What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-03-12 compared with 2024-12-16 · 110 added, 113 removed, 269 unchanged (45% of the section changed)

34 unchanged sentences

and commercial.

On June 10, 2024, we acquired a controlling interest in Barnes & Noble Education, Inc., a Delaware corporation (“Barnes & Noble Education” or “BNED”), refer to Note 2 .

Business Combination for more information.

On June 10, 2024, we acquired a controlling interest in Barnes & Noble Education, Inc., a Delaware corporation (“Barnes & Noble Education” or “BNED”), please refer to Note 2 .

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.

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As a result of the change in fiscal year end, we filed a Transition Report on Form 10-QT for the transition period from January 1, 2024, through April 30, 2024, on November 8, 2024.

The change in quarterly reporting from the old to the new fiscal year resulted in the one month period ended July 31, 2024 not being covered by a separate report on Form 10-Q.

As this period is not covered in the transition report, it is included in this first initial report on Form 10-Q for the newly adopted fiscal year.

The financial results for the month ended July 31, 2024, did not have a significant impact on our financial position and results of operation.

Our fiscal year begins on May 1 and ends on April 30.

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References throughout this Quarterly Report on Form 10-Q to fiscal 2025 with respect to Immersion refer to the fiscal year ending April 30, 2025.

The financial information presented in this Quarterly Report on Form 10-Q includes the financial information of Barnes & Noble Education for the 13 weeks and 26 weeks ended October 26, 2024.

We did not recast the condensed consolidated financial statements for the three and six months ended October 31, 2023, because the financial reporting processes in place at that time included certain procedures that were completed only on a quarterly basis.

The financial information presented in this Quarterly Report on Form 10-Q includes the financial information of Barnes & Noble Education for the 13 weeks and 39 weeks ended January 25, 2025.

We did not recast the condensed consolidated financial statements for the three and nine months ended September 30, 2023, because the financial reporting processes in place at that time included certain procedures that were completed only on a quarterly basis.

Consequently, to recast this period would have been impractical and would not have been cost-justified.

As a result, the condensed consolidated financial statements for the three and six months ended June 30, 2023, are presented as the most nearly comparable quarter of the earlier year.

As a result, the condensed consolidated financial statements for the three and nine months ended September 30, 2023, are presented as the most nearly comparable periods of the prior year.

RESULTS OF OPERATION

One Month Ended

Three Months Ended

Six Months Ended

July 31, 2024

October 31, 2024

June 30, 2023

October 31, 2024

June 30, 2023

Nine Months Ended

January 31, 2025

September 30, 2023

January 31, 2025

September 30, 2023

Royalty and license

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Operating income (loss)

Interest and other income, net

Interest and other income (expense), net

Interest expense

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We have adopted a business model under which we offer licenses to our patented technology to our customers and offer our customers enabling software, related tools and technical assistance related to integrate our patented technology into our customers’ products or enhance the functionality of our patented technology.

Our licenses enable our customers to deploy haptically-enabled devices, content and other offerings, which they typically sell under their own brand names.

We and our wholly-owned subsidiaries hold more than 800 issu ed or pending patents worldwide as of October 31, 2024 .

Our licenses enable our customers to deploy haptic-enabled devices, content and other offerings, which they typically sell under their own brand names.

We and our wholly-owned subsidiaries hold more than 800 issu ed or pending patents worldwide as of January 31, 2025 .

Our patents cover a wide range of digital technologies and ways in which touch-related technology can be incorporated into and between hardware products and components, systems software, application software, and digital content.

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Our portfolio includes numerous patents and patent applications that we believe may become essential to emerging standards in development by Standards Development Organizations (“SDOs”) including media standards in development by ISO/IEC Moving Picture Expert Group (MPEG) and software and system standards in development at IEEE-SA.

