Immersion : Quarterly Report for Quarter Ending October 31, 2025 (Form 10-Q)

About this update from Immersion Corporation

M anagement's Discussion and Analysis of Financi al Condition and Results of Operations This Management's Discussion and Analysis of Financial Condition and Results of Operations includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The forward-looking statements involve risks and uncertainties. Forward-looking statements are frequently identified by words such as "anticipates," "believes," "expects," "intends," "may," "can," "will," "places," "estimates," and other similar expressions. However, these words are not the only way we identify forward-looking statements. Examples of forward-looking statements include among other things, any expectations, projections, or other characterizations of future events, or circumstances, and include statements regarding: our strategy and our ability to execute our business plan; our competition and the market in which we operate; our customers and suppliers; our revenue and trends related thereto, and the recognition and components thereof; our costs and expenses, including capital expenditures; our investment of surplus funds and sales of marketable securities seasonality and demand; our investment in research and technology development; changes to general and administrative expenses; our foreign operations and the reinvestment of our earnings related thereto; our investment in and protection of our intellectual property ("IP"); our employees; capital expenditures and the sufficiency of our capital resources; unrecognized tax benefit and tax liabilities; the impact of changes in interest rates and foreign exchange rates, as well as our plans with respect to foreign currency hedging in general; changes in laws and regulations, including with respect to taxes; our plans and estimates related to and the impact of current and future litigation and arbitration and our dividend, stock repurchase and equity distribution programs. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside our control. Actual results could differ materially from those projected in the forward-looking statements, and therefore, we caution you not to place undue reliance on these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the risk factors contained under Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended April 30, 2025, filed with the Securities and Exchange Commission (the "SEC") on March 12, 2026, as amended on March 13, 2026, Part I, Item 1A, "Risk Factors" in Barnes & Noble Education's Annual Report on Form 10-K for the fiscal year ended May 2, 2025 filed with the SEC on December 23, 2025, and in Part II, Item 1A, "Risk Factors" of this Quarterly Report on Form 10-Q. Any forward-looking statements made by us in this report speak only as of the date of this report, and we do not intend to update these forward-looking statements after the filing of this report, unless required to do so by applicable law or regulation. You are urged to review carefully and consider our various disclosures in this report and in our other reports publicly disclosed or filed with the SEC that attempt to advise you of the risks and factors that may affect our business. COMPANY OVERVIEW Description of Business Immersion Corporation ("Immersion") was incorporated in 1993 in California and reincorporated in Delaware in 1999. In this Management's Discussion and Analysis of Financial Condition and Results of Operations the terms "Company," "us," "we," or "our" refer to Immersion and its consolidated subsidiaries. Immersion generates license and royalty revenues from a wide range of IP that more fully engage users' sense of touch when operating digital devices. We focus on the following target application areas: mobile devices, wearables, mobile entertainment, console gaming, and automotive. On June 10, 2024, we acquired a controlling interest in Barnes & Noble Education, Inc., a Delaware corporation ("Barnes & Noble Education"). Please refer to Note 4. Business Combination for additional information. The financial results of Barnes & Noble Education have been included in our C ondensed Consolidated Financial Statements from the acquisition date of June 10, 2024. Following June 10, 2024, we operate our business in two operating segments: Immersion and Barnes & Noble Education. The financial information presented in this Quarterly Report on Form 10-Q includes the financial information of Barnes & Noble Education for the 26 weeks ended November 1, 2025 and for the period from June 10, 2024 to October 31, 2024. Restatement of Previously Issued Consolidated Financial Statements The following discussion reflects the restatement of the Company's previously-issued consolidated interim financial information, as disclosed in Note 20. Restatement of Quarterly