IMMERSION CORP (IMMR) DCF Valuation & Fundamental Primer
IMMERSION CORP (IMMR) trades at $187.34 with a market enterprise value of $6.06B and generated $1.73B in TTM revenue and $61.1M in free cash flow (filed 2026-09-14 (period ended 2026-07-31)). Our 5-year DCF model estimates an implied intrinsic value of $350.50 per diluted share ($11.50B DCF enterprise value, Grade: A · 80/100 · High-Quality Compounder).
SEC 10-K/10-Q DCF teardown of IMMERSION CORP (IMMR): $1.73B TTM revenue (118.1% growth), 20.7% GAAP gross margin, 3.5% FCF margin, 0.5% SBC/revenue, and Rule of 40 score of 83.5%.
IMMERSION CORP (IMMR) earns a "Buy" rating and an institutional Quality Score of 80/100 (Grade A). On $1.73B in baseline revenue (118.1% growth, 20.7% gross margin, 3.5% FCF margin), our 5-year DCF yields an Enterprise Value of $11.50B ($350.50/share vs. $187.34 market price). On the R&D Return Benchmark, IMMR ranks #1 of 174 (Harvesters · Grade AAA, 10091.90× return).
Gross Margin & Unit Economics: IMMERSION CORP operates at a 20.7% gross margin on $1.73B revenue (52.0 pts below the Software - Application median of 72.7%).
R&D Productivity (Harvesters · Grade AAA): Investing 0.0% of revenue in R&D ($42K) generates $10091.90 of incremental gross profit per R&D dollar (Rank #1 of 174).
Rule of 40 & Cash Conversion: Combining 118.1% top-line growth with 3.5% FCF margin yields a 121.6% Rule of 40 score (vs. 47.2% cohort median) and $11.50B DCF Enterprise Value.
3-Statement Financial Schedule & 5-Year Horizon
Synchronized directly with the 3-Year Operating Statement (20.7% Gross Margin · 118.1% Growth)
| Income Statement Line | Year 1 (2026) | Year 2 (2027) | Year 3 (2028) |
|---|---|---|---|
| Revenue | $1.73B | $3.78B | $8.24B |
| Cost of Revenue (COGS) | ($1.37B) | ($2.98B) | ($6.45B) |
| Gross Profit & Margin | $359.0M (20.7%) | $801.7M (21.2%) | $1.79B (21.7%) |
| Research & Development (R&D) | $42K | $181.4M | $379.1M |
| Sales & Marketing (S&M) | $235.2M | $492.4M | $1.03B |
| General & Administrative (G&A) | $91.5M | $191.5M | $400.2M |
| Operating EBIT | $32.3M (1.9%) | -$63.5M (-1.7%) | -$18.7M (-0.2%) |
| Adjusted EBITDA | $74.7M (4.3%) | $29.0M (0.8%) | $183.0M (2.2%) |
3 Key Underwriting Risks
Structural sensitivities monitored in the 3-Statement Financial Engine
Value-Creation Levers · Quantified Statement Impact
Apply any lever below to write its operating assumptions directly into the 3-Statement Model
Automate cloud hosting & support workflows to lift gross margin from 20.7% to 25.7%.
Align R&D intensity and ASC 350-40 capitalization to the R&D Compounders cohort median, recapturing $34.7M in annual EBITDA.
Lift net dollar retention and expansion velocity by +300 bps, compounding Year 3 revenue to $8.47B.
IMMERSION CORP (IMMR) 3-Scenario DCF Valuation Range
Stress-test IMMR's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Simulate how deploying Gemini workflow automation and autonomous engineering expands IMMR's Gross Margin, FCF Margin, DCF share price, and 2x2 R&D Return Quadrant.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $187.34).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $2,811.20 +1401% | $3,014.83 +1509% | $3,252.40 +1636% | $3,533.17 +1786% | $3,870.09 +1966% |
| 9.3% | $2,486.50 +1227% | $2,646.92 +1313% | $2,831.10 +1411% | $3,044.75 +1525% | $3,295.56 +1659% |
| 10.0% | $2,220.58 +1085% | $2,349.55 +1154% | $2,495.72 +1232% | $2,662.77 +1321% | $2,855.52 +1424% |
| 10.8% | $1,999.10 +967% | $2,104.55 +1023% | $2,222.78 +1086% | $2,356.27 +1158% | $2,508.17 +1239% |
| 11.5% | $1,812.00 +867% | $1,899.45 +914% | $1,996.62 +966% | $2,105.21 +1024% | $2,227.39 +1089% |
Institutional Software Quality Scorecard (80/100 · Grade A)
Strong fundamentals, above-average cash generation, and robust competitive positioning.
Elite deferred revenue float; FCF exceeds operating income by >20%
Minimal dilution friction; management compensation aligned with shareholders
Sub-par gross margins; higher cost of delivery or hardware/services mix
Positive net cash cushion; self-funding operations with zero insolvency risk
Core Investment Strengths & Moats
- High-grade cash conversion: FCF is 189% of EBIT driven by upfront annual collections
- Low dilution friction: SBC is only 0.5% of revenue
- Net cash positive: $174.8M balance sheet buffer
Key Operational & Dilution Risks
- Lower software gross margins (20.7%), indicating higher hosting or service delivery drag
Compare IMMERSION CORP (IMMR) against the software universe on the 2x2 R&D Return vs. R&D Intensity matrix.
