Good day, everyone, and welcome to the Immersion's Second Quarter 2021 Earnings Call. At this time, I would like to turn the conference over to Aaron Ackerman. Please go ahead.
Good afternoon, and thank you for joining us today on Immersion's Q2 2021 conference call. This call is also being broadcast live over the web and can be accessed from the Investor Relations section of our website at ir.immersion.com. With me on today's call is Jared Smith, our Interim CEO. During this call, we may make forward looking statements, Which may include any expectations, projections or other characterizations of future events or circumstances and include statements Regarding the impact of COVID-nineteen on our business and the business of our customers and suppliers as well as on the economy in general And also include projected financial results or operating metrics, business strategies, litigation or absence of litigation, Anticipated future products, future expense reductions, anticipated tax expenses, anticipated market demand or opportunities, Our operating model and other forward looking topics. These statements are subject to risks, uncertainties and assumptions, Especially in light of the ongoing adverse effects of the COVID-nineteen global pandemic.
Many of these risks And uncertainties are beyond the control of Immersion. For a more detailed discussion of these factors And other factors that could cause actual results to vary materially. Interested parties should review the risk factors listed in the press release we issued today after market Immersion's annual report on Form 10 ks for 2020 and its most recent quarterly report on Form 10 Thank you, which are on file with the U. S. Securities and Exchange Commission.
The forward looking statements mentioned on this call Immersion's beliefs and predictions as of today. Immersion does not intend to update these forward looking statements As a result of financial, business or any other developments occurring after the date of this release or to update the reasons actual results Except as required by law. Additionally, please note that during this call, we may discuss non GAAP financial measures. For each non GAAP financial measure discussed, a presentation of the most directly comparable GAAP financial And a reconciliation of the differences between the non GAAP financial measure discussed and the most directly comparable GAAP
Thanks, Aaron, and thanks, everyone, for joining us on the call today or listening via webcast. The results that we are reporting today Reflect the continued success of our customers and partners in developing and shipping high performance haptic products and solutions In our core markets of automotive, gaming and mobile, our revenue grew 94% compared to the Q2 of 2020 And our GAAP net income was $5,300,000 compared to a GAAP net loss of $700,000 in the same quarter of last year. We saw revenue growth in all of our core markets. In automotive, we remain on track for double digit percent revenue growth in fiscal In Q2, we expanded our license agreement with STANLEY, a leading provider of electronic components To cover automotive products, STANLEY now has access to our innovative haptic technology for touch based automotive products. The addition of STANLEY strengthens our position in the market as it builds on our existing Tier 1 licensee base, including Pharesha, Alps Alpine, Continental and many others.
We are engaged with several OEMs and Tier 1s who are evaluating our technology And haptics for new vehicles and interfaces. We continue to believe in the long term potential of haptics in automotive And our ability to address this market. In gaming, we're excited that Sony Interactive Entertainment recently announced that PlayStation 5 Surpassed 10,000,000 units sold, making it the fastest selling console in Sony's history. Immersion innovations are central to the PlayStation 5 experience. The DualSense controller has become the industry benchmark for performance And gamers are purchasing them to use on a range of platforms.
Sony also previously announced that many of the haptic innovations from the DualSense controller We also remain on track to achieve double digit percent revenue growth In gaming in fiscal 2021 compared to fiscal 2020. In mobile, We continue to focus on driving revenue growth from the China market through our channel licensing program. We recently announced a new channel partnership with Titan Haptics, The Canadian based developer of Advanced Haptic Motors to make our haptic IP available to mobile phone and wearable OEMs That incorporates its actuators. Titan Haptics actuators are based on a new technology it developed to deliver compelling high definition experiences. This partnership expands the footprint of component suppliers, offering a channel license option servicing China and other global markets.
Haptics is essential to today's smartphone experiences, including mobile gaming. We're pleased to share that ASUS, the company behind the powerful ROG Gaming Smartphones executed a multi year renewal license for its use of Immersion Touch Sense software And technology in its mobile products. Our mobile segment revenue remains on track to meet or exceed our 2020 segment revenue. We also see interest in haptics from companies in adjacent markets who are seeking to leverage tactile feedback to improve the user experience in their products. I'm pleased to share that Peloton, a leading interactive fitness platform provider executed a technology license with Immersion in Q2.
