Quarterly Report for Quarter Ending January 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial 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 3, 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 Condensed 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 39 weeks ended January 31, 2026 and for the period from June 10, 2024 to January 31, 2025.

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

Immersion

Immersion generates license and royalty revenue from a broad portfolio of intellectual property designed to enhance users' sense of touch when interacting with digital devices. The Company focuses on the following target application areas: mobile devices, wearables, mobile entertainment, console gaming, and automotive. The Company licenses its patented technology to customers that integrate the technology into their products to enhance functionality. These licenses allow customers to offer haptic-enabled devices, content, and other products, which they typically market under their own brand names.

As of January 31, 2026, the Company and its wholly-owned subsidiaries held more than 400 issued or pending patents worldwide. These patents cover a broad range of digital technologies and methods for incorporating touch-related technology across 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 nine months ended January 31, 2026 and 2025 (in thousands, except for percentages):

Revenues

Immersion generates revenue primarily from fixed-fee license agreements and per-unit royalty arrangements. Royalty and license revenue includes per-unit royalties based on licensees' usage or net sales, as well as fixed license fees for the Company's intellectual property and software.

Fixed-fee license revenue decreased by $5.0 million for the three months ended January 31, 2026, compared with the same period in the prior year, primarily due to lower automotive license revenue. The prior-year quarter included a one-time perpetual license agreement that did not recur in the current-year quarter. For the nine months ended January 31, 2026, fixed-fee license revenue decreased by $59.6 million compared with the same period in the prior year, primarily due to four one-time perpetual license agreements in gaming, mobility, and automotive applications executed in the prior-year period, with no comparable agreements in the current-year period.

Per-unit royalty revenue was relatively flat for the three months ended January 31, 2026, compared with the same period in the prior year. For the nine months ended January 31, 2026, per-unit royalty revenue increased by $1.6 million compared with the same period in the prior year, driven by higher business levels from multiple customers in gaming, mobility, and other applications, as well as contributions from three new customers in other applications, partially offset by lower year-over-year royalty-generating activity from multiple other customers.

For the three months ended January 31, 2026, revenue generated in Asia, North America, and Europe represented 75%, 22%, and 3% of total revenue, respectively, compared with 31%, 9%, and 60%, respectively, in the prior-year period. For the nine months ended January 31, 2026, revenue generated in Asia, North America, and Europe represented 74%, 24%, and 2% of total revenue, respectively, compared with 88%, 4%, and 8%, respectively, in the prior-year period. Revenue may vary significantly from period to period based on the timing of agreements and the geographic location of the contracting entity.

Operating Expenses

The following is a summary of operating expenses for the three and nine months ended January 31, 2026 and 2025 (in thousands, except for percentages):

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 January 31, 2026, selling and administrative expenses decreased by $2.4 million compared with the same prior year period primarily due to lower stock-based and variable compensation.

For the nine months ended January 31, 2026, selling and administrative expenses decreased by $13.4 million compared with

the same prior year period due to a $6.5 million decrease in stock-based and variable compensation, and a decrease of $5.9 million in legal costs associated with the settlement of patent litigation in the prior year.

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 1,120 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 three quarters of fiscal 2026.

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. During the current fiscal year, Barnes & Noble Education experienced a modest increase in the number of academic start periods occurring in the 13 and 39 weeks ended January 31, 2026, compared to the prior year, primarily due to differences in the fiscal calendar week alignment year over year.

Product sales are recognized when the customer takes physical possession of the products, which occurs either at the point of sale for products purchased at physical locations or upon receipt of the products by the customers for products ordered through Barnes & Noble Education's websites and virtual bookstores. Revenue from the sale of digital textbooks, which contains a single

performance obligation, is recognized upon delivery of the digital content as product revenue in the condensed consolidated financial statements. Revenue from the rental of physical textbooks is deferred and recognized over the rental period based on the passage of time commencing at the point of sale, when control of the product transfers to the customer and is recognized as rental income in the condensed consolidated financial statements. Rental revenue and margin dollars deferral from third fiscal quarter is higher compared to prior year due to the growth of the BNC First Day® programs. Depending on the product mix offered under the BNC First Day® offerings, revenue recognized is consistent with the policies for product, digital and rental sales, net of an anticipated opt-out or return provision.

BNC First Day® Affordable Access Course Material Programs

Given the growth of the 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 the 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 our 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 the sales shift to BNC First Day® affordable access course material program offerings, Barnes & Noble Education is focused on efforts to better align the timing of the 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 when the digital content is made available to the customer 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 the customers for products ordered through Barnes & Noble Education's websites and virtual bookstores.

