iRobot Corp. (NASDAQ: IRBT), a leader in consumer robots, today announced its financial results for the second quarter ended July 2, 2022. Additionally, in a separate release, iRobot announced it has entered into a definitive agreement to be acquired by Amazon.com, Inc. (NASDAQ: AMZN). Under the terms of the agreement, Amazon will acquire all the outstanding shares of iRobot common stock for $61.00 per share in cash for a transaction value of approximately $1.7 billion, including iRobot’s net debt.
Financial Performance Highlights
- Revenue for the second quarter of 2022 was $255.4 million, compared with $365.6 million in the second quarter of 2021. Revenue for the first half of 2022 was $547.3 million versus $668.9 million in the first half of 2021.
- The company’s second-quarter 2022 revenue performance was primarily impacted by unanticipated order reductions, delays and cancellations from retailers in North America and EMEA, and, to a much lesser extent, lower-than-anticipated direct-to-consumer (DTC) sales and the impact of changes in foreign exchange rates. Geographically, second-quarter 2022 revenue declined 39% in EMEA, 29% in the U.S. and 18% in Japan over the prior period last year.
- Revenue from mid-tier robots (with an MSRP between $300 and $499) and premium robots (with an MSRP of $500 or more) represented 83% of total robot sales in the second quarter of 2022 versus 82% in the same quarter one year ago.
- Aeris air purifier revenue was approximately $3 million in the second quarter of 2022.
- We estimate that iRobot’s second-quarter 2022 revenue to support e-commerce, which spans the company’s own website and app, dedicated e-commerce websites and the online arms of traditional retailers, declined by 35% from the second quarter of 2021 and represented 62% of second-quarter 2022 revenue. iRobot’s direct-to-consumer (DTC) revenue of $40 million declined 12% from the prior year’s second quarter.
- The company’s second-quarter 2022 GAAP operating loss was $63.9 million, compared with a GAAP operating loss of $3.0 million in the second quarter of 2021. iRobot’s second-quarter 2022 non-GAAP operating loss was $53.3 million, compared with non-GAAP operating income of $9.0 million in the same period one year ago. The company’s GAAP operating loss for the first six months of 2022 was $87.2 million, compared with GAAP operating income of $3.3 million in the first half of 2021. iRobot’s first-half 2022 non-GAAP operating loss was $71.8 million versus non-GAAP operating income of $23.9 million in the same period one year ago. The company’s operating loss reflects the impact of lower-than-expected revenue, partially offset by the benefits of certain cost management activities.
- iRobot’s GAAP net loss per share was $1.60 for the second quarter of 2022, compared with GAAP net loss per share of $0.10 in the second quarter of 2021. Non-GAAP net loss per share was $0.35 for the second quarter of 2022 versus non-GAAP net income per share of $0.27 in the second quarter of 2021. First-half 2022 GAAP net loss per share was $2.72, compared with GAAP net income per share of $0.16 in the first half of 2021. First-half 2022 non-GAAP net loss per share was $1.01, compared with non-GAAP net income per share of $0.68 in the same period of 2021.
- As of July 2, 2022, the company’s cash, cash equivalents and short-term investments were $63.4 million, compared with $113.5 million as of April 2, 2022, and $234.5 million at the end of 2021. During the quarter, the company drew down $35 million from its unsecured revolving line of credit of $150 million.
- The company’s inventory balance was $397.0 million, or 210 days, as of July 2, 2022, versus $276.5 million, or 112 days, at the end of the second quarter one year ago. The inventory increase reflects increased on-hand inventory levels entering the quarter, higher in-transit inventory levels and the impact of lower-than-expected orders during the quarter. iRobot plans to use its on-hand inventory to help fulfill anticipated orders over the coming quarters.
Cost-Reduction Actions
- To better align its cost structure with near-term revenue, iRobot is in the process of initiating a restructuring of its operations, which is expected to deliver net savings in the range of approximately $5 million to $10 million in 2022 and approximately $30 million to $40 million in 2023. As part of the restructuring, the company is accelerating actions to shift certain non-core engineering functions to lower-cost regions and increasingly leverage its joint design manufacturing (JDM) partners; better balancing global and regional commercial and marketing resources to support go-to-market plans while driving efficiencies and achieving economies of scale; realigning other operational areas to best support current needs of the business; and reducing its global facilities footprint. The actions are expected to result in a net reduction of approximately 140 employees, which represents 10% of the company’s workforce as of July 2, 2022.
- In conjunction with the workforce reduction, iRobot expects to record restructuring charges totaling between $5 million and $6 million over the next two quarters with the majority of the restructuring charges anticipated in the third quarter of 2022. iRobot plans to complete activities in support of the rationalization of its global facilities during the third quarter of 2022 and expects to record additional restructuring charges in conjunction with this action.
- These actions help support the company’s near-term priorities to drive innovation by executing on its product roadmaps, optimize inventory levels across all major channels, expand DTC sales and position the business for profitable growth in 2023. They also augment other cost-reduction actions that include recalibrating near-term promotional and advertising plans, carefully managing hiring activities, adjusting short-term incentive compensation to align with projected performance and reducing other discretionary spending.
Second-Quarter and Recent Business Highlights
- For the 8th consecutive year, Roomba® was a featured product in Amazon’s Prime Day event, which was held on July 12-13, 2022.
- The company’s community of engaged, connected customers who have opted-in to its digital communications grew to 15.7 million, an increase of 35% from the second quarter of 2021.
- In May 2022, the company introduced iRobot OS, an evolution of the company’s Genius Home Intelligence platform that delivers a new level of customer experience for a cleaner, healthier and smarter home.
- iRobot’s j7+ continues to generate favorable reviews and awards with recent accolades in the U.S. from ZDNet and Android Headlines, in the UK from Good Housekeeping, and in Japan from Lee and ASCII.
In light of the transaction with Amazon.com, Inc. announced separately today, iRobot will not hold its second-quarter 2022 financial results conference call, which was originally scheduled for August 10 at 8:30 am ET. In addition, iRobot has withdrawn its prior 2022 financial expectations issued in early May 2022, as well as its long-term financial targets provided in December 2021. Given the ongoing disruptions and uncertainty that could impact the company’s outlook, iRobot is suspending its practice of providing financial guidance.
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.
