iRobot Reports Record Fourth-Quarter and Full-Year Revenue

BEDFORD, Mass., Feb. 7, 2018 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in consumer robots, today announced its financial results for the fourth quarter and full year ended December 30, 2017.

"In our first full year as a solely consumer-focused business, we delivered fantastic quarterly and full-year revenue growth of 54% and 34% respectively, over Q4 and full-year 2016. Record Q4 revenue was driven by very strong sales in the United States, and in EMEA, as the overall category continued to grow at an accelerating rate. We achieved record growth while maintaining unambiguous global product and brand leadership in the robotic vacuum cleaner (RVC) category.

"In 2018, we expect to cross the billion-dollar revenue threshold and deliver $1.05 to $1.08 billion in revenue, which is year-over-year growth of 19% to 22%, operating income of $86 to $96 million and EPS of $2.10 to $2.35.

"The opportunity ahead of us is tremendous. Global household penetration of robotic vacuum cleaners remains extremely low, in the single digits. Strong economic conditions worldwide are fueling overall global growth and positive consumer sentiment. We have demonstrated that in regions where we have run marketing programs to educate prospective customers about Roomba, we have increased our market share, and our recent distributor acquisitions enable us to extend our strategic marketing programs to Japan and Europe.

"Further, the global RVC category grew more than 25% in 2017, and we expect category growth to continue as we and competitors invest to drive awareness. And, we have seen retailers in the United States increasingly embracing and promoting the category through national advertising programs featuring RVCs, as well as allocating increased shelf space and investing in high-visibility displays.

"These are the growth drivers we see for Roomba, but we believe there is also a great opportunity to drive adoption of our Braava products through campaigns targeted at our millions of Roomba customers.

"There is a lot to be excited about. 2017 was a critical year for iRobot as the first full year focused solely on developing and delivering products for the home. We delivered outstanding financial results for the year while successfully executing the acquisition of two major distributors in key markets and extending our control over 75% of our global revenue. 

"In 2018, we plan to capitalize on the incremental investments we made in 2017 with the introduction of new products in the second half of the year. We expect double-digit revenue growth in all regions as we continue to evolve and extend our proven sales and marketing initiatives in overseas markets. In the U.S., we expect continued strong sales following our 40+% growth in 2017," said Colin Angle, chairman and chief executive officer of iRobot.  

Financial Results

• Revenue for the fourth quarter of 2017 was $326.9 million, compared with $212.5 million for the fourth quarter of 2016. Revenue for the full year 2017 was $883.9 million, compared with $660.6 million for the full year 2016. Full-year 2017 and 2016 revenue included $0.3 million and $4.8 million respectively, of D&S and other revenue.
• Operating income in the fourth quarter of 2017 was $23.1 million, compared with $18.7 million in the fourth quarter of 2016. Operating income for the full year 2017 was $72.7 million, compared with $57.6 million for the full year 2016.
• Quarterly earnings per share were $0.16 for the fourth quarter of 2017, compared with $0.49 in the fourth quarter of 2016. Fourth-quarter 2017 earnings per share included a negative ($0.41) impact from the new tax reform law for the remeasurement of our net deferred tax assets and a provisional repatriation toll charge, as well as a discrete tax benefit of $0.03 relating to the new 2017 stock compensation accounting standard. Full-year 2017 EPS was $1.77, compared with $1.48 for full-year 2016. Full-year 2017 earnings per share included a negative ($0.41) impact from the new tax reform law for the remeasurement of our net deferred tax assets and a provisional repatriation toll charge, as well as a discrete tax benefit of $0.41 relating to the new 2017 stock compensation accounting standard. Fourth-quarter 2016 earnings per share included a $0.03 benefit associated with a change in accounting treatment of an equity investment and a $0.01 contribution from transition services provided to our former D&S business. Full-year 2016 earnings per share included a negative ($0.10) impact from the divestiture of the D&S business and a $0.03 contribution from the sale of an investment.

Business Highlights

• In the fourth quarter, the positive impact of our targeted marketing programs in the U.S., EMEA and Japan drove year-over-year Q4 revenue growth of 54%. Fourth-quarter consumer revenue grew 47% in the United States, 34% in Japan and more than doubled in EMEA, in each case over Q4 2016.
• In Q4, we launched our first ever Braava national television program in the U.S., which drove Braava family revenue growth of 65% in the U.S. over full-year 2016.
• We announced an agreement with Black & Decker in which Black & Decker agreed to discontinue sales of all home robotic vacuums for a certain period of time after selling through its existing inventory. This represents another win in an ongoing effort by iRobot to defend and protect its valuable intellectual property.

Financial Expectations

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

(Dollars in millions except Earnings Per Share)

Fiscal Year 2018                                           
Revenue                                              $1,050 - $1,080                      
Operating Income                                $86 - $96                    
Tax Rate (before discrete items)         25 - 27%
Earnings Per Share                             $2.10 - $2.35  

Three-Year Financial Targets 2018 - 2020 
Revenue Growth                                             Approximately 20% 
Gross Margin                                                  50 – 51% 
Operating Margin                                            Increasing to 10%

Fourth-Quarter and Full-Year Conference Call 
iRobot will host a conference call tomorrow at 8:30 a.m. ET to discuss its financial results for the fourth fiscal quarter and full-year 2017, the outlook for full-year 2018 financial performance, and the company's three-year financial targets for 2018 through 2020.

Pertinent details include:

Date:                           Thursday, February 8 
Time:                           8:30 a.m. ET  
Call-In Number:          213-358-0894 
Passcode:                    4995868

A live, audio broadcast of the conference call also will be available at http://investor.irobot.com/events/event-details/q4-2017-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 February 15, and can be accessed by dialing 404-537-3406, passcode 4995868.

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 data 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 robotic vacuum cleaners, and for our Roomba® and Braava® robots; the impact of sales and marketing initiatives; the impact of investments in research and development, technology and innovation; the introduction of new products and the timing and impact thereof; the impact of our acquisition of our largest European distributor; anticipated revenue, revenue growth, operating income and earnings per share for the fiscal year ended December 29, 2018; and anticipated revenue growth, gross margin and operating income as a percent of revenue for the next three fiscal years. 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, 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.

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SOURCE iRobot Corp.