A summary of our re su lts of operation for the month ended July 31, 2024, and the th ree and six months ended October 31, 2024 , and June 30, 2023 is as follows (in thousands, except for percentages):

One Month Ended

A summary of our re su lts of operation for the th ree and nine months ended January 31, 2025 , and September 30, 2023 is as follows (in thousands, except for percentages):

Three Months Ended

Six Months Ended

July 31, 2024

October 31, 2024

June 30, 2023

October 31, 2024

June 30, 2023

Nine Months Ended

January 31, 2025

September 30, 2023

January 31, 2025

September 30, 2023

Fix license revenue

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Selling and administrative expenses

Operating income

Operating income (loss)

Immersion revenue is primarily derived from fixed fee license agreements and per-unit royalty agreements.

Royalty and license revenue is composed of per unit royalties earned based on usage or net sales by licensees and fixed payment license fees charged for our IP and software.

Fixed fee license revenue increased by $ 9.4 million in the three months ended October 31, 2024, compared to the three months ended June 30, 2023 , primarily due to $ 9.7 million increase in mobility license revenue following the new license agreements we entered into in the first half of fiscal 2025 .

Per-unit royalty revenue decreased by $ 2.3 million, or 40 %, in the three months ended October 31, 2024 compared to the three months ended June 30, 2023 , primarily due to a $ 2.4 million decrease in royalties from mobility licensees.

Geographically, revenues generated in Asia, North America and Europe for the three months ended October 31, 2024 represented 90 %, 5 %, and 5 %, respectively, of our total revenue as compared to 14 %, 83 %, and 3 %, respectively, for the three months ended June 30, 2023 .

Fixed fee license revenue increased by $ 53.6 million in the first six months of fiscal 2025 compared to the six months ended June 30, 2023 , primarily due to a $ 53.8 million increase in mobility license revenue following the new license agreements we entered into in the first half of fiscal 2025 .

Per-unit royalty revenue decreased by $ 5.1 million, or 44 %, in the six months ended October 31, 2024 compared to the six months ended June 30, 2023 , primarily due to a $ 2.9 million decrease in royalties from mobility licensees, a $ 1.4 million decrease in royalties from gaming licensees and a $ 0.9 million decrease in royalties from other licensees.

Geographically, revenues generated in Asia, North America and Europe for the six months ended October 31, 2024 represented 96 %, 3 %, and 1 %, respectively, of our total revenue as compared to 9 6 %, 1 %, and 3 %, respectively, for the six months ended June 30, 2023 .

Fixed fee license revenue increased by $ 4.6 million in the three months ended January 31, 2025 , compared to the three months ended September 30, 2023 , primarily due to $ 3.0 million increase in automotive license revenue following the new license agreements entered into during the three months ended January 31, 2025.

Per-unit royalty revenue decreased by $ 5.6 million, or 68 %, in the three months ended January 31, 2025 compared to the three months ended September 30, 2023 , primarily due to a $ 3.8 million decrease in royalties from mobility licensees.

Geographically, revenues generated in Asia, North America, and Europe for the three months ended January 31, 2025 represented 31 %, 9 %, and 60 %, respectively, of our total revenue as compared to 68 %, 8 %, and 24 %, respectively, for the three months ended September 30, 2023 .

Revenue is significantly different from period to period due to the timing and geographic location of the company that executes the agreements.

Fixed fee license revenue increased by $ 58.0 million in the first nine months of fiscal 2025 compared to the nine months ended September 30, 2023 , primarily due to a $ 56.8 million increase in mobility and gaming license revenue following the new license agreements entered into during the nine months ended January 31, 2025.

Per-unit royalty revenue decreased by $ 10.6 million, or 53 %, in the n ine months ended January 31, 2025 compared to the n ine months ended September 30, 2023 , primarily due to a $ 7.9 million decrease in royalties from mobility licenses.

Geographically, revenues generated in Asia, North America, and Europe for the n ine months ended January 31, 2025 represented 88 %, 4 %, and 8 %, respectively, of our total revenue as compared to 77 %, 12 %, and 11 %, respectively, for the n ine months ended September 30, 2023 .

Revenue is significantly different from period to period due to the timing and geographic location of the company that executes the agreements.

