iRobot Reports Second-Quarter 2020 Financial Results

BEDFORD, Mass., July 21, 2020 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in consumer robots, today announced its financial results for the second quarter ended June 27, 2020.

Colin Angle, chairman and chief executive officer of iRobot, stated, "Consistent with our business update last month, iRobot delivered a stronger-than-expected second-quarter performance as demand strengthened meaningfully during the quarter. Our top-line results were highlighted by 43% growth in our premium robots. Quarterly revenue in each major geographic region surpassed our initial targets entering the quarter, led by 13% growth in the U.S. and 43% expansion in Japan. Our return to operating profitability reflected the combination of higher revenue, notable improvement in our gross margin and disciplined expense management."

"We are making tangible progress in our strategy to differentiate our robots through their ability to deliver an exceptional cleaning experience as our product mix continued to shift toward our premium robots," Angle noted. "Maintaining a clean home has taken on greater prominence during this pandemic. Consumers are increasingly realizing that our floor cleaning robots, particularly our premium products such as the Roomba i7 Series and s9 Series, along with the Braava jet m6, possess the cleaning efficacy, thoughtful intelligence and home understanding to become trusted cleaning companions. Related to this, our community of connected customers grew 13% sequentially from the end of March to approximately 6.9 million at the end of Q2."

Angle concluded, "We move into the second half of 2020 with relatively low inventory levels at retailers and solid year-to-date sell-through momentum globally. Despite considerable macroeconomic uncertainty and limited visibility into the timing and magnitude of second-half orders, we are incrementally more optimistic about our second-half revenue growth prospects than we were in mid-June. Rather than an expected decline in annual revenue, we now anticipate 2020 revenue will be relatively unchanged to slightly higher than 2019. While our second-quarter profitability reflects the benefit of our tariff exclusion, we do not yet know whether this exclusion will be extended through the second half of the year. Nevertheless, we are focused on converting our second-half top-line results and prudent spending into a solid operating profitability and EPS performance."

Financial Performance Highlights

• Revenue for the second quarter of 2020 was $279.9 million, an increase of 8% from $260.2 million in the second quarter of 2019. The growth primarily reflected a 43% increase in premium robot (list price of $500 or higher) revenue. Revenue for the first half of 2020 was $472.4 million versus $497.8 million in the first half of 2019.
• The second-quarter 2020 revenue performance was highlighted by 13% growth in the U.S. and 43% in Japan over the prior year period, which more than offset a 14% decline in EMEA.
• Approximately 70% of the second-quarter 2020 revenue was estimated to be generated from e-commerce-related orders that span the company's own website and app, dedicated e-commerce websites and the online arms of traditional retailers. Direct-to-consumer revenue of $33 million grew nearly 160% from the prior year's second quarter.
• Second-quarter 2020 GAAP operating income was $70.3 million, compared with GAAP operating income of $5.3 million in the second quarter of 2019. Second-quarter 2020 non-GAAP operating income of $40.5 million compared with non-GAAP operating income of $15.7 million in the same period one year ago. GAAP operating income for the first six months of 2020 was $50.1 million, compared with GAAP operating income of $27.5 million in the first half of 2019. First-half 2020 non-GAAP operating income was $26.1 million versus non-GAAP operating income of $48.8 million in the same period one year ago.
• GAAP net income per share was $2.07 for the second quarter of 2020, compared with GAAP net income per share of $0.25 in the second quarter of 2019. Non-GAAP net income per share was $1.06 for the second quarter of 2020 versus non-GAAP second-quarter 2019 net income per share of $0.48. First-half GAAP 2020 net income per share was $1.42, compared with $1.03 in the first half of 2019. First-half 2020 non-GAAP net income per share was $0.73, compared with $1.43 in the first half of 2019.
• As of June 27, 2020, the company's cash, cash equivalents and short-term investments were $242.3 million, compared with $263.5 million as of March 28, 2020 and $256.4 million as of December 28, 2019. The company, which has no debt, also has access to an unsecured revolving line of credit of $150 million, with an additional $75 million accordion feature.

Second-Quarter and Recent Business Highlights

• On April 24, the United States Trade Representative granted iRobot an exclusion for its Roomba® robot vacuums from Section 301 tariffs through August 7, 2020. The company does not yet know whether an extension for its exclusion beyond the expiration date will be granted.
• Completed all actions associated with the company's April 2020 restructuring, recording a $1.9 million charge primarily associated with severance costs in the second quarter.
• Continued progress in expanding the company's community of engaged owners who have opted-in to its digital communications (in-app messaging, email or both) to approximately 6.9 million, up 13% since the end of the first quarter and nearly 110% from the same period one year ago.
• Recognition for iRobot and its products continued to grow globally with awards and favorable reviews. iRobot was among the winners of the Robotics Business Review's 2020 RBR50 Robotics Innovation Award while Roomba and Braava received accolades from Reviewed.com, Tom's Guide, Popular Mechanics, Red Dot, Real Homes and LEE.

Second-Quarter 2020 Results Conference Call
iRobot will host a conference call tomorrow at 8:30 a.m. ET to review its second-quarter 2020 financial results, and discuss its outlook going forward. Pertinent conference call details include:

A live webcast of the conference call, along with the conference call prepared remarks, will be accessible on the event section of the company's website at https://investor.irobot.com/events/event-details/q2-2020-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 July 29, and can be accessed by dialing 404-537-3406, passcode 2875976.

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® Robot Vacuum in 2002. Today, iRobot is a global enterprise that has sold more than 30 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 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: second-half 2020 revenue growth prospects; full-year 2020 revenue expectations ranging from relatively unchanged to slightly higher than 2019 revenue; converting our second-half top-line results and prudent spending into solid operating profitability and EPS performance; the potential extension of our tariff exclusion; and future market conditions. 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: the impact of COVID-19 on our business, the industry and markets in which we operate, and the global economy; our ability to operate in an emerging market; the financial strength of our customers and retailers; the impact of tariffs on goods imported into the United States; 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.

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. 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.

Tariff Refunds: iRobot was granted a Section 301 List 3 Tariff Exclusion in April 2020, which temporarily eliminates tariffs on the Company's products imported from China until August 7, 2020 and entitles the Company to a refund of all related tariffs previously paid since September 2018. We exclude the refunds for tariffs paid in 2018 and 2019 from our 2020 second-quarter and year-to-date non-GAAP measures because those tariff refunds associated with tariff costs incurred in the past have no impact to our current period earnings.

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. 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.

IP Litigation Expense, Net: IP litigation expense, net relates to legal costs incurred to litigate patent, trademark, copyright and false advertising infringements, or to oppose or defend against interparty actions related to intellectual property. 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.

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.

Restructuring and Other: Restructuring charges are related to one-time actions associated with workforce reductions, including severance costs, certain professional fees and other 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.

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 reassess the need for any valuation allowance recorded based on the non-GAAP profitability and have eliminated the effect of the valuation allowance recorded in the U.S. jurisdiction. We also exclude certain tax items that are not reflective of income tax expense incurred as a result of current period earnings. These certain tax items include, among other non-recurring tax items, impacts from the Tax Cuts and Jobs Act of 2017 and stock-based compensation windfalls/shortfalls. 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.

SOURCE iRobot Corporation

Related Links

http://www.irobot.com