As part of the agreement, we are also providing engineering services to support development of new products. As part of our long term strategy to support continued adoption Of Advanced Haptics, in our target market segments, we are leading development of industry standards. Last quarter, we reported that MPEG approved a call for For coding of haptic effects, multiple companies have submitted candidate proposals, which are currently under evaluation. We look forward to keeping you updated on this initiative. These wins and developments demonstrate our continued progress driving I'll now turn the call over to Aaron for a review of our Q2 results.
Thanks, Jared. Let me begin by referring you to this afternoon's press release for information regarding our Q2 2021 financial performance. Total revenue of $11,000,000 for Q2 2021 was up 94% from total revenue $5,700,000 in the same quarter last year. Revenue from per unit royalty arrangements increased Approximately $4,800,000 or 111% compared with the prior year quarter, primarily due to increased volume from both Mobility and gaming licensees. Fixed d license revenue increased $500,000 in the 3 months ended June 30, 2021 compared to the same period in 2020, mainly due to fixed fee payments from new and existing automotive licensees.
Recurring revenues represented 91% of revenues in Q2 2021 versus 98% of revenues in the Q2 last year. Our revenue mix for each line of business typically fluctuates quarterly due to seasonality patterns. And for the Q2 of 2021, A breakdown by line of business as a percentage of total revenues was as follows: 61% from mobility, 21% from gaming and 18% from automotive. Gross profit was $11,000,000 compared to gross profit of 5.6 in the same quarter of 2020. Turning to operating expenses.
GAAP operating expenses of $5,200,000 For the Q2 of 2021 were down 23 percent or $1,500,000 from the comparable period last year. The reduction in expenses for the quarter reflected our disciplined focus on cost through our various cost reduction initiatives, which resulted in $5,000,000 lower litigation, patent related and general legal costs $400,000 lower professional service costs $400,000 lower facilities expenses as well as $200,000 lower other expenses in the quarter. Looking at our net results, GAAP net income for the Q2 of 2021 was $5,300,000 Or $0.17 per diluted share compared to GAAP net loss of $700,000 or $0.03 per diluted share in the same quarter of 2020. In addition to GAAP metrics, we use non GAAP net income and non GAAP net income per share to track our business performance. As a reminder, we define non GAAP net income as GAAP net income adjusted to reflect cash tax expense less stock based compensation, depreciation and restructuring expense.
On a non GAAP basis, we had net income of $7,200,000 or 0 point 2 $3 per diluted share in the quarter compared to non GAAP net income of $800,000 or $0.03 per diluted share in the same period last year. Moving on to the balance sheet. Overall, we had total cash and cash equivalents of $107,300,000 as of June 30, 2021. This represents a $47,800,000 increase from the $59,500,000 as of December 31, 2020. Overall, our Q2 revenue performance was better than originally anticipated.
And as a result of the uncertainty caused by the recent Delta variant And the potential impact that may have on our licensees businesses, we may not see continued increases in revenue on a quarterly basis off of this Q2's performance. We remain cautiously optimistic about our future performance, but at the same time also recognize that Q2 2 was an outstanding quarter and we may face tougher headwinds from the impact of the resurfacing of COVID and supply chain issues on our licensees. We remain confident in our ability to manage our cost structure and expect to remain profitable and to continue to generate positive free cash flow
Thanks, Darren. We are very pleased with the significant improvement in our financial results compared to Q2 2020. We generated 94% revenue growth While reducing our operating expenses by over 20% and strengthened our balance sheet considerably in the same period, We continue to achieve sustained profitability under our optimized operating structure. I'm excited that we remain on track to deliver double digit percent year over year growth in revenue and profitability. I look forward to keeping you updated on our progress.
Before we open up the call for questions, I'd like to note that given the circumstances, Aaron and I and the support team are all in separate locations. So please bear with us as we take a little extra time to process your questions and deliver answers in real time. We appreciate your patience. With that, I will turn the call over to the operator to start Q and A.
Operator?
Thank And first, we'll go to Anthony Stoss from Craig Hallum. Your line is open.
Hi, guys. Really nice quarter. Easy one for you first, Aaron. On the OpEx side of things, do you expect It's remained relatively flat going forward, up or down a little bit. And then I know you're not guiding for Q3, but Typically and seasonally, your September quarter would be up sequentially and I reasonably believe that that wouldn't be the case this time.
And then maybe for Jared, Related to, I guess, Titan and just your penetration into the Chinese handset marketplace, how much do you think Titan will help you within that China smartphone space? Thanks.