Operating Expenses

A summary of operating expenses for the month ended July 31, 2024, and the three and six months ended October 31, 2024 , and June 30, 2023 , is as follows (in thousands, except for percentages):

One Month Ended

A summary of operating expenses for the three and nine months ended January 31, 2025 , and September 30, 2023 , is as follows (in thousands, except for percentages):

Three Months Ended

Six Months Ended

July 31, 2024

October 31, 2024

June 30, 2023

October 31, 2024

June 30, 2023

Nine Months Ended

January 31, 2025

September 30, 2023

January 31, 2025

September 30, 2023

Selling and administrative expense

Selling and administrative expenses - Our selling and administrative expenses primarily consisted of employee compensation and benefits including stock-based compensation;

legal and other professional fees;

external legal costs for patents;

office expense;

and facilities costs.

Selling and administrative expenses increased $ 0.3 million in the three months ended October 31, 2024 as compared to the three months ended June 30, 2023 primarily due to a $ 0.8 million increase in compensation, benefits and other personnel related costs partially offset by a $ 0.5 million decrease in legal costs.

Selling and administrative expenses - Our selling and administrative expenses primarily consisted of employee compensation and benefits including stock-based compensation, legal and other professional fees, external legal costs for patents, office expense, travel, and facilities costs.

Selling and administrative expenses increased $ 2.0 million in the three months ended January 31, 2025 as compared to the three months ended September 30, 2023 primarily due to a $ 2.3 million increase in compensation, benefits and other personnel related costs;

partially offset by a $ 0.2 million decrease in legal costs.

The increase in compensation, benefits and other personnel related costs is largely attributable to higher stock-based compensation expense resulting from new equity grants partially offset by a decrease in variable compensation.

Selling and administrative expenses increased $ 9.9 million in the six months ended October 31, 2024 as compared to the six months ended June 30, 2023 primarily due to a $ 5.1 million increase in legal costs and a $ 4.9 million increase in compensation, benefits and other personnel related costs.

The increase in legal costs was due to an increase from legal costs related to the new license agreements and Barnes & Noble Education Transactions.

The increase in compensation, benefits and other personnel related costs were largely driven by increases in variable compensation and higher stock-based compensation.

Selling and administrative expenses increased $ 11.9 million in the nine months ended January 31, 2025 as compared to the nine months ended September 30, 2023 primarily due to a $ 4.9 million increase in legal costs and a $ 4.7 million increase in compensation, benefits and other personnel related costs.

The increase in legal costs was due to costs related to the new license agreements and the Barnes & Noble Education Transaction.

The increase in compensation, benefits and other personnel related costs were primarily driven by increases in variable compensation and stock-based compensation.

Barnes & Noble Education

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 a textbook wholesaler, and inventory bookstore management hardware and software provider.

Barnes & Noble Education operates 1,162 physical and virtual bookstores and serves more than 5.7 million students, delivering essential educational content and general merchandise within a dynamic omnichannel retail environment.

Barnes & Noble Education is also a textbook wholesaler, and bookstore management hardware and software provider.

Barnes & Noble Education operates 1,164 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 its ability to compete by developing new products and solutions to meet market needs, its large operating footprint with direct access to students and faculty, its well-established, deep relationships with academic partners and stable, long-term contracts and its well-recognized brands.

Barnes & Noble Education provides product and service offerings designed to address the most pressing issues in higher education, including equitable access, enhanced convenience and improved affordability through innovative course material delivery models designed to drive improved student experiences and outcomes.

Barnes & Noble Education offers its BNC First Day® affordable textbook programs, consisting of First Day Complete and First Day, which provide faculty required course materials to students 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.

Barnes & Noble Education offers its BNC First Day® affordable access course material programs, consisting of First Day Complete and First Day, which provide faculty required course materials to students 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.

Barnes & Noble Education is moving quickly to accelerate its First Day Complete strategy.

Many institutions adopted First Day Complete in Fiscal 2024 , and Barnes & Noble Education plans to continue to scale the number of schools adopting First Day Complete in Fiscal 2025 and beyond.

