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07 Nov, 2023, 16:01 ET
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BEDFORD, Mass., Nov. 7, 2023 /PRNewswire/ — iRobot Corp. (NASDAQ: IRBT), a leader in consumer robots, today announced its financial results for the third quarter ended September 30, 2023.
Q3 2023 Financial Performance Highlights
Third-Quarter and Recent Business Highlights
Proposed Merger with Amazon
On July 24, 2023, iRobot entered into a $200 million financing facility to fund its ongoing operations. At the same time, iRobot and Amazon amended the existing terms of their merger agreement to reflect a reduction in the price per share. For Amazon, the change in price per share is expected to be largely offset by the increase in iRobot’s net debt under the new financing facility. On October 12, 2023, iRobot’s stockholders approved and adopted the amended merger agreement at the Company’s special meeting of stockholders.
In light of the pending transaction with Amazon, which was originally announced on August 5, 2022, iRobot will not hold a financial results conference call, and its practice of providing financial guidance remains suspended.
About iRobot Corp.
iRobot is a global consumer robot company that designs and builds thoughtful robots and intelligent home innovations that make life better. iRobot introduced the first Roomba robot vacuum in 2002. Today, iRobot is a global enterprise that has sold millions of robots worldwide. iRobot’s product portfolio features technologies and advanced concepts in cleaning, mapping and navigation. Working from this portfolio, iRobot engineers are building robots and smart home devices to help consumers make their homes easier to maintain and healthier places to live. For more information about iRobot, please visit www.irobot.com.
Cautionary Statement Regarding Forward-Looking Statements
This communication contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on the Company’s current expectations, estimates and projections about its business and industry, all of which are subject to change. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “could,” “seek,” “see,” “will,” “may,” “would,” “might,” “potentially,” “estimate,” “continue,” “expect,” “target,” similar expressions or the negatives of these words or other comparable terminology that convey uncertainty of future events or outcomes. All forward-looking statements by their nature address matters that involve risks and uncertainties, many of which are beyond our control, and are not guarantees of future results, such as statements about the consummation of the proposed transaction and the anticipated benefits thereof. These and other forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements and, therefore, you should not place undue reliance on any such statements and caution must be exercised in relying on forward-looking statements. Important risk factors that may cause such a difference include, but are not limited to: (i) the ability of the parties to consummate the proposed transaction with Amazon.com, Inc in a timely manner or at all; (ii) the satisfaction (or waiver) of closing conditions to the consummation of the proposed transaction; (iii) potential delays in consummating the proposed transaction; (iv) the ability of the Company to timely and successfully achieve the anticipated benefits of the proposed transaction; (v) the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the merger agreement; (vi) the impact of the COVID-19 pandemic and various global conflicts on the Company’s business and general economic conditions; (vii) the Company’s ability to implement its business strategy; (viii) significant transaction costs associated with the proposed transaction; (ix) potential litigation relating to the proposed transaction; (x) the risk that disruptions from the proposed transaction will harm the Company’s business, including current plans and operations; (xi) the ability of the Company to retain and hire key personnel; (xii) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed transaction; (xiii) legislative, regulatory and economic developments affecting the Company’s business; (xiv) general economic and market developments and conditions; (xv) the evolving legal, regulatory and tax regimes under which the Company operates; (xvi) potential business uncertainty, including changes to existing business relationships, during the pendency of the merger that could affect the Company’s financial performance; (xvii) restrictions during the pendency of the proposed transaction that may impact the Company’s ability to pursue certain business opportunities or strategic transactions; (xviii) unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, (xviv) current supply chain challenges including current constraints in the availability of certain semiconductor components used in our products; (xx) the financial strength of our customers and retailers; (xxi) the impact of tariffs on goods imported into the United States; and (xxii) competition, as well as the Company’s response to any of the aforementioned factors. Additional risks and uncertainties that could cause actual outcomes and results to differ materially from those contemplated by the forward-looking statements are included under the caption “Risk Factors” in the Company’s most recent annual and quarterly reports filed with the SEC and any subsequent reports on Form 10-K, Form 10-Q or Form 8-K filed from time to time and available at www.sec.gov. While the list of factors presented here is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability and similar risks, any of which could have a material adverse effect on the Company’s financial condition, results of operations, or liquidity. The forward-looking statements included herein are made only as of the date hereof. The Company does not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.