The following is a summary of Barnes & Noble Education's results of operations for the three months ended January 31, 2026 and 2025, the nine months ended January 31, 2026, and for the period from June 10, 2024 to January 31, 2025 (in thousands):

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 $515.1 million for the three months ended January 31, 2026, consisting of $471.8 million of product and other sales and $43.3 million of rental sales. Total revenue for the comparable prior year period was $462.8 million, including $419.7 million of product and other sales and $43.1 million of rental sales. The $52.3 million increase in revenue is primarily due to higher comparable store sales of $41.2 million and new store sales of $35.2 million, largely driven by a $71.3 million increase from BNC First Day programs, partially offset by lower sales from closed stores of $16.2 million and lower textbook rental deferral of $9.4 million.

Total revenue was $1,447.7 million for the nine months ended January 31, 2026, consisting of $1,344.2 million of product and other sales and $103.5 million of rental sales. For the period from June 10, 2024 to January 31, 2025, total revenue was $1,200.0 million, including $1,109.5 million of product and other sales and $90.6 million of rental sales. The $247.7 million increase in revenue is partially due to the prior year period being 40 days shorter, which reduced revenue by approximately $118.0 million on a linear basis in the first quarter of the prior year. The remaining increase was primarily due to higher comparable store sales of $92.3 million and new store sales of $82.0 million, largely driven by a $163.0 million increase from BNC First Day programs and, partially offset by lower sales from closed stores of $46.7 million.

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 82.6% of total revenue for the three months ended January 31, 2026, compared to 76.6% for the three months ended January 31, 2025. The current year quarter net cost increase was primarily due to reduced higher margin logo and non-logo general merchandise sales and higher markdowns related to closed stores, partially offset by lower contract costs as a percentage of sales related to university contracts as a result of the shift to digital and First Day models and lower performing school contracts not renewed.

Cost of sales was 81.1% of total revenue for the nine months ended January 31, 2026, compared to 77.0% for the period from June 10, 2024 to January 31, 2025. Product and other cost of sales increased in the current year period primarily due to a decrease in higher margin logo and non-logo general merchandise sales, offset by lower contract costs as a percentage of sales related to Barnes & Noble Education's university contracts as a result of the shift to digital and First Day models and lower performing school contracts not renewed.

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 $72.5 million for the three months ended January 31, 2026, an increase of $1.0 million compared to the three months ended January 31, 2025. This increase was primarily due to higher payroll, incentive plan costs, and related operating expenses.

For the nine months ended January 31, 2026, selling and administrative expenses were $217.6 million, an increase of $37.1 million compared to $180.5 million for the period from June 10, 2024 to January 31, 2025. One factor contributing to the year-over-year increase is that the period from June 10, 2024 to January 31, 2025 was 40 days shorter, resulting in approximately $30.0 million lower expenses on a linear basis in the first quarter of the prior year. The remaining increase is primarily due to a $3.1 million increase in payroll and related operating costs, and a $3.1 million increase in incentive plan expense 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 $10.7 million for the three months ended January 31, 2026, an increase of $0.7 million compared to the three months ended January 31, 2025, driven mainly by capital additions and accelerated intangible amortization related to closed stores.

Depreciation and amortization expense was $31.6 million for the nine months ended January 31, 2026, an increase of $7.0 million compared to $24.6 million for the period from June 10, 2024 to January 31, 2025. One factor contributing to the increase is that the period from June 10, 2024 to January 31, 2025 was 40 days shorter, resulting in approximately $5.9 million of lower depreciation and amortization expense calculated on a linear basis in the first quarter of the prior year. The remaining net increase is primarily due to capital additions and accelerated intangible amortization related to closed stores.

Impairment loss

Barnes & Noble Education reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets.

During the three months and nine months ended January 31, 2026, Barnes & Noble Education evaluated certain store-level long-lived assets for impairment. Based on the results of the impairment tests, Barnes & Noble Education recognized an impairment loss of $1.0 million (both pre-tax and after-tax), comprised of $0.4 million, $0.2 million, and $0.4 million of property and equipment, operating lease right-of-use assets, and amortizable intangibles, respectively, on the condensed consolidated statement of operations.

During the three months and nine months ended January 31, 2025, Barnes & Noble Education evaluated certain store-level long-lived assets for impairment. Based on the results of the impairment tests, Barnes & Noble Education recognized an impairment loss of $1.2 million (both pre-tax and after-tax), comprised of 0.2 million, $0.2 million, and $0.8 million of property and equipment, operating lease right-of-use assets, and amortizable intangibles, respectively, on the condensed consolidated statement of operations.

Other (income) expense

During the three and nine months ended January 31, 2026, the Company recognized other expense of $1.1 million and $8.3 million, respectively, primarily related to investigation costs incurred by Barnes & Noble Education.

During the three months ended January 31, 2025, the Company recognized other income, net of $6.2 million, primarily related to income of $7.6 million related to the termination of liabilities associated with a frozen retirement benefit plan.