Financial Information (Unaudited) in the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2025. Also, see Note 3. Restatement of Previously-Issued Financial Statements in Notes to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this Quarterly Report on Form 10-Q. There have been no additional restatements or revisions to previously issued financial statements since the filing of the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2025. RESULTS OF OPERATIONS Three Months Ended October 31, Six Months Ended October 31, (in thousands) 2025 2024 2025 2024 As Restated As Restated Revenues: Immersion Royalty and license $ 5,760 $ 14,127 $ 9,632 $ 62,552 Barnes & Noble Education Product and other 598,211 559,674 872,390 689,792 Rental income 46,203 42,448 60,184 47,394 644,414 602,122 932,574 737,186 Total revenues 650,174 616,249 942,206 799,738 Cost of sales (excludes depreciation and amortization expense) Barnes & Noble Education Product and other cost of sales 489,511 436,859 715,685 543,724 Rental cost of sales 25,591 22,619 33,011 25,664 515,102 459,478 748,696 569,388 Operating expenses: Immersion Selling and administrative expenses 2,949 4,165 6,644 17,576 Barnes & Noble Education Selling and administrative expenses 77,282 72,717 145,087 109,046 Depreciation and amortization expense 10,487 9,400 20,884 14,676 Restructuring and other charges 4,296 59 7,192 5,064 92,065 82,176 173,163 128,786 Total operating expenses 95,014 86,341 179,807 146,362 Operating Income (Loss) 40,058 70,430 13,703 83,988 Interest and other income (expense), net 4,543 3,540 12,284 14,236 Interest expense 2,969 4,547 5,798 6,914 Income (Loss) Before Income Taxes 41,632 69,423 20,189 91,310 Income tax benefit (expense) (14,750 ) (5,036 ) (7,023 ) (14,723 ) Net Income (Loss) $ 26,882 $ 64,387 $ 13,166 $ 76,587 Immersion Immersion generates license and royalty revenues from a wide range of IP that more fully engage users' sense of touch when operating digital devices. We focus on the following target application areas: mobile devices, wearables, mobile entertainment, console gaming and automotive. We have adopted a business model under which we offer licenses to our patented technology to our customers and offer our customers enabling software, related tools and technical assistance related to integrating our patented technology into our customers' products or enhance the functionality of our patented technology. Our licenses enable our customers to deploy haptic-enabled devices, content and other offerings, which they typically sell under their own brand names. We and our wholly-owned subsidiaries hold more than 400 issued or pending patents worldwide as of October 31, 2025. Our patents cover a wide range of digital technologies and ways in which touch-related technology can be incorporated into and between hardware products and components, systems software, application software, and digital content. The following is a summary of our results of operation for the three and six months ended October 31, 2025 and 2024 (in thousands, except for percentages): Three Months Ended October 31, Six Months Ended October 31, 2025 2024 $ Change % Change 2025 2024 $ Change % Change As Restated As Restated Revenues: Fixed fee license revenue $ 736 $ 10,676 $ (9,940 ) (93 )% $ 1,472 $ 56,003 $ (54,531 ) (97 )% Per-unit royalty revenue 5,024 3,451 1,573 46 % 8,160 6,549 1,611 25 % 5,760 14,127 (8,367 ) (59 )% 9,632 62,552 (52,920 ) (85 )% Selling and administrative expenses 2,949 4,165 (1,216 ) (29 )% 6,644 17,576 (10,932 ) (62 )% Operating income (loss) $ 2,811 $ 9,962 $ (7,151 ) (72 )% $ 2,988 $ 44,976 $ (41,988 ) (93 )% Revenues Immersion revenue is generated primarily from fixed fee license agreements and per-unit royalty agreements. Royalty and license revenue consists of per-unit royalties earned based on usage or net sales by licensees and fixed license fees for our IP and software. Fixed fee license revenue decreased by $9.9 million in the second quarter of the current year compared to the same period in the prior year, mainly due to an increase in gaming license revenue in the prior year resulting from a one time perpetual license agreement executed in that quarter. Fixed fee license revenue for the six months ended October 31, 2025, decreased by $54.5 million compared to the same period in the prior year, primarily due to three one time perpetual license agreements in gaming and mobility applications executed in the prior year period, with no comparable agreements in the current year period. Per-unit royalty revenue increased by $1.6 million in the second quarter of the current year compared to the same period in the prior year, primarily due to stronger seasonal orders from our largest per-unit royalty customer. For the six months ended October 31, 2025, per-unit royalty revenue increased by $1.6 million