Okay. Thanks So the question, Tony. So first on the OpEx, our previous guidance was that we expected to be sustainably within $17,000,000 to $19,000,000 Non GAAP OpEx, we're running below that now. And while we previously said that could go up once we start Traveling more and doing more marketing activities. Certainly, we're not anticipating doing a lot of that next quarter, given the resurfacing of COVID and some of those other issues.
So I don't expect it to increase significantly, but longer term it could be In the range of 17% to 19%, as we've previously said. And with respect to the seasonality, while it's true that Q3 typically is a strong quarter for us, given the outstanding performance in Q2 And how that was above our expectations and the resurfacing of COVID and supply chain issues on our licensees. We may not continue to beat quarterly Q3 on a sequential basis compared to Q2.
Okay. Jared, that you haven't had this space.
Yes. Again, we're pleased With how things are going with our channel licensing, with Titan, it's, I'm not able to actually estimate the This is coming at it from the angle of actuators and a new technology. It may take some time for that technology to be adopted, But we see the potential to grow the overall China licensing program with their participation.
Okay. Then if I may, 2 quick follow ups. I think in the past you've commented about you think the auto segment will likely be your fastest growing, albeit it's Smaller than the other 2. I'm curious if that's still the case. And then, I don't think you've disclosed in the past what you mentioned on this call about Peloton being How are they using it?
Do you think there's other applications for kind of consumer devices?
So on the first question with automotive, we just based on the Adoption and what the OEMs are saying, we do consider that it will keep growing. There's a longer lag time or longer time To production in that market, so that's something that just grows steadily over time. So but we still anticipate that over time that will continue to grow. And then on your second question, In regards to I can't talk too much about specifically what we're doing with them. But as far as other markets, we do see the potential in other markets for haptics outside of our core markets, In other consumer devices, kind of outside of gaming and phones, there is some potential there.
So that's something that we keep an eye on And we do talk to some customers about, but there is some longer term potential for that definitely. Thanks, Jared. Appreciate it.
Next, we'll go to Derek Soderbergh from Collier Securities. Your line is open.
Hey, guys. Thanks for taking my questions. My congrats as well on the strong results. I want to start with automotive. I was wondering if you guys could provide any more detail about what's sort of going on in there on the upside.
And I think in the past you guys have received upfront payments in that segment. Is that the reason at all for any of the upside? And if you guys could sort of segment where That revenue growth is coming from by application. Now is it primarily touchscreen infotainment systems? How much of it is screens versus buttons and the steering wheel?
Anything there would be great.
So I'll respond to the first part of your question. Yes, go ahead. Yes, there were a couple of upfront payments in the automotive Which I alluded to earlier in my comments, part of those were 60 payments that we received from automotive licensees.
And then regarding the different applications, It's actually we're seeing button applications and screen applications, The different applications, whether the buttons are in the center console or on the dash, say, so that continues. And then Interest in screens as screens become more prevalent in cars, Not just at the high end range. I don't have a specific distribution that kind of changes over time, but I would say that The applications are still across those different modalities.
Got it. Got it. And then just looking at your cash balance and operating model, I think you guys are going to be generating cash from here. You guys talked about sustained profitability. I guess I was just curious if you could provide some reasons on why you guys are going out and raising money.
It seems like to me it could be for an acquisition. You guys I'm just curious if you're more active in that space in M and A. And then what sort of would be the area of interest for you guys in that case? Would it be for more patents or hardware Hi, Rolf. Any detail there would be helpful.
Thanks.
So we have no ongoing engagements with respect to M and A activities. And we do Look at things from time to time and keep our eyes open on what's out there. But there's nothing that we're Engaged with at the current time. And with respect to the ATM in general, I'll refer you to Our public filings, which has complete information.
Got it. And then where are you at with That new offering, how much have you sort of gone out and sold so far? And Do you guys what's sort of the timeline on you guys using that? Any updated commentary on that would be helpful as well.
So any of the information that we're able to disclose is in our 10 Q filed this afternoon as well as in our previous
And at this time, I'll turn it back to Jared Smith for closing remarks.
Thanks, operator, and thanks to you all for joining us on the call today. I'm very excited with our continued progress and financial results. We're well positioned to drive continued adoption of haptics in our core markets and grow the company. We look forward to sharing updates on this effort in future calls. Thank you and goodbye.
And that does conclude our call for today. Thank you for your participation. You may now disconnect.