During the nine months ended January 31, 2025, the Company recognized other income, net of $1.1 million, primarily related to the following items incurred by Barnes & Noble Education: (i) $9.0 million related to the termination of liabilities associated with a frozen retirement benefit plan; (ii) severance and other employee termination benefit costs of $2.1 million associated with the elimination of certain positions as part of cost reduction initiatives; (iii) severance expense of $2.0 million primarily related to the resignation of the former Chief Executive Officer on June 11, 2024; (iv) legal and advisory professional fees other charges of $0.9 million related to restructuring and process improvement initiatives; and (v) expenses of $1.3 million related to the settlement of a class action lawsuit and associated legal fees.

Interest income and other income (expense), net; Interest expense; and Income tax benefit (expense)

A summary of consolidated interest income and other income (expense), net, interest expense, and income taxes for the three and nine months ended January 31, 2026 and 2025 are as follows (in thousands, except for percentages):

Interest income and other income (expense)

Interest income and other income (expense), net consists primarily of interest and dividend income earned 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 income and other income (expense), net decreased by $19.2 million for the three months ended January 31, 2026, compared with the corresponding period in the prior year. This decrease was driven primarily by an $18.5 million unfavorable period-over-period change in realized and unrealized gains and losses on marketable equity securities and derivative instruments, from a $12.5 million net gain in the prior-year quarter to a $6.0 million net loss in the current quarter. The decrease was also attributable to $0.9 million of lower interest income, primarily due to lower invested balances in fixed-income securities and lower interest rates.

Interest income and other income (expense), net decreased by $21.2 million for the nine months ended January 31, 2026, compared with the corresponding period in the prior year. This decrease was driven primarily by a $19.2 million unfavorable period-over-period change in realized and unrealized gains and losses on marketable equity securities and derivative instruments, from a $29.0 million net gain in the prior-year period to a $9.8 million net gain in the current period. The decrease was also

attributable to $1.3 million of lower interest income, primarily due to lower invested balances in fixed-income securities and lower interest rates.

Interest expense

Net interest expense decreased by $0.2 million to $4.0 million during the three months ended January 31, 2026, from $4.2 million during the three months ended January 25, 2025. The decrease was primarily due to lower borrowings and lower interest rates. Interest expense for the three and nine months ended January 31, 2026 included $0.3 million and $1.0 million, respectively, of waiver fees incurred in connection with the Investigation.

Net interest expense decreased by $1.3 million to $9.8 million during the nine months ended January 31, 2026, from $11.1 million during the nine months ended January 31, 2025. The decrease was primarily due to lower borrowings and lower interest rates.

Income tax benefit (expense)

Immersion

Income tax benefit (expense) for the three months ended January 31, 2026, 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 and the resolution of foreign withholding tax matters.

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 January 31, 2026, we had unrecognized tax benefits under ASC 740 Income Taxes of approximately $10.0 million, all of the $10.0 million could be payable in cash. In addition, interest and penalties of $1.6 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 $11.6 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 $5.1 million during the nine months ended January 31, 2026, which represented an effective income tax rate of 34.9%.

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 January 31, 2026, 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 income and other income (expense), net on the Condensed Consolidated Statements of Operations. Unrealized gains and losses on marketable equity securities are reported as Interest income and other 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 January 31, 2026, our cash, cash equivalents, and investments - current totaled $177.9 million, a $16.5 million increase from $161.4 million on April 30, 2025. As of January 31, 2026, approximately 4% or $7.0 million, was held by foreign subsidiaries and may be subject to repatriation tax effects. In addition, as of January 31, 2026 and April 30, 2025, we had restricted cash of $8.3 million and $19.7 million, respectively.

The following is select cash flow information for the nine months ended January 31, 2026 and 2025 (in thousands):

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 used in operating activities was $24.8 million for the nine months ended January 31, 2026, an increase of $82.9 million compared to the nine months ended January 31, 2025. The increase was primarily driven by higher accounts payable and accrued liabilities and lower other assets partially offset by lower net income and higher accounts receivables and inventories.

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 $46.1 million for the nine months ended January 31, 2026, an increase of $41.7 million compared to the nine months ended January 31, 2025. 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 $24.5 million for the nine months ended January 31, 2026, a decrease of $78.5 million compared to the nine months ended January 31, 2025. The decrease was primarily driven by no proceeds from the sale of Barnes & Noble Education common stock in the current period compared to $78.3 million of net proceeds in the prior year period.

Immersion Dividends Declared and Dividend Payments

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.

Immersion Stock Repurchase Program

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 nine months ended January 31, 2026, the Company repurchased 1,700 shares of our common stock for $10 thousand at an average purchase price of $6.30 per share. As of January 31, 2026, the Company had $39.3 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.