iRobot Corporation
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
For the three months ended
For the nine months ended
September 30, 2023
October 1, 2022
September 30, 2023
October 1, 2022
Revenue
$ 186,176
$ 278,191
$ 583,036
$ 825,511
Cost of revenue:
Cost of product revenue
137,871
200,947
444,106
558,111
Amortization of acquired intangible assets
292
837
864
2,533
Total cost of revenue
138,163
201,784
444,970
560,644
Gross profit
48,013
76,407
138,066
264,867
Operating expenses:
Research and development
37,239
41,425
117,137
125,893
Selling and marketing
41,744
60,273
142,002
197,355
General and administrative
28,350
31,508
90,245
84,585
Amortization of acquired intangible assets
174
11,568
529
12,603
Total operating expenses
107,507
144,774
349,913
420,436
Operating loss
(59,494)
(68,367)
(211,847)
(155,569)
Other expense, net
(19,113)
(979)
(24,217)
(19,906)
Loss before income taxes
(78,607)
(69,346)
(236,064)
(175,475)
Income tax expense
598
59,020
5,053
26,718
Net loss
$ (79,205)
$ (128,366)
$ (241,117)
$ (202,193)
Net loss per share:
Basic
$ (2.86)
$ (4.71)
$ (8.73)
$ (7.44)
Diluted
$ (2.86)
$ (4.71)
$ (8.73)
$ (7.44)
Number of shares used in per share calculations:
Basic
27,738
27,264
27,608
27,159
Diluted
27,738
27,264
27,608
27,159
Stock-based compensation included in above figures:
Cost of revenue
$ 838
$ 548
$ 2,226
$ 1,574
Research and development
3,355
2,797
8,737
7,657
Selling and marketing
1,384
1,658
4,221
4,800
General and administrative
3,798
3,274
10,696
9,477
Total
$ 9,375
$ 8,277
$ 25,880
$ 23,508
iRobot Corporation
Condensed Consolidated Balance Sheets
(unaudited, in thousands)
September 30, 2023
December 31, 2022
Assets
Cash and cash equivalents
$ 189,649
$ 117,949
Accounts receivable, net
73,457
66,025
Inventory
244,509
285,250
Other current assets
49,234
59,076
Total current assets
556,849
528,300
Property and equipment, net
44,942
60,909
Operating lease right-of-use assets
20,482
26,084
Deferred tax assets
10,536
16,248
Goodwill
167,630
167,724
Intangible assets, net
9,692
11,260
Other assets
21,347
24,918
Total assets
$ 831,478
$ 835,443
Liabilities and stockholders’ equity
Accounts payable
$ 211,341
$ 184,016
Accrued expenses
103,101
98,959
Deferred revenue and customer advances
10,951
13,208
Total current liabilities
325,393
296,183
Term loan
204,411
–
Operating lease liabilities
28,981
33,247
Deferred tax liabilities
377
931
Other long-term liabilities
19,428
29,366
Total long-term liabilities
253,197
63,544
Total liabilities
578,590
359,727
Stockholders’ equity
252,888
475,716
Total liabilities and stockholders’ equity
$ 831,478
$ 835,443
iRobot Corporation
Consolidated Statements of Cash Flows
(unaudited, in thousands)
For the nine months ended
September 30, 2023
October 1, 2022
Cash flows from operating activities:
Net loss
$ (241,117)
$ (202,193)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
21,367
39,078
Loss on equity investment
3,910
18,828
Stock-based compensation
25,880
23,508
Change in fair value of term loan
5,292
–
Debt issuance costs expensed under fair value option
11,837
–
Deferred income taxes, net
4,115
13,090
Other
(8,618)
4,209
Changes in operating assets and liabilities — (use) source
Accounts receivable
(7,943)
23,767
Inventory
34,675
(85,447)
Other assets
12,544
31,268
Accounts payable
28,904
(24,054)
Accrued expenses and other liabilities
(4,483)
(54,649)
Net cash used in operating activities
(113,637)
(212,595)
Cash flows from investing activities:
Additions of property and equipment
(3,132)
(8,895)
Purchase of investments
(213)
(3,150)
Sales and maturities of investments
–
17,723
Net cash (used in) provided by investing activities
(3,345)
5,678
Cash flows from financing activities:
Proceeds from employee stock plans
9
3,274
Income tax withholding payment associated with restricted stock vesting
(1,924)
(1,775)
Proceeds from credit facility
–
90,000
Proceeds from term loan
200,000
–
Payment of debt issuance costs
(11,837)
–
Net cash provided by financing activities
186,248
91,499
Effect of exchange rate changes on cash, cash equivalents and restricted cash
4,193
3,549
Net increase (decrease) in cash, cash equivalents and restricted cash
73,459
(111,869)
Cash, cash equivalents and restricted cash, at beginning of period
117,949
201,457
Cash, cash equivalents and restricted cash, at end of period
$ 191,408
$ 89,588
Cash, cash equivalents and restricted cash, at end of period:
Cash and cash equivalents
$ 189,649
$ 89,588
Restricted cash, non-current (included in other assets)
1,759
–