See BNC First Day® Affordable Textbook Access Programs below.

See BNC First Day® Affordable Access Course Material Programs below.

Barnes & Noble Education expects to continue to introduce scalable and advanced solutions focused largely on the student and customer experience, expand its e-commerce capabilities and accelerate such capabilities with its service providers, Fanatics Retail Group Fulfillment, LLC (“Fanatics”) and Fanatics Lids College, Inc.

D/B/A “Lids” (“Lids”) (collectively referred to herein as the “F/L Relationship”), win new accounts, and expand its revenue opportunities through strategic relationships.

Barnes & Noble Education expect gross comparable store general merchandise sales to increase over the long term, as its product assortments continue to emphasize and reflect changing consumer trends, and Barnes & Noble Education evolves its presentation concepts and merchandising of products in stores and online, which Barnes & Noble Education expects to be further enhanced and accelerated through the F/L Relationship.

Barnes & Noble Education expects gross comparable store general merchandise sales to increase over the long term, as its product assortments continue to emphasize and reflect changing consumer trends, and Barnes & Noble Education evolves its presentation concepts and merchandising of products in stores and online, which Barnes & Noble Education expects to be further enhanced and accelerated 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 its logo general merchandise business.

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Barnes & Noble Education's large college footprint, reputation, and credibility in the marketplace not only support its marketing efforts to universities, students, and faculty, but are also important to its relationship with leading publishers who rely on Barnes & Noble Education as one of their primary distribution channels.

BNC First Day Affordable Textbook Programs

BNC First Day Affordable Access Course Material Programs

Barnes & Noble Education offers its BNC First Day® affordable textbook access programs, consisting of First Day Complete and First Day, which provide faculty required course materials to students 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.

• First Day Complete is adopted by an institution and includes all or the majority of undergraduate classes (and on occasion graduate classes), providing students with both physical and digital materials.

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• First Day is adopted by a faculty member for a single course, and students receive primarily digital course materials through their school's learning management system ("LMS").

Offering course materials through the BNC First Day® affordable textbook access programs, First Day Complete and First Day, is an important strategic initiative to meet the market demands of reduced pricing for students, as well as the opportunity to improve student outcomes, while, at the same time, increasing Barnes & Noble Education's market share, revenue and relative gross profits of course material sales given the higher volumes of units sold in such models as compared to historical sales models that rely on individual student marketing and sales.

These affordable textbook access 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.

Offering course materials through the BNC First Day® affordable access course material programs, First Day Complete and First Day, is an important strategic initiative to meet the market demands of reduced pricing for students, as well as the opportunity to improve student outcomes, while, at the same time, increasing Barnes & Noble Education's market share, revenue and relative gross profits of course material sales given the higher volumes of units sold in such models as compared to historical sales models that rely on individual student marketing and sales.

These affordable access course material 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.

Barnes & Noble Education is moving quickly to accelerate its First Day Complete strategy.

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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 our fiscal calendar dates.

These shifts in timing may affect the comparability of our results across periods.

Given the growth of BNC First Day® affordable textbook access 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 Barnes & Noble Education's BNC First Day® affordable textbook access 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 Barnes & Noble Education's 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 Barnes & Noble Education's sales shift to BNC First Day® affordable textbook access offerings, Barnes & Noble Education is focused on efforts to better align the timing of its cash outflows to course material vendors and cash inflows from collections from schools.

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.

These shifts in timing may affect the comparability of Barnes & Noble Education's results across periods.

Given the growth of 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 Barnes & Noble Education ’ s 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 Barnes & Noble Education ’ s 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 Barnes & Noble Education ’ s sales shift to BNC First Day® affordable access course material offerings, Barnes & Noble Education is focused on efforts to better align the timing of its 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 customer accesses the digital content 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 our products, which occurs either at the point of sale for products purchased at physical locations or upon receipt of products by Barnes & Noble Education customers for products ordered through its websites and virtual bookstores.

