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iRobot Reports Third-Quarter Financial Results
Strength in All Major Regions Drives 29% Year-Over-Year Revenue Growth
Increases Full-Year Financial Expectations

BEDFORD, Mass., Oct. 23, 2018 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in consumer robots, today announced its financial results for the third quarter ended September 29, 2018.

iRobot logo. (PRNewsfoto/iRobot Corp.)

"We delivered record third-quarter revenue of $265 million in Q3 2018, with growth across all major regions. In the United States, we saw significant year-over-year growth of 45%, driven by a very successful launch of two new products, the Roomba i7/i7+ and the Roomba e5," said Colin Angle, chairman and chief executive officer of iRobot.

"Given our Q3 results and our outlook for the holiday season, we are increasing our 2018 full-year financial expectations. We now anticipate full-year 2018 revenue of $1.08 to $1.09 billion, which is year-over-year growth of 22 – 23%, operating income of $92 to $96 million, and EPS of $2.55 to $2.75. Our full-year 2018 operating income expectation includes an anticipated negative tariff impact, of approximately $5.0 million in Q4, which was not previously included in our financial expectations.

"We have delivered very strong results thus far this year. I am very excited about our positioning for the upcoming holiday season and confident in our ability to deliver our increased 2018 financial expectations."

Financial Results

  • Revenue for the third quarter of 2018 was $264.5 million, compared with $205.4 million for the third quarter of 2017.
  • Operating income in the third quarter of 2018 was $37.3 million, compared with $23.9 million in the third quarter of 2017.
  • Quarterly earnings per share were $1.12 for the third quarter of 2018, compared with $0.76 in the third quarter of 2017.

Business Highlights

  • We successfully launched two new products during the third quarter, the Roomba e5, our latest product offering premium features at a lower price point, and our game-changing premium Roomba i7 and i7+ robots, which helped to drive U.S. year-over-year revenue growth of 45% in the third quarter.
  • We debuted our shared vision of the smart home in Boston with Google at HUBweek, demonstrating how our iRobot/Google collaboration can integrate robotic and smart home technologies that will advance the next-generation smart home.

Financial Expectations

Management provides the following expectations with respect to the fiscal year ending December 29, 2018.

Fiscal Year 2018:

Current

Previous         




Revenue

$1.08 - $1.09 billion

$1.06 - $1.08 billion   

Operating Income

$92 - $96 million

$90 - $96 million        

Earnings Per Share

$2.55 - $2.75

$2.30 - $2.50              

Third-Quarter Conference Call
iRobot will host a conference call tomorrow at 8:30 a.m. ET to discuss its financial results for the third fiscal quarter 2018, business outlook, and outlook for fiscal year 2018 financial performance. Pertinent details include:


Date:

Wednesday, October 24, 2018  


Time:

8:30 a.m. ET


Call-In Number:

213-358-0894


Passcode:

2997885

A live, audio broadcast of the conference call will also be available at http://investor.irobot.com/events/event-details/q3-2018-irobot-corp-earnings-conference-call. An archived version of the broadcast will be available on the same website shortly after the conclusion of the live event. A replay of the telephone conference call will be available through October 31, and can be accessed by dialing 404-537-3406, passcode 2997885.

About iRobot Corp.
iRobot, the leading global consumer robot company, designs and builds robots that empower people to do more both inside and outside of the home. iRobot created the home robot cleaning category with the introduction of its Roomba® Vacuuming Robot in 2002. Today, iRobot is a global enterprise that has sold more than 20 million robots worldwide. iRobot's product line, including the Roomba and the Braava® family of mopping robots, feature proprietary technologies and advanced concepts in cleaning, mapping and navigation. iRobot's engineers are building an ecosystem of robots and technologies to enable the smart home. For more information about iRobot, please visit www.irobot.com.

For iRobot Investors
Certain statements made in this press release that are not based on historical information are forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This press release contains express or implied forward-looking statements relating to, among other things, iRobot Corp.'s expectations regarding: future financial performance; future operating performance; revenue growth; demand for robots; the impact on our financial results of the imposition of tariffs on goods imported into the United States; and anticipated revenue, operating income and earnings per share for the fiscal year ended December 29, 2018. These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. In particular, the risks and uncertainties include, among other things: our ability to operate in an emerging market; the financial strength of our customers and retailers; general economic conditions; market acceptance of and adoption of our products; and competition. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. iRobot Corp. undertakes no obligation to update or revise the information contained in this press release, whether as a result of new information, future events or circumstances or otherwise. For additional disclosure regarding these and other risks faced by iRobot Corp., see the disclosure contained in our public filings with the Securities and Exchange Commission.

