What happened

Shares of Immersion Corporation (NASDAQ:IMMR) have surged today, up by 13% as of 11:20 a.m. EST, after it reported fourth-quarter earnings last night. The company was able to narrow its net loss compared to a year ago, and guidance for 2018 came in strong.

So what

Revenue in the fourth quarter fell 26% year over year to $6.9 million, which predominantly consisted of royalty and license revenue of $6.7 million. That translated into a non-GAAP net loss of $6.2 million, or $0.21 per share, which narrowed from an adjusted net loss of $7.9 million, or $0.27 per share, a year ago. Immersion had inked a settlement with Apple last month, ending nearly two years of litigation regarding alleged patent infringement.

iPhone, iPad, and MacBook

The use of haptics in MacBooks and iPhones was at the heart of the patent lawsuit. Image source: Apple.

Now what

 "Immersion has been and will continue to be, the torchbearer of haptics," interim CEO Carl Schlachte said in a statement. He continued:

Our focus on innovation and development of cutting-edge haptic technology remains at the forefront of our company's strategy. Today, our employees are working on haptic technology solutions for fascinating and seemingly insurmountable challenges that will become mainstream in the market during the next five to ten years. This is the work we do here at Immersion; this is why our patent portfolio is exceptional; and, this is why I'm so excited about the future of our company.

While specific terms of the Apple settlement are confidential, I previously noted investors could get some broader sense of the financial impact once the company reported earnings. That settlement now appears to be a significant windfall for Immersion. The company's outlook for 2018 calls for full-year revenue of $80 million to $95 million, which should result in non-GAAP net income of $35 million to $46 million. Compare that forecast to Immersion's full-year 2017 revenue of $35 million and non-GAAP net loss of $28.6 million, and it becomes clear why investors are celebrating right about now. Immersion inked a couple other licensing deals with other companies during the quarter, but none are as meaningful as the Apple settlement.

Evan Niu, CFA owns shares of AAPL. The Motley Fool owns shares of and recommends AAPL. The Motley Fool has the following options: long January 2020 $150 calls on AAPL and short January 2020 $155 calls on AAPL. The Motley Fool has a disclosure policy.