Good day, everyone and welcome to the Immersion Corporation Third Quarter 2017 Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Ms. Jennifer Jarman. Please go ahead, ma’am.

Thank you, Shannon. Good afternoon, and thank you for joining us today on Immersion’s third quarter 2017 conference call. This call is also being broadcast live over the web and can be accessed from the Investor Relations section of the company’s Web site at www.immersion.com. With me on today’s call is Vic Viegas, President and CEO; and Nancy Erba, CFO. During this call, we may make forward-looking statements, which may include projected financial results or operating metrics, business strategies, litigations, anticipated future products, anticipated market demand or opportunities and other forward-looking topics. These statements are subject to risks, uncertainties and assumptions. Accordingly, actual results could differ materially. For a listing of the risks that could cause this, please see our Form 10-Q filed with the SEC as well as the factors identified in the press release we issued today after market close. 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 measure and a reconciliation of the differences between the non-GAAP financial measure discussed and the most directly comparable GAAP financial measure is available in today’s press release. With that said, I’ll now turn the call over to Chief Executive Officer, Vic Viegas. Vic?

Thanks, Jennifer, and thanks everyone for joining us this afternoon. This is an important time for Immersion. One that requires a resolute approach to the execution of our strategy and achievement of our operational objectives. We continue to focus on delivering value to our shareholders through the licensing of new customers, renewals with our existing customers and the expansion and protection of our intellectual property. I would now like to highlight some of our customer and market achievements that took place during the third quarter. I am pleased to share with you that Sony Mobile Communications has licensed the Immersion patent portfolio for their mobile devices including phones, tablets, smart watches and fitness bands. We continue to expand our technology license agreement with LG Electronics to include Immersion's TouchSense technology for high definition haptics in LG's premier mobile phones including the LG V30. We announced that Tencent has licensed our TouchSense technology to deliver next generation interactive experiences to its mobile QQ and NOW applications. Additionally, Tencent has also licensed Immersion technology to incorporate haptics into its Super NBA game. In the gaming VR and AR market, we entered into a licensing agreement with Yomuneco, enabling the addition of tactile feedback to its gaming applications using our TouchSense Force Haptic Lab solution for the Unreal Engine design tool. Yomuneco is now developing a new VR role playing game scheduled to be released in 2018. We also renewed our licensing agreement with Perfect World game studio for their Torchlight game which will enhanced interaction by using 47 Immersion designed and tailored tactile effects. Finally, we have extended our TouchSense Force Haptic Lab solution to game developers building on the Unity Technologies engine. With the Haptic Lab developers can now easily design and integrate high quality touch effects into their games to leverage the advanced capabilities of newer gaming consoles including a Nintendo Switch system. We are pleased with the continued adoption and advancement of haptics as is evidenced by new customers licensing our technology solutions and renewals and expansions by our existing customers into our key strategic markets. I will share more with you regarding our recent business developments, enforcement actions and outlook, but first I will turn the call over to Nancy to discuss the details of our third quarter 2017 financial results. Nancy?

Thanks, Vic. Revenues for the September quarter were $11.9 million, down $14.4 million or 55% from revenues of $26.3 million in the year ago period. This decrease is primarily related to a one time license fee of $19 million from Samsung that we recognized during the quarter ended September 30, 2016, partially offset by mobility license fees from new and existing customers recognized during the quarter ending September 30, 2017. Revenues from royalties and licenses in the third quarter of 2017 included variable royalties based on shipping volumes and per unit prices totaling $4.7 million and fixed payment license fees totaling $6.9 million. This compares to variable royalties of $5.3 million and fixed license fees of $20.8 million in the prior year period. While revenue mix for line of business is expected to fluctuate on a quarterly basis due to seasonality pattern, for the third quarter of 2017 a breakdown by line of business as a percentage of total revenues was as follows. 71% from mobility, 17% from gaming, 9% from auto, and 3% from medical. Looking at year-over-year trends, mobility revenues were down 63% from the third quarter of 2016 primarily due to the aforementioned one time license fee of $19 million from Samsung recognized in the third quarter of 2016, partially offset by license fees from new and existing mobility customers recognized in the third quarter of 2017. Gaming revenues were down 15% during the quarter, primarily reflecting decreased license fees, partially offset by increased royalty revenue from gaming licenses. Automotive revenues were up 3%, attributable to increased volume from our automotive license fees. Medical revenues were down 27% resulting from expiring medical contracts. Gross profit was $11.8 million compared to gross profit of $26.3 million in the third quarter of 2016. Now turning to our third quarter…