compared to the same period in the prior year, driven by improved business levels from multiple customers in mobility and other applications. For the three months ended October 31, 2025, revenues generated in Asia, North America, and Europe represented 77%, 21%, and 2% of total revenue, respectively, compared to 90%, 5%, and 5% for the prior year period. For the six months ended October 31, 2025, revenues generated in Asia, North America, and Europe represented 73%, 25%, and 2% of total revenue, respectively, compared to 96%, 3%, and 1% in the prior year period. Revenue can vary significantly from period to period due to the timing and geographic location of the contracting entity. Operating Expenses The following is a summary of operating expenses for the three and six months ended October 31, 2025 and 2024 (in thousands, except for percentages): Three Months Ended October 31, $ % Six Months Ended October 31, $ % 2025 2024 Change Change 2025 2024 Change Change As Restated As Restated Selling and administrative expense $ 2,949 $ 4,165 $ (1,216 ) (29 )% $ 6,644 $ 17,576 $ (10,932 ) (62 )% Selling and administrative expenses primarily consist of employee compensation and benefits (including stock-based compensation), legal and other professional fees, external patent related legal costs, office expenses, travel, and facilities costs. For the three months ended October 31, 2025, selling and administrative expenses decreased by $1.2 million compared to the same prior year period primarily due to lower variable compensation. For the six months ended October 31, 2025, selling and administrative expenses decreased by $10.9 million compared to the same prior year period due to a decrease of $5.9 million in legal costs associated with the settlement of patent litigation in the prior year, and a $4.2 million decrease in compensation, benefits, and other personnel-related costs. Barnes & Noble Education Description of Business Barnes & Noble Education is one of the largest contract operators of physical and virtual bookstores for college and university campuses and K-12 institutions across the United States. Barnes & Noble Education is also one of the largest textbook wholesalers, and inventory management hardware and software providers. Barnes & Noble Education operates 1,128 physical and virtual bookstores, delivering essential educational content and general merchandise within a dynamic omnichannel retail environment. The strengths of Barnes & Noble Education's business include the ability to compete by developing new products and solutions to meet market needs, the large operating footprint with direct access to students and faculty, the well-established, deep relationships with academic partners and stable long-term contracts and the well-recognized brands. Barnes & Noble Education provides product and service offerings designed to address the most pressing issues in higher education, including affordable access, enhanced convenience and improved affordability through innovative course material delivery models designed to drive improved student experiences and outcomes. Barnes & Noble Education offers the BNC First Day® affordable access course material programs, consisting of First Day Complete and First Day, which provide faculty-required course materials on or before the first day of class at below market rates, as compared to the total retail price for the same course materials if purchased separately (a la carte), and students are billed the below market rate directly by the institution as a course charge or included in tuition. These programs have allowed Barnes & Noble Education to reverse historical long-term trends in course materials revenue declines, which has been observed at those schools where such programs have been adopted, and improve predictability of the future results. Barnes & Noble Education is moving quickly to accelerate the BNC First Day® programs strategy. Institutions continued to adopt BNC First Day® programs during the first half of fiscal 2026, and Barnes & Noble Education continues to expand participation across the partner schools. Barnes & Noble Education expects to continue to introduce scalable and advanced solutions focused largely on the student and customer experience, expand the e-commerce capabilities and accelerate such capabilities through service providers, Fanatics Retail Group Fulfillment, LLC ("Fanatics") and Fanatics Lids College, Inc. D/B/A "Lids" ("Lids") (and together with Fanatics, referred to herein as the "F/L Relationship"), win new accounts, and expand revenue opportunities through strategic relationships. Barnes & Noble Education expects gross comparable store general merchandise sales to increase over the long term, as product assortments continue to emphasize and reflect changing consumer trends, and Barnes & Noble Education evolves