A summary of Barnes & Noble 's Education’s s results of operation for the reporting period for the month ended July 31, 2024, the three months ended October 31, 2024 and for the period from June 10, 2024, to October 31, 2024, is as follows (in thousands):

One Month Ended

July 31, 20 24

Three Months Ended October 31, 2024

From June 10, 2024 to October 31, 2024

A summary of Barnes & Noble Education’s results of operation for the reporting period for the three months ended January 31, 2025 and for the period from June 10, 2024 to January 31, 2025, is as follows (in thousands):

Three Months Ended January 31, 2025

From June 10, 2024 to January 31, 2025

Product and other

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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 $ 602.1 million during the three months ended October 31, 2024, primarily consisting of $ 559.7 million product and other sales and $ 42.4 million of rental sales.

Total revenue was $ 737.2 million during the period from June 10, 2024, to October 31, 2024, primarily consisting of $ 689.8 million product and other sales and $ 47.4 million of rental sales.

Total revenue was $ 466.3 million during the three months ended January 31, 2025 , primarily consisting of $ 423.2 million product and other sales and $ 43.2 million of rental sales.

Total revenue was $ 1,203.5 million during the period from June 10, 2024, to January 31, 2025, primarily consisting of $ 1,113.0 million product and other sales and $ 90.6 million of rental sales.

Cost of sales

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Restructuring and other charges

During the period from June 10, 2024, to October 31, 2024, Barnes & Noble Education recognized restructuring and other charges (credits) totaling $ 5.1 million, comprised primarily of $ 2.1 million related to severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction initiatives, $ 2.0 million of severance costs related to the departure of Barnes & Noble Education's Chief Executive Officer on June 11, 2024, a $ 1.9 million loss related to fixed assets disposal and $ 0.8 million costs associated with legal and advisory professional services restructuring and process improvements and other charges.

These costs and expenses were partially offset by a $ 1.4 million expense reversal related to the termination of liabilities related to a frozen retirement benefit plan.

Interest and Other Income, Interest Expenses and Income Taxes

A summary of consolidated interest and other Income (loss), interest expense and income taxes for the month ended July 31, 2024 and the three and six months ended October 31, 2024 and June 30, 2023 are as follows (in thousands, except for percentages):

One Month Ended

During the period from June 10, 2024, to January 31, 2025, Barnes & Noble Education recognized restructuring and other charges (credits) totaling $ (2.4) million, comprised primarily of $( 9.0 ) million expense reversal related to the termination of liabilities related to a frozen retirement benefit plan, partially offset by cost and expense of $ 2.1 million related to severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction initiatives, $ 2.0 million of severance costs related to the departure of Barnes & Noble Education's Chief Executive Officer on June 11, 2024, a $ 1.9 million loss related to fixed assets disposal, and $ 0.8 million costs associated with legal and advisory professional services restructuring and process improvements and other charges.

Barnes & Noble Education's impairment expense did not have a material or meaningful impact on operations during the periods .

Interest and other income (expense), net, Interest expense, and Income taxes

A summary of consolidated interest and other income (expense), net, interest expense, and income taxes for the three and nine months ended January 31, 2025 and September 30, 2023 are as follows (in thousands, except for percentages):

Three Months Ended

Six Months Ended

July 31, 2024

October 31, 2024

June 30, 2023

October 31, 2024

June 30, 2023

Nine Months Ended

January 31, 2025

September 30, 2023

January 31, 2025

September 30, 2023

Operating income (loss)

I nterest and other in come, net

I nterest and other in come (expense), net

Interest expense

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Net income (loss)

Interest and Other Income (loss) - Interest and other income consists primarily of interest and dividend income from cash and cash equivalents and marketable debt and equity securities, realized and unrealized gains (losses) on our marketable equity securities and derivative instruments and realized gains (losses) on our marketable debt securities.

Interest and other income, net decreased $ 3.2 million during the three months ended October 31, 2024 compared to the three months ended June 30, 2023 , primarily due to a $ 4.2 million decrease in net gains from investments in marketable equity securities and derivative instruments and a $ 0.5 million increase in interest income.