Thanks, Nancy. In previous conference calls I have outlined our five strategic markets that we remain focused on as well as our market engagement cycle of innovation, adoption, monetization and recognition. I will now provide an update on our strategy and momentum in this quarter for three of those five strategic markets, specifically mobile OEM and content, gaming and mobile ads. Our mobile OEM and content strategy continue to gain global momentum in the adoption and monetization phases. Adoption and monetization are the phases where by licensing our IP and solutions, content providers and mobile OEMs can realize the value that haptics bring to their products, enabling us to achieve a sustainable and growing revenue stream. This quarter we reached a significant milestone in our China content strategy with Tencent's deployment our haptic technology into their popular 2Q instant messaging application. They are now live streaming applications and Super NBA game with a combined monthly active user base of over 650 million users. We believe widespread adoption of haptics in mobile content coupled with the positive response we have seen from Tencent users, facilitates future mobile OEM monetization opportunities similar to our licensing agreements with Sony Mobile Communications and LG Electronics. For the gaming market opportunity, in addition to the adoption of haptics in traditional mobile games such as Perfect World's Torchlight and Tencent's Super NBA game, we are also driving adoption of haptics in the nascent VR games category with companies such as Yomuneco and [indiscernible] planning haptic enabled games in 2018. With falling VR hardware cost fueling wider user adoption, we will continue our momentum in enabling popular VR titles to achieve higher levels of user engagement through the addition of tactile effects. As with our mobile strategy, we believe this increased adoption and user engagement will facilitate…

[Operator Instructions] And our first question will come from Josh Nichols with B. Riley FBR.

So you have been pursuing patent infringement in China more recently. I was just wondering, at a high level, could you talk a little bit about your thoughts behind pursuing that strategy and how patent infringement enforcement in China differs from that in the U.S.

Sure, Josh. So as you probably know, we have patents all around the world and we have a carefully crafted litigation strategy. China is an important part of that strategy and we believe that we have a strong portfolio in China and that the time is right to enforce actions against Apple on the infringement of those patents. At lease these two that are currently being prosecuted. In terms of the venue, in China there are a number of different courts that you can take IP disputes to. We have chosen to take it to the High Peoples Court which is I believe the highest court that these type of disputes would be litigated. The process is quite streamlined. It's faster than it is typically in the United States and we feel confident in our position. We feel like the cost is definitely something that is worthwhile pursuing and so we have decided that China is the right venue for this particular action.

Thank you. And then I did want to ask a little bit, you mentioned it earlier I believe, but content to media and embedding haptics technology in mobile ads has always been one of this [tough] [ph] long-term growth drivers for Immersion. Could you talk a talk a little about the progress it's made? What's going on there and also where you need to improve to really be able to scale this thing?

Well, that’s one of the most exciting parts about this last quarter was the adoption by Tencent and a number of very profile applications. They are using it in a social application, in stickers and in alerts and other types of interactions. They are adding an emotional component to the communication component, if you will. And so this is getting exposure broadly, as I mentioned hundreds of millions of daily active users, monthly subscribers. And so it adds that additional, physical or emotional element to that interaction. This is something that the OEMs take notice and want to participate in to be part of that rich communication experience. And so it's helping drive our OEM engagements, our OEM licensing efforts and in fact you saw in the quarter, an increase in the mobile space with regards to new OEMs and expanding licensing with existing OEMs. In addition to that one particular strategic account, Tencent, and those applications we are seeing broad adoption in other gaming applications. And similarly it too is having an impact on user interest and we also are leveraging the mobile ad opportunities where we are able to show substantial increase in retention and engagement. And all of these have an impact on the OEMs interest in expanding their relationships with us and delivering a better experience to the use of our TouchSense technology. So it is having a near-term impact. It's having an impact in terms of attracting other content parties and overall it's a key part of our OEM engagement strategy.