the presentation concepts and merchandising of products in stores and online, which is expected to further enhance and accelerate through the F/L Relationship. Fanatics and Lids, acting on Barnes & Noble Education's behalf as its service providers, provide unparalleled product assortment, e-commerce capabilities and powerful digital marketing tools to drive increased value for customers and accelerate growth of the logo general merchandise business. The Barnes & Noble brand (licensed from Barnes & Noble Education's former parent) along with the subsidiary brands, BNC and MBS, are synonymous with innovation in bookselling and campus retailing, and are widely recognized and respected brands in the United States. Barnes & Noble Education's large college footprint, reputation, and credibility in the marketplace not only support the marketing efforts to universities, students, and faculty, but are also important to the relationship with leading publishers who rely on Barnes & Noble Education as one of their primary distribution channels. For additional information related to the business of Barnes & Noble Education, see Part I - Item 1. Business in the Annual Report on Form 10-K for the fiscal year ended May 3, 2025, filed with the SEC on December 23, 2025. Seasonality Barnes & Noble Education's business is highly seasonal, particularly with respect to textbook sales and rentals, with the major portion of sales and operating profit realized during the second and third fiscal quarters when college students generally purchase and rent textbooks for the upcoming semesters and lowest in the first and fourth fiscal quarters. Barnes & Noble Education's quarterly results also may fluctuate depending on the timing of the start of the various schools' semesters, as well as shifts in Barnes & Noble Education's fiscal calendar dates. These shifts in timing may affect the comparability of Barnes & Noble Education's results across periods. BNC First Day® Affordable Access Course Material Programs Given the growth of BNC First Day ® affordable access course material programs, the timing of cash collection from the school partners may shift to periods subsequent to when the revenue is recognized. When a school adopts Barnes & Noble Education's BNC First Day ® affordable access course material offerings, cash collection from the school generally occurs after the institution's drop/add dates, which is later in the working capital cycle, particularly in the third quarter given the timing of the Spring Term and Barnes & Noble Education's quarterly reporting period, as compared to direct-to-student point-of-sale transactions where cash is generally collected during the point-of-sale transaction or within a few days from the credit card processor. As a higher percentage of Barnes & Noble Education's sales shift to BNC First Day® affordable access course material offerings, Barnes & Noble Education is focused on efforts to better align the timing of its cash outflows to course material vendors and cash inflows from collections from schools. As the concentration of digital product sales increases, revenue will be recognized earlier during the academic term as digital textbook revenue is recognized upon delivery of the digital content compared to: (i) the rental of physical textbooks where revenue is recognized over the rental period; and (ii) a la carte courseware sales where revenue is recognized when the customer takes physical possession of Barnes & Noble Education's products, which occurs either at the point of sale for products purchased at physical locations or upon receipt of products by Barnes & Noble Education customers for products ordered through its websites and virtual bookstores. The following is a summary of Barnes & Noble Education's results of operations for the three months ended October 31, 2025 and 2024, the six months ended October 31, 2025, and for the period from June 10, 2024 to October 31, 2024 (in thousands): Three Months Ended October 31, $ % 2025 2024 Change Change As Restated Revenues Product and other $ 598,211 $ 559,674 $ 38,537 7 % Rental income 46,203 42,448 3,755 9 % Total revenue 644,414 602,122 42,292 7 % Cost of sales (excluding depreciation and amortization expense) Product and other cost of sales 489,511 436,859 52,652 12 % Rental cost of sales 25,591 22,619 2,972 13 % Total cost of sales 515,102 459,478 55,624 12 % Operating expenses Selling and administrative expenses 77,282 72,717 4,565 6 % Depreciation and amortization expense 10,487 9,400 1,087 12 % Restructuring and other charges 4,296 59 4,237 NM Total operating expenses 92,065 82,176 9,889 12 % Operating Income (Loss) $ 37,247 $ 60,468 $ (23,221 ) -38 % Six Months Ended From June 10, 2024 to $ % October 31, 2025 October 31, 2024 Change Change As Restated Revenues Product and other $ 872,390 $ 689,792 $ 182,598 