Overview
Haptic technologies allow people to use their sense of touch to engage with various digital products. I stumbled across this technology after researching the new Sony PS5 console to kill boredom during covid. Immersion Corporation with ticker symbol IMMR creates, designs, develops, and licenses haptic technologies in North America, Europe, and Asia. Their goal is to create new and valuable touch experiences everywhere in the digital world.
Haptic technology or easier to understand as a touch feedback technology, embraced the power of touch in gaming consoles, automobiles, and smartphones, resulting in over 3 billion devices worldwide adopting this new technology.
The JUICE
I fancy including new technology as part of my portfolio to reap the early valuation even though the risk is a lit bit on the higher end. In addition to that, I am building an incremental position with the next-generation technology to future proof my portfolio.
So what’s the big deal about this haptic technology that is going to be revolutionary?
In my opinion, the company is trying to marry the digital world with meaningful touch experiences to enrich real-world interactions. Why? Because our digital experiences feel flat and ineffective, pale reflections of the real world. If you don’t think that’s the case, probably this ticker symbol is not for you.
How does Haptic Technology work?
- Today’s touchscreen, touchpad, and other touch surfaces often lack the physical feedback provided by mechanical keyboards, buttons, and switches that we need to validate the interactions fully. Haptics instill confidence by providing users with intuitive tactile confirmation as they push virtual buttons.
- In haptically-enhanced videos, mobile games, and simulations that integrate audio-visual content with tactile sensations, users can feel the real sense through the controllers for actions such as guns recoil, engines revving, and the crack of a baseball bat crushing a home run. The new PS5 console adopted this technology for their controllers to provide users with a better gaming experience.
- In mobile devices and wearables, haptics can enhance voice, chat, and video applications by creating a sense of physical presence, allowing for more personal and engaging communications between users.
Who is currently using Haptic Technology?
As disclosed in their 10K, licensees include some of the top makers of mobile devices globally, including Apple, LG Electronics, Google, Fujitsu, Sony, Panasonic, and integrated manufacturers such as Awinic Dongwoon. For the Automotive market, licensees include ALPS Electric Co., Continental, Marquardt, Bosch, Preh, Panasonic Automotive Systems, Seoyon Electronics, and Tokai Rika. Also, top players like Microsoft, Sony, and Nintendo adopted the haptic technology for their gaming consoles and peripherals.
Technical Valuation
In the most recent Q3FY20 earnings, key things to note are the following:
1) Total revenue of $7.6 million for Q3 2020 was down 29% from total revenue of $10.6 million in the same quarter last year. Gross profit was $7.6 million compared to gross profit of $10.6 million in the same quarter of 2019. GAAP net income for the third quarter of 2020 was $2.9 million or $0.11 per share compared to GAAP net loss of $1.4 million or $0.04 per share in the same quarter of 2019. The company is in a net income position even with lower revenue YoY comparison.
2) Balance sheet remains strong with $1.9 million of positive cash flow in the third quarter, which increased cash and cash equivalents balance to $56 million as of September 30, 2020.
3) Additional vehicle designs, including the forthcoming Jeep Wagoneer, will feature haptic interfaces.
4) In Q3, they executed a multi-year renewal with LG Electronics for continued use of TouchSense software and haptic technology in its mobile devices.
5) Continue to pursue the China partner program and address the opportunities in that region.
6) The company collects a royalty from each controller and expects more than one controller to ship per console overtime to support multiplayer gaming and replace worn-out controllers.
I already have position in this company and looking to increase more over the next few months. My prediction is that this technology is only at the beginning of its lifecycle in revolutionizing the digital experience. As long as they continue to innovate, there will be new cases and revenue opportunities to explore.
As usual, I am not a financial advisor, and this is not advisable for you to start dwelling on stock trading. The thought process above is solely to validate my understanding before purchasing any equity. I am still learning the process of evaluating and identifying opportunities in the stock market. By doing this, I am creating a structure for my brain to follow and not be an impulsive buyer or act emotionally when the market is against me. It is a journey I thought of worth sharing with any interested audience.