Interest and other income, net increased $ 0.4 million during the six months ended October 31, 2024 , compared to the six months ended June 30, 2023, primarily driven by a $ 0.9 million increase in interest income partially offset by a $ 0.6 million decrease in net gains from investments in marketable equity securities and derivative instruments.

Interest expense - Interest expenses primarily consisted of the interest charges related to Barnes & Noble Education's credit facility .

Interest and other income (expense), net - Interest and other income (expense), net consists primarily of interest and dividend income from cash and cash equivalents and marketable debt and equity securities, realized and unrealized gains (losses) on our marketable equity securities, and derivative instruments and realized gains (losses) on our marketable debt securities.

Interest and other income (expense), net increased $ 17.4 million during the three months ended January 31, 2025 compared to the three months ended September 30, 2023 , primarily due to a $ 17.1 million increase in net gains from investments in marketable equity securities and derivative instruments and a $ 0.3 million increase in interest income.

Interest and other income (expense), net increased $ 18.3 million during the nine months ended January 31, 2025 , compared to the nine months ended September 30, 2023 , primarily driven by a $ 16.5 million increase in net gains from investments in marketable equity securities and derivative instruments and a $ 1.9 million increase in interest income .

Interest expense - Interest expenses primarily consisted of interest charges related to Barnes & Noble Education ’ s credit facility .

expense decreased primarily due to the June 10, 2024 debt financing

transaction, lower borrowings, and lower interest rates.

Provision for income taxes - The changes in the provision for income taxes are described below:

Provision for income taxes for the three and six months ended October 31, 2024 resulted primarily from estimated domestic and foreign taxes included in the calculation of the effective tax rate.

Provision for income taxes for the three and nine months ended January 31, 2025 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.

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We also maintain liabilities for uncertain tax positions.

As of October 31, 2024, we had unrecognized tax benefits under ASC 740 Income Taxes of approximately $ 7.6 million, all of the $ 7.6 million could be payable in cash.

As of January 31, 2025 , we had unrecognized tax benefits under ASC 740 Income Taxes of approximately $ 7.6 million, all of the $ 7.6 million could be payable in cash.

In addition, interest and penalty of $ 0.2 million could also be payable in cash in relation to unrecognized tax benefits.

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Barnes & Noble Education

Barnes & Noble Education recorded an income tax provision of $ 1.3 million on pre-tax loss of $ 48.5 million during the period of May 1 st, 2024 to October 31, 2024, which represented an effective income tax rate of ( 2.6 )%.

Barnes & Noble Education recorded an income tax provision of $ 11.9 million on pre-tax loss of $ 30.7 million during the period of May 1 , 2024 to January 31, 2025, which represented an effective income tax rate of ( 38.8 )%.

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 October 31, 2024, 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.

As of January 31, 2025 , 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.

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Unrealized gains and losses on marketable debt securities reported as a component of Accumulated other comprehensive income on our Condensed Consolidated Balance Sheets .

Cash, cash equivalents and investments-current - As of October 31, 2024 , our cash, cash equivalents, and investments- current totaled $ 159.3 million, a $ 19.0 million decrease from $ 178.4 million on April 30, 2024 .

In addition, as of October 31, 2024 , we had restricted cash of $ 17.3 million .

A summary of select cash flow information for the six months ended October 31, 2024 and June 30, 2023 are as follows (in thousands):

Six Months Ended

October 31, 2024

June 30, 2023

Net cash (used in) provided by in operating activities

Net cash used in investing activities

Cash, cash equivalents, and investments-current - As of January 31, 2025 , our cash, cash equivalents, and investments-current totaled $ 153.9 million, a $ 24.5 million decrease from $ 178.4 million on April 30, 2024 .

In addition, as of January 31, 2025 , we had restricted cash of $ 7.5 million .