26 % Rental income 60,184 47,394 12,790 27 % Total revenue 932,574 737,186 195,388 27 % Cost of sales (excluding depreciation and amortization expense) Product and other cost of sales 715,685 543,724 171,961 32 % Rental cost of sales 33,011 25,664 7,347 29 % Total cost of sales 748,696 569,388 179,308 31 % Operating expenses Selling and administrative expenses 145,087 109,046 36,041 33 % Depreciation and amortization expense 20,884 14,676 6,208 42 % Restructuring and other charges 7,192 5,064 2,128 42 % Total operating expenses 173,163 128,786 44,377 34 % Operating Income (Loss) $ 10,715 $ 39,012 $ (28,297 ) -73 % Revenues Barnes & Noble Education primarily derives its revenues from sale of course materials, which include new, used, rental and digital textbooks. Additionally, at college and university bookstores which Barnes & Noble Education operates, it sells general merchandise, including emblematic apparel and gifts, trade books, computer products, school and dorm supplies, convenience and cafe items and graduation products. Barnes & Noble Education's rental income is primarily derived from the rental of physical textbooks. Barnes & Noble Education also derives revenue from other sources, such as sales of bookstore management, hardware and point-of-sale software, and other services. Total revenue was $644.4 million for the three months ended October 31, 2025, consisting of $598.2 million of product and other sales and $46.2 million of rental sales. Total revenue for the comparable prior year period was $602.1 million, including $559.7 million of product and other sales and $42.4 million of rental sales. The $42.3 million increase in revenue was driven primarily by growth in BNC First Day® programs and a net reduction in physical and virtual locations, some of which were closures of underperforming stores that contribute to improved profitability. Gross Comparable Store Sales increased by $20.3 million during the quarter, reflecting a $58.7 million increase in revenue from BNC First Day programs, which helped offset the decline from closed stores. Total revenue was $932.6 million for the six months ended October 31, 2025, consisting of $872.4 million of product and other sales and $60.2 million of rental sales. For the period from June 10, 2024 to October 31, 2024, total revenue was $737.2 million, including $689.8 million of product and other sales and $47.4 million of rental sales. The $195.4 million increase in revenue is primarily due to the prior year period being 40 days shorter, which reduced revenue by approximately $118.0 million on a linear basis. The remaining increase reflects higher comparable store sales and new store sales, largely driven by a $91.7 million increase from BNC First Day programs, partially offset by lower sales from closed stores. Cost of sales Barnes & Noble Education cost of sales primarily includes costs such as merchandise costs, textbook rental amortization, warehouse costs related to inventory management and order fulfillment, insurance, certain payroll costs, and management service agreement costs, including rent expense, related to its college and university contracts and other facility related expenses. Cost of sales was 80% of total revenue for the three months ended October 31, 2025, compared to 77% for the three months ended October 31, 2024. The increase was driven primarily by higher costs for course materials, including higher markdowns related to closed stores and increased inventory reserves, partially offset by lower contract costs as a percentage of sales due to the shift to digital and First Day models and the non-renewal of lower performing school contracts. Cost of sales was also 80% of total revenue for the six months ended October 31, 2025, compared to 77% for the period from June 10, 2024 to October 31, 2024. Product and other cost of sales increased mainly due to higher costs for course materials resulting from higher markdowns, partially offset by lower contract costs as a percentage of sales due to the shift to digital and First Day models and the non renewal of lower performing school contracts. Rental cost of sales increased due to lower rental margin rates, partially offset by lower contract costs as a percentage of sales. Selling and administrative expenses Barnes & Noble Education selling and administrative expenses primarily consist of employee payroll and store operating expenses. These expenses also include long-term incentive compensation and general office costs such as merchandising, procurement, field support, and finance and accounting. Selling and administrative expenses were $77.3 million for the three months ended October 31, 2025, an increase of $4.6 million compared to the three months ended October 31, 2024, driven mainly by higher payroll, incentive plan costs, and related operating expenses. For the