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.
"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. | |||||
SOURCE iRobot Corp.
