.407 $26.206
Cost of Sales ($USD Millions)N/A*$465.510 $368.943
Gross Margin (%)N/A*24.5% (calc from )22.3% (calc from )
Non‑GAAP Diluted EPS ($)N/A*$1.22 $0.63

Values retrieved from S&P Global* when marked with an asterisk.

YoY Comparable (company disclosed prior-year comparable quarter)

MetricQ2 FY2025 (Oct 31, 2024)Comparable Prior Year (Jun 30, 2023)YoY Change
Revenue ($USD Millions)$616.249 $6.983 +$609.266M
Net Income attributable to IMMR ($USD Millions)$27.157 $7.028 +$20.129M
Diluted EPS ($)$0.83 $0.21 +$0.62
Operating Income ($USD Millions)$64.407 $3.113 +$61.294M

Note: Fiscal calendar changed to align with BNED; comparable prior-year quarter presented by the company is the three months ended June 30, 2023 .

Segment Breakdown — Q2 FY2025

SegmentRevenue ($USD Millions)
IMMR Royalty & License$14.127
BNED Product & Other$559.674
BNED Rental Income$42.448
Total$616.249

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal Revenue/EPS/Margins GuidanceFY2025Not providedNot providedMaintained (no formal guidance)
Special DividendJan 24, 2025None$0.245 per share (record date Jan 10, 2025)Initiated
Quarterly DividendApr 25, 2025Ongoing quarterly program$0.045 per share (record date Apr 14, 2025)Maintained
Tax Rate/OpEx/OI&EFY2025Not providedNot providedMaintained (no formal guidance)

Earnings Call Themes & Trends

No Q2 FY2025 earnings call transcript was available in the filings/earnings materials dataset for the period searched.

TopicPrevious Mentions (Q1 FY2025, Q3 FY2025)Current Period (Q2 FY2025)Trend
Capital Allocation (Dividends/Buybacks)Q3 FY2025: Tenth quarterly dividend planned; buybacks referenced Special dividend declared post‑Q2 Strengthening shareholder returns
BNED Integration/ScaleQ1 FY2025: Consolidation began (company footnotes) BNED drove revenue scale; detailed segment mix provided Structural transformation vs legacy IMMR
Regulatory/Legal — BNED ControlsN/A in Q1; Q3 not discussing controlsPost‑Q2 8‑K: investigation and expected material weakness in ICFR Emerging risk; monitoring pending investigation outcome
Expense Structure/Operating LeverageQ3 FY2025: GAAP opex $79.6M; non‑GAAP opex $74.2M Q2 FY2025: GAAP opex $86.3M; non‑GAAP opex $73.2M Elevated opex; non‑GAAP leverages add‑backs
Fiscal Calendar AlignmentQ3 FY2025 PR reiterates alignment with BNED fiscal year Q2 FY2025 PR explains change and comparability caveats Now established reporting cadence

Management Commentary

  • “Immersion executed well against its key business objectives in the quarter… We will continue to pursue thoughtful capital allocation as we aim to build our business and create long term shareholder value.” — Eric Singer, Chairman & CEO .
  • “Underscoring our financial strength, we announced a special dividend of $0.245 per share…” — Eric Singer .
  • Q3 FY2025 tone similarly emphasized returns to shareholders and value creation: “We returned over $9 million to shareholders in the form of dividends and buybacks… laser focused on building our business and creating long‑term shareholder value.” — Eric Singer .

Q&A Highlights

No Q2 FY2025 earnings call transcript was available; therefore, Q&A highlights and guidance clarifications cannot be provided for this quarter based on primary sources.

Estimates Context

  • Wall Street consensus via S&P Global was not available for Q2 FY2025 EPS or revenue; as a result, formal “beat/miss” determinations versus consensus cannot be made from S&P Global data for this quarter .
  • Where estimates or prior-quarter fundamentals were referenced from S&P Global, they are marked with an asterisk and noted as SPGI data.

Values retrieved from S&P Global* when marked with an asterisk.

Key Takeaways for Investors

  • The consolidated BNED footprint materially alters IMMR’s revenue scale and earnings profile; investors should recalibrate models to reflect BNED segment dynamics rather than legacy licensing alone .
  • Expense intensity rose alongside BNED consolidation; margin durability hinges on SG&A discipline and normalization of D&A/reserve levels over time .
  • Capital return policy is a clear pillar (special + quarterly dividends) and can be a near‑term support for the equity; sustained free cash generation from BNED operations is key to its persistence .
  • The BNED investigation into AR and internal controls is a non‑trivial risk; watch for resolution, potential restatements, and control remediation disclosures before re‑rating .
  • With no S&P Global consensus available for Q2 FY2025, the market’s reaction may center on headline scale, capital allocation, and governance/control updates rather than pure “beat/miss” prints .
  • Fiscal year change and comparability caveats matter; use the company‑provided prior‑year comparable and segment disclosures when modeling sequential and YoY trends .
  • Near‑term trading: dividend news supports, but control‑risk headlines could cap upside until investigation clarity; medium‑term thesis depends on integrating BNED while preserving IMMR’s IP/licensing economics .