six months ended October 31, 2025, selling and administrative expenses were $145.1 million, an increase of $36.0 million compared to $109.0 million for the period from June 10, 2024 to October 31, 2024. The most significant factor contributing to the year-over-year increase is that the period from June 10, 2024 to October 31, 2024 was 40 days shorter, resulting in approximately $30.0 million lower expenses on a linear basis. The remaining increase is primarily attributable to higher payroll, incentive plan costs, and related operating expenses. Depreciation and amortization expense Barnes & Noble Education depreciation and amortization expense consists primarily of depreciation of property and equipment and amortization of intangible assets. Depreciation and amortization expense was $10.5 million for the three months ended October 31, 2025, an increase of $1.1 million compared to the three months ended October 31, 2024, driven mainly by capital additions and accelerated intangible amortization related to closed stores. Depreciation and amortization expense was $20.9 million for the six months ended October 31, 2025, an increase of $6.2 million compared to $14.7 million for the period from June 10, 2024 to October 31, 2024. The primary factor contributing to the increase is that the period from June 10, 2024 to October 31, 2024 was 40 days shorter, resulting in approximately $5.9 million of lower depreciation and amortization expense calculated on a linear basis. Restructuring and other charges During the three months ended October 31, 2025, Barnes & Noble Education recognized restructuring and other charges of $4.3 million, primarily related to investigation costs. During the three months ended October 31, 2024, restructuring and other charges were not material. Restructuring and other charges totaled $7.2 million for the six months ended October 31, 2025, consisting primarily of $5.6 million of investigation related costs and impairment charges. For the period from June 10, 2024 to October 31, 2024, restructuring and other charges were $5.1 million, primarily consisting of $2.0 million of severance related to the resignation of the former Chief Executive Officer on June 11, 2024, $1.1 million of severance and other employee termination and benefit costs associated with cost reduction initiatives, and $0.5 million of legal and advisory fees related to restructuring, process improvements, and other charges. Barnes & Noble Education recognized an increase to additional paid-in capital for the reimbursement of its former Chief Executive Officer's severance by VitalSource, a principal stockholder, as part of the June 10, 2024 financing transactions. Interest and other income (expense), net; Interest expense; and Income tax benefit (expense) A summary of consolidated interest and other income (expense), net, interest expense, and income taxes for the three and six months ended October 31, 2025 and 2024 are as follows (in thousands, except for percentages): Three Months Ended October 31, Six Months Ended October 31, 2025 2024 $ Change % Change 2025 2024 $ Change % Change As Restated As Restated Operating Income (Loss) $ 40,058 $ 70,430 $ (30,372 ) (43)% $ 13,703 $ 83,988 $ (70,285 ) (84)% Interest and other income (expense), net 4,543 3,540 1,003 28% 12,284 14,236 (1,952 ) (14)% Interest expense 2,969 4,547 (1,578 ) (35)% 5,798 6,914 (1,116 ) (16)% Income (Loss) Before Income Taxes 41,632 69,423 (27,791 ) (40)% 20,189 91,310 (71,121 ) (78)% Income tax benefit (expense) (14,750 ) (5,036 ) (9,714 ) 193% (7,023 ) (14,723 ) 7,700 (52)% Net Income (Loss) $ 26,882 $ 64,387 $ (37,505 ) (58)% $ 13,166 $ 76,587 $ (63,421 ) (83)% Interest and other income (expense), net consists primarily of interest and dividend income on cash and cash equivalents and marketable debt and equity securities, realized and unrealized gains and losses on marketable equity securities and derivative instruments, and realized gains and losses on marketable debt securities. Interest and other income (expense), net increased by $1.0 million for the three months ended October 31, 2025, compared to the same period in the prior year, driven primarily by net gains of $1.9 million from marketable equity securities and derivative instruments, partially offset by a $0.9 million decrease in interest income. For the six months ended October 31, 2025, interest and other income (expense), net decreased by $2.0 million compared to the same period in the prior year, primarily reflecting a $1.8 million decline in interest income due to lower invested balances in fixed-income securities and lower interest rates. Interest expense primarily reflects interest charges on Barnes & Noble Education's credit facility. Interest expense decreased by $1.6 million for the three months ended October 31, 2025, compared to the prior year period, primarily