[Operator Instructions] Our next question will come from Charlie Anderson of Dougherty & Company.

There is one to dial into. What happened in the quarter with the higher revenue, I think it was kind of concentrated to mobility. So I think we are up pretty decently from last quarter in that category. Was that sort of episodic revenue because as I look as your guidance, implied Q4 sort of backdrop prior Q2 levels. So if you could maybe just tell me a little bit more about what's going on there and then I have got a follow up.

So, yes, we were really pleased with the revenue this quarter. We did have both new mobility customers and we mentioned specifically Sony Mobile as well as other mobile customers who were seeing higher revenue from and also expanding our relationship with them whether that be through additional phones that they are now putting haptics or just across a broader portfolio of products that they have. For the year we did actually narrow the range and bring it you slightly. Now at 33% to 35%. And so, yes, there was obviously a step up in Q3. There will be continued growth opportunities for us in Q4 but we felt it was -- given where we are in the year it's necessary to narrow that and raise it a little bit.

Got it. So these wouldn’t be variable royalty. Like, I guess, when putting on [practice] [ph] it doesn’t look from the guidance that they are variable royalties that flow into Q4. It more looks like a past sales type of element. Am I reading all right?

So it's actually probably a combination of both. Some that were fixed and then some that actually will hit our variable numbers next quarter.

Got it. Okay. And then a quick question on the accounting standards change. I wonder if maybe if you could just sort of describe, think some of your other peers have sort of described it as sort of static versus other deals where there is maybe a future IP contemplated. I wonder if you could maybe just talk about what will be the differences for you in terms of why you would sign one deal or the other if you are seeing sort of the same thing. And then on a go forward basis, how it would may or may not change your approach and then also I wonder do you have the ability to go back to some of the licensees where there is an impact to maybe renegotiate so it is more favorable just from a optics standpoint. Thanks.

Sure. I think you are referring to static versus dynamic. Some of those phrases have been used by others. Our existing fixed fee agreements and those are the one that we have evaluated, those are the ones that are in place today, would be more of the static nature which is why we are discussing today the facts that those would have been recognized upfront in the quarter in which the agreement was signed. Certainly any new agreement that we reach going forward, we would as part of that negotiation look at what the best structure is for us and the customer and there will likely be some that are static and some that are dynamic in addition to the ongoing kind of per unit royalty agreement. So the agreements that we have in place. So after evaluating those and working with our auditors, the determination was made for the treatments that I discussed, we don’t believe we have any opportunity at this point to go and renegotiate any of those but certainly as we look at new agreements going forward, we will be considering what the revenue implications are.

Got it. And then just last question for me relates to cash burn. Just any general commentary there as you have had another litigation here. What sort of your outlook is there, sort of balancing defending your IP with making sure you have adequate cash on the balance sheet to run the business. Thanks.

Sure. The cash position as we mentioned at $48 million, we are certainly comfortable with where we are today. As I have mentioned in the comments, we believe that the cash burn will decrease as we go into Q4 just because of the bulk of the ITC litigation expense is behind us. The new case that we brought up today and discussed with Apple in China, that was already contemplated in our litigation forecast. So we are still leaving our litigation expenses expected to be 21 to 24 for the year. So don’t think of that as adding on to the already described litigation expense. We will continue to look at different opportunities in front of us whether that be debt or equity, or as mentioned before, how we structure agreements with customers. Whether those are more cash upfront or overtime and take advantage as we need to of any of those opportunities that are in front of us to add cash to the balance sheet if we feel like we need to in the coming quarters.

[Operator Instructions] And it does appear we have no further questions at this time. We will turn the conference back over to our speakers for any additional or closing remarks.

Okay. Thank you, everyone for joining us this afternoon. We look forward to updating you again on our next call. Good day.

And that does conclude today teleconference. Thank you all for your participation.