Cash, cash equivalents and restricted cash, at end of period
$ 191,408
$ 89,588
iRobot Corporation
Supplemental Information
(unaudited)
For the three months ended
For the nine months ended
September 30, 2023
October 1, 2022
September 30, 2023
October 1, 2022
Revenue by Geography: *
Domestic
$ 85,781
$ 147,075
$ 288,725
$ 439,626
International
100,395
131,116
294,311
385,885
Total
$ 186,176
$ 278,191
$ 583,036
$ 825,511
Robot Units Shipped *
Vacuum
585
925
1,760
2,556
Mopping
42
81
135
289
Total
627
1,006
1,895
2,845
Revenue by Product Category **
Vacuum***
$ 172
$ 251
$ 540
$ 736
Mopping and other****
14
27
43
90
Total
$ 186
$ 278
$ 583
$ 826
Average gross selling prices for robot units
$ 331
$ 314
$ 354
$ 325
Headcount
1,126
1,316
* in thousands
** in millions
*** Includes Roomba robot vacuum-related accessory revenue
**** Includes Braava robot mop-related accessory revenue and air purifier, handheld vacuum and Root
Certain numbers may not total due to rounding
iRobot Corporation
Explanation of Non-GAAP Measures
In addition to disclosing financial results in accordance with U.S. GAAP, this earnings release contains references to the non-GAAP financial measures described below. We use non-GAAP measures to internally evaluate and analyze financial results. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and enable comparison of our financial results with other public companies, many of which present similar non-GAAP financial measures.
Our non-GAAP financial measures reflect adjustments based on the following items. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated.
Amortization of acquired intangible assets: Amortization of acquired intangible assets consists of amortization of intangible assets including completed technology, customer relationships, and reacquired distribution rights acquired in connection with business combinations as well as any non-cash impairment charges associated with intangible assets in connection with our past acquisitions. Amortization charges for our acquisition-related intangible assets are inconsistent in size and are significantly impacted by the timing and valuation of our acquisitions. We exclude these charges from our non-GAAP measures to facilitate an evaluation of our current operating performance and comparisons to our past operating performance.
Net Merger, Acquisition and Divestiture (Income) Expense: Net merger, acquisition and divestiture (income) expense primarily consists of transaction fees, professional fees, and transition and integration costs directly associated with mergers, acquisitions and divestitures, including with respect to the iRobot-Amazon Merger. It also includes business combination adjustments including adjustments after the measurement period has ended. The occurrence and amount of these costs will vary depending on the timing and size of these transactions. We exclude these charges from our non-GAAP measures to facilitate an evaluation of our current operating performance and comparisons to our past operating performance.
Stock-Based Compensation: Stock-based compensation is a non-cash charge relating to stock-based awards. We exclude this expense as it is a non-cash expense, and we assess our internal operations excluding this expense and believe it facilitates comparisons to the performance of other companies.
Tariff Refunds: Our exclusion from Section 301 List 3 tariffs was reinstated in March 2022, which temporarily eliminates tariffs on our Roomba products imported from China beginning on October 12, 2021 until December 31, 2022. This temporary exclusion, which was subsequently extended until September 30, 2023, and then further extended until December 31, 2023, entitles us to a refund of all related tariffs previously paid since October 12, 2021. We exclude the refunds for tariff costs expensed during fiscal 2021 from our 2022 non-GAAP measures because those tariff refunds associated with tariff costs incurred in the past have no impact to our current period earnings.
IP Litigation Expense, Net: IP litigation expense, net relates to legal costs incurred to litigate patent, trademark, copyright and false advertising matters against SharkNinja. Any settlement payment or proceeds resulting from these infringements are included or netted against the costs. We exclude these costs from our non-GAAP measures as we do not believe these costs have a direct correlation to the operations of our business and may vary in size depending on the timing and results of such litigations and settlements.