due to lower borrowings and lower interest rates. For the six months ended October 31, 2025, interest expense decreased by $1.1 million compared to the period from June 10, 2024 to October 31, 2024, also due to lower borrowings and lower interest rates. Income tax benefit (expense), the changes in the provision for income taxes are described below: Immersion Income tax benefit (expense) for the three months ended October 31, 2025, resulted primarily from estimated domestic and foreign taxes included in the calculation of the effective tax rate. We maintain no valuation allowance against our U.S. federal deferred tax assets and maintain valuation allowance against certain U.S. state and Canadian federal deferred tax assets. The estimated effective tax rate was mainly driven by higher U.S. taxable income which was a result of higher U.S. passive income. The year-over-year change in Income tax benefit (expense) resulted primarily from the change in income from continuing operations across various tax jurisdictions. In the event that we determine the deferred tax assets are realizable based on an assessment of relevant factors, an adjustment to the valuation allowance may increase income in the period such determination is made. The valuation allowance does not impact our ability to utilize the underlying net operating loss carryforwards. We also maintain liabilities for uncertain tax positions. As of October 31, 2025, we had unrecognized tax benefits under ASC 740 Income Taxes of approximately $13.3 million, of which $11.7 million could be payable in cash. In addition, interest and penalty of $1.3 million could also be payable in cash in relation to unrecognized tax benefits. The total amount of unrecognized tax benefits that would affect our effective tax rate, if recognized, is $13.0 million. We account for interest and penalties related to uncertain tax positions as a component of income tax provision. We do not expect to have any significant changes to unrecognized tax benefits during the next twelve months. Barnes & Noble Education Barnes & Noble Education recorded an income tax expense of $1.8 million on pre-tax income of $4.9 million during the six months ended October 31, 2025, which represented an effective income tax rate of 36.2%. In assessing the realizability of the deferred tax assets, management considered whether it is more likely than not that some or all of the deferred tax assets would be realized. As of October 31, 2025, Barnes & Noble Education determined that it was more likely than not that it would not realize all deferred tax assets and its tax rate for the current fiscal year reflects this determination. Barnes & Noble Education will continue to evaluate this position. LIQUIDITY AND CAPITAL RESOURCES Our cash equivalents, investments - current, and investments - noncurrent consist primarily of money-market funds, investments in marketable equity and debt securities, and investments in U.S. treasury securities. All marketable securities are stated at fair value. Realized gains and losses on marketable equity securities and marketable debt securities are recorded in Interest and o ther income (expense), net on the Condensed Consolidated Statements of Operations. Unrealized gains and losses on marketable equity securities are reported as Interest and o ther income (expense), net on our Condensed Consolidated Statement of Operations. Unrealized gains and losses on marketable debt securities reported as a component of Accumulated other comprehensive income (loss) on our Condensed Consolidated Balance Sheets . Cash, cash equivalents, and investments - current - As of October 31, 2025, our cash, cash equivalents, and investments - current totaled $186.7 million, a $25.3 million increase from $161.4 million on April 30, 2025. In addition, as of October 31, 2025 and April 30, 2025, we had restricted cash of $24.7 million and $19.7 million, respectively. The following is select cash flow information for the six months ended October 31, 2025 and 2024 (in thousands): Six Months Ended October 31, 2025 2024 As Restated Net cash provided by (used in) operating activities $ 8,982 $ (63,975 ) Net cash provided by (used in) investing activities 36,101 (4,319 ) Net cash provided by (used in) financing activities 14,270 80,636 Cash provided by (used in) operating activities - Our operating activities primarily consist of net income adjusted for certain non-cash items including depreciation and amortization, stock-based compensation expense, loss on disposal of property and equipment, deferred income taxes, net (gains) losses on investments in marketable securities, and the effect of changes in operating assets and liabilities. Net cash provided by operating activities was $9.0 million for the six months ended October 31, 2025, an increase of $73.0 million compared to