Reverse-DCF Solver: What Growth is Priced Into IMMR?
The current share price only requires 15.6% 5-year CAGR (17.1% dilution-adjusted), well below historical growth of 118.1%. If the company maintains baseline execution, there is asymmetric upside.
Headline Reverse-DCF ignores Stock-Based Compensation (0.5% of revenue) and annual share dilution (0.8%/yr). Accounting for both requires 17.1% 5-year revenue CAGR to justify $187.34/sh on a true per-share economic cash flow basis.
IMMERSION CORP (IMMR) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $1.73B | $1.73B | $3.12B | $5.62B | $10.11B | $18.19B | $32.75B |
| Gross Profit | $359.0M | $358.9M | $646.1M | $1.16B | $2.09B | $3.77B | $6.78B |
| Operating Income (EBIT) | $32.3M | $32.2M | $58.0M | $104.4M | $188.0M | $338.4M | $609.1M |
| Stock-Based Compensation (SBC) | $8.4M | $8.5M | $15.3M | $27.5M | $49.5M | $89.1M | $160.5M |
| Unlevered Free Cash Flow (FCF) | $61.1M | $61.2M | $110.1M | $198.2M | $356.8M | $642.2M | $1.16B |
| SBC-Adjusted True Cash Flow | $52.7M | $52.7M | $94.8M | $170.7M | $307.3M | $553.1M | $995.5M |
Software - Application Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = 6.4 + 0.05 × (Rule of 40) · R² = 14%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| IMMERSION CORP | IMMR | $6.24B | $1.73B | 20.7% | 3.5% | 83.5% | 0.5% | 3.5× |
| Grab Holdings Limited | GRAB | $20.18B | $2.80B | 42.0% | 27.7% | 84.0% | 10.0% | 6.3× |
| Figma, Inc. | FIG | $18.07B | $749.0M | 88.3% | -9.2% | 39.1% | 126.5% | 23.5× |
| Full Truck Alliance Co. Ltd. | YMM | $71.73B | $11.24B | 86.6% | 25.8% | 70.2% | 4.4% | 5.9× |
| ServiceTitan, Inc. | TTAN | $9.97B | $771.9M | 64.9% | 2.0% | 30.5% | 21.2% | 12.5× |
| InterDigital, Inc. | IDCC | $8.65B | $868.5M | 80.5% | 30.6% | 55.3% | 5.3% | 9.9× |
| OPEN TEXT CORP | OTEX | $8.11B | $5.30B | 63.5% | 13.0% | 23.8% | 2.0% | 2.6× |
| Peer Cohort Median Benchmark (N=6) | 72.7% | 19.4% | 47.2% | 7.6% | 8.1× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 3.5× | $6.06B | $6.24B | $187.34 | 0.0% |
| -20% Multiple Compression | 2.8× | $4.85B | $5.03B | $150.92 | -20.0% |
| -35% Multiple Compression | 2.3× | $3.94B | $4.12B | $123.61 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $8.67B | $8.84B | $265.44 | +42.9% |
Frequently Asked Questions: IMMERSION CORP (IMMR) Valuation
What is IMMERSION CORP (IMMR)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, IMMERSION CORP (IMMR) has a Base Case implied value of $350.50 per share (with a Bear Case of $69.86 and a Bull Case of $985.42), compared to its current price of $187.34. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is IMMERSION CORP (IMMR)'s Rule of 40 score and Free Cash Flow margin?
IMMERSION CORP achieves a Rule of 40 score of 83.5%, combining a 118.1% revenue growth run-rate with a 3.5% TTM free cash flow margin on $1.73B in trailing twelve-month revenue. In the Software - Application peer cohort, the median Rule of 40 benchmark is 47.2%.
What revenue growth rate is priced into IMMR stock according to Reverse-DCF analysis?
At $187.34 per share (Enterprise Value of $6.06B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 15.6%, compared to IMMERSION CORP's historical CAGR of 118.1%. Overall market expectations are rated as "Substantial Margin of Safety".
What is IMMERSION CORP (IMMR)'s R&D Return Score and innovation productivity?
IMMERSION CORP (IMMR) recorded N/A in FY R&D expense (tracked from SEC filings) and N/A in FY gross profit. It is currently unranked on the letter-grade leaderboard (pending full multi-year XBRL R&D history).
How does IMMERSION CORP compare to Software - Application peers?
IMMERSION CORP (IMMR) earns an institutional Software Quality Score of 80/100 (Grade A — High-Quality Compounder). Across its Software - Application peer group (GRAB, FIG, YMM, TTAN, IDCC), the cohort trades at a median EV/TTM Revenue multiple of 8.1× and a median gross margin of 72.7%.
How does Stock-Based Compensation (SBC) impact IMMERSION CORP (IMMR)'s valuation?
IMMERSION CORP recorded $8.4M in TTM stock-based compensation (0.5% of revenue). When treating SBC as a cash-equivalent compensation expense, IMMERSION CORP's SBC-adjusted free cash flow yield is 0.8%, scoring 25/25 on our Shareholder Dilution Friction pillar.