Restructuring and Other: Restructuring charges are related to one-time actions associated with realigning resources, enhancing operational productivity and efficiency, or improving our cost structure in support of our strategy. Such actions are not reflective of ongoing operations and include costs primarily associated with severance costs, certain professional fees, costs associated with consolidation of facilities, warehouses and any other leased properties, and other non-recurring costs directly associated with resource realignments tied to strategic initiatives or changes in business conditions. We exclude this item from our non-GAAP measures when evaluating our recent and prospective business performance as such items vary significantly based on the magnitude of the action and do not reflect anticipated future operating costs. In addition, these charges do not necessarily provide meaningful insight into the fundamentals of current or past operations of our business.
Gain/Loss on Strategic Investments: Gain/loss on strategic investments includes fair value adjustments, realized gains and losses on the sales of these investments and losses on the impairment of these investments. We exclude these items from our non-GAAP measures because we do not believe they correlate to the performance of our core business and may vary in size based on market conditions and events. We believe that the exclusion of these gains or losses provides investors with a supplemental view of our operational performance.
Debt issuance costs: Debt issuance costs include various incremental fees and commissions paid to third parties in connection with the issuance of debt.
Income tax adjustments: Income tax adjustments include the tax effect of the non-GAAP adjustments, calculated using the appropriate statutory tax rate for each adjustment. We regularly assess the need to record valuation allowances based on non-GAAP profitability and other factors. We also exclude certain tax items, including the impact from stock-based compensation windfalls/shortfalls, that are not reflective of income tax expense incurred as a result of current period earnings. During the three months ended September 30, 2023, we concluded that, based on the introduction of negative evidence associated with increased expenses expected from the Term Loan issued during the quarter, it is no longer more likely than not that the net deferred tax assets are recoverable on a non-GAAP basis. Accordingly, we recorded a valuation allowance of $41.7 million as a non-GAAP adjustment during the three months ended September 30, 2023. We believe disclosure of the income tax provision before the effect of such tax items is important to permit investors’ consistent earnings comparison between periods.
iRobot Corporation
Supplemental Reconciliation of GAAP Actuals to Non-GAAP Actuals
(in thousands, except per share amounts)
(unaudited)
For the three months ended
For the nine months ended
September 30, 2023
October 1, 2022
September 30, 2023
October 1, 2022
GAAP Revenue
$ 186,176
$ 278,191
$ 583,036
$ 825,511
GAAP Gross Profit
$ 48,013
$ 76,407
$ 138,066
$ 264,867
Amortization of acquired intangible assets
292
837
864
2,533
Stock-based compensation
838
548
2,226
1,574
Tariff refunds
–
–
–
(11,727)
Net merger, acquisition and divestiture expense
288
–
898
–
Restructuring and other
(17)
530
174
4,551
Non-GAAP Gross Profit
$ 49,414
$ 78,322
$ 142,228
$ 261,798
GAAP Gross Margin
25.8 %
27.5 %
23.7 %
32.1 %
Non-GAAP Gross Margin
26.5 %
28.2 %
24.4 %
31.7 %
GAAP Operating Expenses
$ 107,507
$ 144,774
$ 349,913
$ 420,436
Amortization of acquired intangible assets
(174)
(11,568)
(529)
(12,603)
Stock-based compensation
(8,537)
(7,729)
(23,654)
(21,934)
Net merger, acquisition and divestiture expense
(8,564)
(7,837)
(21,991)
(8,117)
IP litigation expense, net*
–
(312)
(91)
#
(4,234)
Restructuring and other
(169)
(4,486)
(8,062)
(5,413)
Non-GAAP Operating Expenses
$ 90,063
$ 112,842
$ 295,586
$ 368,135
GAAP Operating Expenses as a % of GAAP Revenue
57.7 %
52.0 %
60.0 %