the six months ended October 31, 2024. The increase was primarily driven by Barnes & Noble Education's timing of payments to vendors for inventory purchases, partially offset by higher accounts and other receivables, higher merchandise inventories, and lower net income. Cash provided by (used in) investing activities - Investing activities primarily include purchases and sales of marketable securities and other investments, proceeds from and settlements of derivative instruments, and purchases of property and equipment. Net cash provided by investing activities was $36.1 million for the six months ended October 31, 2025, an increase of $40.4 million compared to the six months ended October 31, 2024. The increase was primarily driven by the absence of business acquisitions in the current period and lower purchases of marketable and other investments, partially offset by lower proceeds from sales or maturities of marketable securities and other investments. Cash provided by (used in) financing activities - Financing activities primarily include dividend payments, borrowings and repayments under our credit facility, and repurchases of our common stock. Net cash provided by financing activities was $14.3 million for the six months ended October 31, 2025, a decrease of $66.4 million compared to the six months ended October 31, 2024. The decrease was primarily driven by less proceeds from borrowings under Barnes & Noble Education's credit facility. Total cash, cash equivalents, and short-term investments were $186.7 million as of October 31, 2025, of which approximately 9%, or $16.7 million, was held by foreign subsidiaries and may be subject to repatriation tax effects. Immersion Dividends Declared and Dividend Payments Announcement Date Dividend Type Amount per Share Record Date Payment Date May 8, 2024 Quarterly $ 0.045 July 8, 2024 July 26, 2024 August 20, 2024 Quarterly 0.045 October 4, 2024 October 18, 2024 November 8, 2024 Special 0.245 January 10, 2025 January 24, 2025 March 10, 2025 Quarterly 0.045 April 14, 2025 April 25, 2025 July 8, 2025 Quarterly 0.045 July 23, 2025 August 8,2025 October 8, 2025 Quarterly 0.045 October 20, 2025 October 31, 2025 December 8, 2025 Quarterly (increased) 0.075 January 19, 2026 January 30, 2026 March 27, 2026 Quarterly 0.075 April 30, 2026 May 1, 2026 We may continue to invest in, protect, and defend our extensive IP portfolio, which can result in the use of cash in the event of litigation. On December 29, 2022, the Board approved a stock repurchase program of up to $50.0 million of our common stock for a period of up to twelve months (the "December 2022 Stock Repurchase Program"), which terminated and superseded the stock repurchase program that had been approved by the Board on February 23, 2022. Any stock repurchases may be made through open market and privately negotiated transactions, at such times and in such amounts as management deems appropriate, including pursuant to one or more Rule 10b5-1 trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. Additionally, the Board authorized the use of any derivative or similar instrument to effect stock repurchase transactions, including without limitation, accelerated share repurchase contracts, equity forward transactions, equity option transactions, equity swap transactions, cap transactions, collar transactions, naked put options, floor transactions or other similar transactions or any combination of the foregoing transactions. The December 2022 Stock Repurchase Program does not obligate us to repurchase any dollar amount or number of shares, and the program may be suspended or discontinued at any time. The December 2022 Stock Repurchase Program has been amended various times and the most recent amendment extended the expiration date to December 29, 2026. During the three and six months ended October 31, 2025, the Company did not purchase shares under the stock repurchase program. As of October 31, 2025, the Company had $40.6 million available for repurchase under the December 2022 Stock Repurchase Program. As of the date of this Quarterly Report on Form 10-Q, we believe we have sufficient capital resources to meet our working capital needs for the next twelve months and beyond. CRITICAL ACCOUNTING ESTIMATES Our policies regarding the use of estimates and other critical accounting policies are consistent with the disclosures in Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates in our Annual Report on Form 10-K for the fiscal year ended April 30, 2025. Recent Accounting Pronouncements See Note 2. Basis of Presentation and Summary of Significant Accounting Policies of the Notes to the Condensed Consolidated Financial Statements for information regarding the effect of new accounting pronouncements on our financial statements.

View stock analysis, news, and events for Immersion Corporation