This press release includes Adjusted EBITDA, which is a non-GAAP financial measure as defined by SEC Regulation G. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, net merger, acquisition and divestiture expense, gain on business acquisition, and net intellectual property litigation expense, and restructuring expense. A reconciliation between net income and Adjusted EBITDA is provided in the financial tables at the end of this press release.

iRobot Corporation 

Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)














 For the three months ended 


 For the nine months ended 


September 29,

September 30,


September 29,

September 30,


2018

2017


2018

2017







Revenue

$        264,534

$        205,399


$        707,919

$        557,014

Cost of revenue:






  Cost of product revenue

124,754

100,800


324,967

272,068

  Amortization of intangible assets

4,574

2,216


14,035

5,329

Total cost of revenue

129,328

103,016


339,002

277,397







Gross margin

135,206

102,383


368,917

279,617







Operating expenses:






  Research and development

35,309

28,843


103,178

80,518

  Selling and marketing

39,030

28,473


116,269

91,171

  General and administrative

23,329

21,002


72,630

58,137

  Amortization of intangible assets

263

173


805

173

      Total operating expenses

97,931

78,491


292,882

229,999







Operating income

37,275

23,892


76,035

49,618







Other income, net

337

2,601


2,363

4,290







Income before income taxes

37,612

26,493


78,398

53,908

Income tax expense

5,683

4,411


15,597

7,565

Net income

$         31,929

$         22,082


$         62,801

$         46,343







Net income per share






   Basic

$             1.16

$             0.80


$             2.27

$             1.68

   Diluted

$             1.12

$             0.76


$             2.19

$             1.61







Number of shares used in per share calculations





   Basic

27,493

27,739


27,692

27,520

   Diluted

28,506

28,916


28,629

28,719













Stock-based compensation included in above figures:




        Cost of revenue

$              347

$              274


$           1,035

$              751

        Research and development

1,910

1,261


5,393

3,508

        Selling and marketing

544

728


2,032

1,869

        General and administrative

3,791

2,771


10,509

7,941

            Total

$           6,592

$           5,034


$         18,969

$         14,069

 

 iRobot Corporation 

 Condensed Consolidated Balance Sheets 

 (unaudited, in thousands) 






September 29,


 December 30, 


2018


2017





 Assets 








 Cash and cash equivalents 

$          100,122


$        128,635

 Short term investments 

34,994


37,225

 Accounts receivable, net 

109,583


142,829

 Inventory 

160,752


106,932

 Other current assets 

33,732


19,105

   Total current assets 

439,183


434,726

 Property and equipment, net 

54,198


44,579

 Deferred tax assets 

31,785


31,531

 Goodwill 

118,805


121,440

 Intangible assets, net 

29,385


44,712

 Other assets 

15,647


14,534

 Total assets 

$          689,003


$        691,522





 Liabilities and stockholders' equity 








 Accounts payable 

$          103,143


$        116,316

 Accrued expenses 

62,851


73,647

 Deferred revenue and customer advances 

4,719


7,761

   Total current liabilities 

170,713


197,724

 Deferred tax liabilities 

5,720


9,539

 Other long-term liabilities 

8,992


13,932

 Total long-term liabilities 

14,712


23,471

 Total liabilities 

185,425


221,195

 Stockholders' equity 

503,578


470,327

 Total liabilities and stockholders' equity 

$          689,003


$        691,522

 

 iRobot Corporation 

 Consolidated Statements of Cash Flows 

 (unaudited, in thousands) 








 For the nine months ended 


September 29,

September 30,


2018

2017

Cash flows from operating activities:



Net income

$          62,801

$          46,343

Adjustments to reconcile net income to net cash provided by operating activities:



Depreciation and amortization 

27,077

14,523

Gain on business acquisition

-

(2,243)

Stock-based compensation 

18,969

14,069

Deferred income taxes, net

(4,296)

(3,226)

Deferred rent

1,171

-

Other

(216)

(774)

Changes in operating assets and liabilities — (use) source



Accounts receivable

31,930

(10,957)

Inventory 

(54,619)

(23,944)

Other assets 

(15,818)

(11,099)

Accounts payable 

(10,512)

20,824

Accrued expenses

(12,086)

7,034

Deferred revenue and customer advances

(1,436)

(965)

Long-term liabilities

(2,672)