A summary of select cash flow information for the nine months ended January 31, 2025 and September 30, 2023 are as follows (in thousands):

Nine Months Ended

January 31, 2025

September 30, 2023

Net cash provided by (used in) operating activities

Net cash provided by (used in) investing activities

Net cash provided by (used in) financing activities

Cash provided by (used in) operating activities - Our operating activities primarily consists of net income adjusted for certain non-cash items including depreciation and amortization;

stock-based compensation expense, deferred income taxes and the effect of changes in operating assets and liabilities.

Net cash used in operating activities was $ 64.0 million in the six months ended October 31, 2024 , a $ 72.7 million decrease compared to the six months ended June 30, 2023 .

Cash provided by (used in) operating activities - Our operating activities primarily consists of net income adjusted for certain non-cash items including depreciation and amortization, stock-based compensation expense, 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 $ 107.7 million for the nine months ended January 31, 2025 , a $ 120.5 million decrease compared to the nine months ended September 30, 2023 .

This cash decrease was primarily attributable to a $ 207.2 million decrease from changes in operating assets and liabilities, partially offset by $ 69.6 million increase from changes in net income and a $ 17.2 million increase from non-cash items .

Net cash provided by operating activities was $ 8.8 million in the six months ended June 30, 2023, a $ 9.9 million decrease compared to the same period in 2022 .

Net cash provided by operating activities was $ 12.8 million in the nine months ended September 30, 2023 , a $ 19.5 million decrease compared to the same period in 2022 .

This cash decrease was primarily attributable to a $ 14.7 million decrease from changes in non-cash items and $ 11.8 million decrease from changes in net operating assets, partially offset by a $ 7.0 million increase in net income.

Cash used in investing activities - Our investing activities primarily consist of purchases of marketable securities and other investments and proceeds from disposal of marketable securities and other investments;

Cash provided by (used in) investing activities - Our investing activities primarily consist of purchases of marketable securities and other investments and proceeds from disposal of marketable securities and other investments;

proceeds from issuance of derivative instruments;

payments made to settle derivative instruments, payment for business acquisitions, net of cash acquired and purchases of property and equipment.

Net cash used in investing activities during the six months ended October 31, 2024 was $ 4.3 million primarily consisting of $ 49.4 million in cash used to purchase marketable securities and in the settlement of derivative instruments, $ 29.6 million cash used in business acquisition, net of cash acquired and $ 5.6 million in purchase of property and equipment partially offset by $ 79.6 million in proceeds from selling marketable securities.

Net cash used in investing activities during the six months ended June 30, 2023 was $ 22.7 million primarily consisting of $ 104.6 million in cash used to purchase marketable securities and in the settlement of derivative instrument partially offset by $ 81.9 million in proceeds from selling marketable securities and derivatives.

payments made to settle derivative instruments;

payment for business acquisitions, net of cash acquired;

and purchases of property and equipment.

Net cash provided by investing activities during the nine months ended January 31, 2025 was $ 4.4 million primarily consisting of $ 127.2 million in cash provided by proceeds from selling marketable securities and derivatives, partially offset by $ 85.8 million in cash used to purchase marketable securities and the settlement of derivative instruments, $ 29.6 million cash used in business acquisition, net of cash acquired, and $ 8.1 million in purchase of property and equipment.

Net cash used in investing activities during the nine months ended September 30, 2023 was $ 19.4 million primarily consisting of $ 167.9 million in cash used to purchase marketable securities and in the settlement of derivative instrument, partially offset by $ 148.5 million in proceeds from selling marketable securities and derivatives.

Cash provided by (used in) financing activities — Our financing activities primarily consist of cash proceeds from issuance of common stock, payments of dividend, proceeds from and repayments of credit facility, cash received from sale issuance of common stock, and cash paid for repurchases of our common stock.

Net cash used in financing activities during the six months October 31, 2024 was $ 80.6 million primarily consisting of $ 404.1 million proceeds from borrowing under Barnes & Noble Education's credit facility, $ 9.4 million in proceeds from sale of Barnes & Noble Education Common Stock, net of commissions, partially offset by $ 327.8 million debt repayment and $ 3.0 million in dividend payments and $ 2.0 million in shares withheld for payroll taxes.