50.9 %
Non-GAAP Operating Expenses as a % of Non-GAAP Revenue
48.4 %
40.6 %
50.7 %
44.6 %
GAAP Operating Loss
$ (59,494)
$ (68,367)
$ (211,847)
$ (155,569)
Amortization of acquired intangible assets
466
12,405
1,393
15,136
Stock-based compensation
9,375
8,277
25,880
23,508
Tariff refunds
–
–
–
(11,727)
Net merger, acquisition and divestiture expense
8,852
7,837
22,889
8,117
IP litigation expense, net*
–
312
91
#
4,234
Restructuring and other
152
5,016
8,236
9,964
Non-GAAP Operating Loss
$ (40,649)
$ (34,520)
$ (153,358)
$ (106,337)
GAAP Operating Margin
(32.0) %
(24.6) %
(36.3) %
(18.8) %
Non-GAAP Operating Margin
(21.8) %
(12.4) %
(26.3) %
(12.9) %
iRobot Corporation
Supplemental Reconciliation of GAAP Actuals to Non-GAAP Actuals continued
(in thousands, except per share amounts)
(unaudited)
For the three months ended
For the nine months ended
September 30, 2023
October 1, 2022
September 30, 2023
October 1, 2022
GAAP Income Tax Expense
$ 598
$ 59,020
$ 5,053
$ 26,718
Tax effect of non-GAAP adjustments
32,045
(16,282)
565
(27,647)
Other tax adjustments
(1,638)
(29,679)
(4,150)
(30,479)
Non-GAAP Income Tax Expense (Benefit)
$ 31,005
$ 13,059
$ 1,468
$ (31,408)
GAAP Net Loss
$ (79,205)
$ (128,366)
$ (241,117)
$ (202,193)
Amortization of acquired intangible assets
466
12,405
1,393
15,136
Stock-based compensation
9,375
8,277
25,880
23,508
Tariff refunds
–
–
–
(11,727)
Net merger, acquisition and divestiture expense
8,852
7,837
22,889
8,117
IP litigation expense, net*
–
312
91
#
4,234
Restructuring and other
152
5,016
8,236
9,964
Loss on strategic investments
758
14
3,910
18,828
Debt issuance costs
11,837
–
11,837
–
Income tax effect
(30,407)
45,961
3,585
58,126
Non-GAAP Net Loss
$ (78,172)
$ (48,544)
$ (163,296)
$ (76,007)
GAAP Net Loss Per Diluted Share
$ (2.86)
$ (4.71)
$ (8.73)
$ (7.44)
Amortization of acquired intangible assets
0.02
0.46
0.05
0.56
Stock-based compensation
0.34
0.30
0.94
0.86
Tariff refunds
–
–
–
(0.43)
Net merger, acquisition and divestiture expense
0.32
0.29
0.83
0.30
IP litigation expense, net*
–
0.01
–
#
0.15
Restructuring and other
–
0.18
0.30
0.37
Loss on strategic investments
0.03
–
0.14
0.69
Debt issuance costs
0.43
–
0.43
–
Income tax effect
(1.10)
1.69
0.13
2.14
Non-GAAP Net Loss Per Diluted Share
$ (2.82)
$ (1.78)
$ (5.91)
$ (2.80)
Number of shares used in diluted per share calculation
27,738
27,264
27,608
27,159
Supplemental Information
Days sales outstanding
36
44
GAAP Days in inventory
161
190
Non-GAAP Days in inventory(1)
163
191
* Beginning in the three months ended July 1, 2023, we no longer exclude IP litigation expense, net from our non-GAAP performance measures.
# Reflects IP litigation expense, net recorded in the three months ended April 1, 2023.
(1) Non-GAAP Days in inventory is calculated as inventory divided by (Revenue minus Non-GAAP Gross Profit), multiplied by 91 days.
iRobot Corporation
Supplemental Data – Impact of Section 301 Tariffs
(in thousands, except per share amounts)
(unaudited)
For the three months ended
For the nine months ended
September 30, 2023
October 1, 2022
September 30, 2023
October 1, 2022
Section 301 Tariff Costs
$ 433
$ 948
$ 1,093
$ 2,471
Impact of Section 301 tariff costs to gross and operating margin (GAAP
& non-GAAP)
(0.2) %
(0.3) %
(0.2) %
(0.3) %
Tax effected impact of Section 301 tariff costs to net income per diluted
share (GAAP)
$ (0.02)
$ (0.03)
$ (0.04)
$ (0.09)
Tax effected impact of Section 301 tariff costs to net income per diluted
share (non-GAAP)
$ (0.03)
$ (0.05)
$ (0.04)
$ (0.06)
Certain numbers may not total due to rounding
SOURCE iRobot Corporation
Consumers should trust that their floor cleaning robot is intelligent enough to avoid making its own mess, will finish its job without interruption…
iRobot Corp. (NASDAQ: IRBT), a leader in consumer robots, today expanded its 2-in-1 lineup with the Roomba Combo j5+ and Roomba Combo i5+ robot…
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iRobot Reports Third-Quarter 2023 Financial Results – PR Newswire
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