1,513

Net cash provided by operating activities 

40,293

51,098




Cash flows from investing activities:



Additions of property and equipment 

(25,284)

(16,630)

Change in other assets

(2,263)

(1,374)

Proceeds from sale of equity investment

856

1,056

Cash paid for business acquisition, net of cash acquired

-

(16,524)

Purchases of investments 

(6,438)

(7,034)

Sales and maturities of investments 

10,500

10,500

Net cash used in investing activities 

(22,629)

(30,006)




Cash flows from financing activities:



Proceeds from employee stock plans

7,948

8,990

Income tax withholding payment associated with restricted stock vesting

(3,532)

(2,974)

Stock repurchases

(50,000)

-

Net cash (used in) provided by financing activities 

(45,584)

6,016




Effect of exchange rate changes on cash and cash equivalents

(593)

155

Net (decrease) increase in cash and cash equivalents 

(28,513)

27,263

Cash and cash equivalents, at beginning of period 

128,635

214,523

Cash and cash equivalents, at end of period 

$        100,122

$        241,786

 

 iRobot Corporation 

Supplemental Information

(unaudited)














 For the three months ended 


 For the nine months ended 


September 29,

September 30,


September 29,

September 30,


2018

2017


2018

2017







Revenue: *












Consumer

$             264,534

$        205,360


$           707,919

$             556,757







    Domestic

$             127,240

$          87,626


$           345,628

$             269,998

    International

$             137,294

$        117,734


$           362,291

$             286,758



















Gross Margin Percent

51.1%

49.8%


52.1%

50.2%













Consumer units shipped*

1,087

906


2,855

2,358

      Vacuum

942

774


2,473

1,994

      Mopping

145

131


382

362







Consumer revenue**

$                   265

$              205


$                 708

$                   557

      Vacuum***

$                   242

$              186


647

$                   504

      Mopping***

$                     23

$                21


$                   61

$                     55







Average gross selling prices for robot units - Consumer

$                   276

$              249


$                 289

$                   260







Days sales outstanding

38

35


38

35







Days in inventory

113

82


113

82







Headcount

1,003

798


1,003

798













* in thousands






** in millions






*** includes accessory revenue






 

 iRobot Corporation  

 Adjusted EBITDA Reconciliation to GAAP 

 (unaudited, in thousands) 














 For the three months ended 


 For the nine months ended 


September 29,

September 30,


September 29,

September 30,


2018

2017


2018

2017







 Net income 

$          31,929

$          22,082


$          62,801

$          46,343







 Interest income, net 

(221)

(558)


(772)

(1,423)

 Income tax expense 

5,683

4,411


15,597

7,565

 Depreciation 

4,557

3,350


12,160

8,888

 Amortization 

4,857

2,419


14,917

5,605







 EBITDA 

46,805

31,704


104,703

66,978













 Stock-based compensation expense 

6,592

5,034


18,969

14,069

 Net merger, acquisition and divestiture expense 

-

681


23

2,452

 Gain on business acquisition 

-

(2,243)


-

(2,243)

 Net intellectual property litigation expense 

187

1,266


3,517

1,910







 Adjusted EBITDA 

$          53,584

$          36,442


$        127,212

$          83,166

 Adjusted EBITDA as a % of revenue 

20.3%

17.7%


18.0%

14.9%



















Use of Non-GAAP Financial Measures

 

In evaluating its business, iRobot considers and uses Adjusted EBITDA as a supplemental measure of its operating performance. The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, net merger, acquisition and divestiture (income) expense, gain on business acquisition, net intellectual property litigation expense, and restructuring expense. The Company also presents Adjusted EBITDA because it believes it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance.

 

The term Adjusted EBITDA is not defined under U.S. generally accepted accounting principles, or U.S. GAAP, and is not a measure of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. Adjusted EBITDA has limitations as an analytical tool, and when assessing the Company's operating performance, investors should not consider Adjusted EBITDA in isolation, or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with U.S. GAAP.  Among other things, Adjusted EBITDA does not reflect the Company's actual cash expenditures.  Other companies may calculate similar measures differently than iRobot, limiting their usefulness as comparative tools.  iRobot compensates for these limitations by relying primarily on its GAAP results and using Adjusted EBITDA only supplementally.


 

 

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SOURCE iRobot Corp.

Elise Caffrey, Investor Relations, iRobot Corp., (781) 430-3003, ecaffrey@irobot.com, or Matthew Lloyd, Media Relations, iRobot Corp., (781) 430-3720, mlloyd@irobot.com