Net cash used in financing activities during the six months ended June 30, 2023 was $ 9.0 million primarily consisting of $ 5.4 million in dividend payments, $ 2.9 million stock repurchases and $ 0.9 million in shares withheld to cover payroll taxes.

Total cash, cash equivalents, and short-term investments were $ 159.3 million as of October 31, 2024 of which approximately 20% , or $ 31.1 million, was held by our foreign subsidiaries and subject to repatriation tax effects.

Net cash provided by financing activities during the nine months ended January 31, 2025 was $ 103.0 million primarily consisting of $ 616.4 million proceeds from borrowing under Barnes & Noble Education's credit facility and $ 78.3 million in proceeds from sale of Barnes & Noble Education Common Stock, net of commissions, partially offset by $ 576.5 million debt repayment and $ 11.3 million in dividend payments, and $ 2.7 million in shares withheld for payroll taxes.

Net cash used in financing activities during the nine months ended September 30, 2023 was $ 13.5 million primarily consisting of $ 6.4 million in dividend payments, $ 6.2 million stock repurchases, and $ 1.1 million in shares withheld to cover payroll taxes.

Total cash, cash equivalents, and short-term investments were $ 153.9 million as of January 31, 2025 of which approximately 14% , or $ 21.4 million, was held by our foreign subsidiaries and subject to repatriation tax effects.

On November 13, 2023, our Board declared a quarterly dividend in the amount of $ 0.045 per share, which was paid on January 25, 2024 to stockholders of record on January 14, 2024 .

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On August 12, 2024, our Board declared a quarterly dividend in the amount of $ 0.045 per share, which was paid on October 18, 2024 to stockholders of record on October 4, 2024.

On November 8, 2024, our Board declared a special cash dividend of $ 0.245 per share on the Company’s outstanding common stock payable, subject to any prior revocation, on January 24, 2025 to stockholders of record on January 10, 2025.

On November 8, 2024, our Board declared a special cash dividend of $ 0.245 per share, which was paid on January 24, 2025 to stockholders of record on January 10, 2025.

On March 10, 2025, our Board declared a quarterly dividend of $0.045 per share that will be payable, subject

to any prior revocation, on April 25, 2025 to stockholders of record on April

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.

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On August 27, 2024, the Board approved an amendment to extend the expiration date of the December 2022 Stock Repurchase Program that was set to expire on December 29, 2024, to December 29, 2025.

As of October 31, 2024 , we had $ 41.7 million available for repurchase under the December 2022 Stock Repurchase Program.

On March 10, 2025, our Board approved an amendment to extend the expiration date of the Company's current stock repurchase program that was set to expire on December 29, 2025 to December 29, 2026.

During the nine months ended January 31, 2025, we repurchased 136,668 shares of our common stock for $ 1.2 million at average purchase price of $ 8.55 per share.

As of January 31, 2025 , we had $ 40.6 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.

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Goodwill is not amortized but reviewed for impairment at least annually at year-end, and when triggering events occur between annual impairment tests.

Refer to Note 7.

Goodwill and Intangible Assets for additional information.

The identified intangible assets arising from the Barnes & Noble acquisition were trade names and customer relationships $ 95.0 million in aggregate fair value.

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However, if our estimates regarding residual value are incorrect, we may be exposed to losses or gains that could be material.

Please refer to Management's Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 11, 2024, and Barnes & Noble Education's Annual Report on Form 10-K for the year ended April 27, 2024 for a complete discussion of our critical accounting policies and estimates.

Please refer to Management's Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 11, 2024, and Barnes & Noble Education's Annual Report on Form 10-K for the year ended April 27, 2024 (as updated through Barnes & Noble Education's Current Report on Form 8-K filed with the SEC on December 11, 2024) for a complete discussion of our critical accounting policies and estimates.

The preparation of financial statements and related disclosures in conformity with U.S.

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Significant Accounting Policies of the Notes to Condensed Consolidated Financial Statements for information regarding the effect of new accounting pronouncements on our financial statements.

Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis