iRobot (IRBT) 10 Feb 222021 Q4 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Q4 and Full Year 2021 iRobot Corp. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. advised conference be being Please Instructions] that is today's recorded. [Operator to I Mr. conference would Instructions] hand now today, [Operator speaker like the your over to Kramer. Andrew Mr. Kramer, the floor yours. is

everybody. you, Thank good morning, and Chris,

Chairman Joining and Vice me and Zeiler. Julie CFO, call on are President CEO, Angle; and today's Colin Executive iRobot's

the of Act Before and statements I statements on and could based provisions call, Private Safe historical Reform or are forward-looking for are agenda such subject pursuant I note differ involve to to that Harbor not like set that made statements implied forward-looking are Securities the XXXX. These expressed statements. to Litigation of factors made the from results to that, uncertainties on cause those by materially today's would risks actual today's call information many

and provide measures loss, on transparency margin, a of these defined will loss operating income operating Commission. and Securities operating in expense, disclosures and or revise reference statements, uncertainties by with our additional underlying and We call, to can believe financial net these obligation update potential. certain during share. and or Exchange filings public performance financial margin, this per risks financial including rate, we SEC help to non-GAAP result be conference into forward-looking gross our new as Additional non-GAAP as non-GAAP loss and information tax found results non-GAAP non-GAAP and circumstances. the effective profit non-GAAP non-GAAP Related Regulation-G, iRobot income operating our that non-GAAP no undertakes information whether iRobot's

as quarter financial most well www.irobot.com. be call at remarks and tables financial provided of last end metrics will in XXXX. as the results full is non-GAAP release we quarter of the in issued year evening, unless reconciliations and measure of these on year otherwise, fourth which end that are the fourth measures press our financial conference metrics on XXXX financial provided financial only, fourth each the stated non-GAAP non-GAAP and these available GAAP our of today's measures the the the the to website are comparable definitions of full and the we these directly at outlook and XXXX prepared Our financial comparisons a Also, at XXXX on with quarter reference historical all basis of

detail, XXXX our and insight turn follows, our some After the For the will our conclude that, term. our this the to At Colin over briefly as XXXX. company's review Angle. over today's results, open our additional and call expectations point, with I'll then will in questions. Colin into call for financial guidance. be Colin commentary annual closing milestones, offer bright the call, cover will about outline agenda Julie we'll quarterly for and review important will our results financial longer remarks prospects strategic

prevented quarter thank we quarter us. million, We joining the for chain over in delays myriad Good us quarter we October. Despite a morning revenue orders. and you generated within results from even as delivered million supply fourth parameters in fulfilling $XX fourth $XXX financial of shipping fourth outlined of challenges,

of Although, were $XX manage net of million, carefully and margins loss expected, costs to per an loss report than our we gross our operating share a lower $X.XX.

of For profit $X.XX. operating X% the X% we with full of year, an by billion, revenue $X.XXX to grew EPS and

models. most for premium some our ongoing Our of supply followed half popular first impacted lines. with of top profitability, two XXXX More as and demand, half revenue that Roomba was outstanding a challenges shaped halves constrained can tale shortages, chip specifically, chain keep by be and pace a with growth second described performance by bottom best semiconductor our to our that ability especially

hampered by top In performance our also was delays. addition, line shipping

and revenue, our this higher strategy Our material, review XXXX the lower GET, during we INNOVATE, profitability to and XXXX increased which progress We KEEP, component combination transportation strategy. backdrop recap to our I'd against during XXXX considerable XXXX and costs, key inflation accomplishments detailed execute goals made raw costs recent Day. reflected Investor like GROW tariffs. the of our of

On platform. high Genius are a competitive our the care superior floor is PCs, is product stage consumers, of sectors as not the Genius Home purchasing differentiated performance cell that by other factor as with phones by software innovation win and front, software, designed sustainable advantage decisions. robotics took during consumer products with iRobot's beautifully hardware consumer primary delivering the for strategy following intelligence our for center to robots XXXX. Intelligence

the primary XX% XXXX for our store key in for to plan at Genius customers. to as region. With approximately revenue. in its Our sales, our helped differentiator, features only of plan of aimed digital intelligence, Roomba primary XXXX. and selling I'm category's leader has the is five updates September our iX in jX most in capabilities and cascade robots excited top difference and certain showcased in for the and a bringing between its our is robots of jX the portfolio. U.S. Roomba The robot our leadership thoughtfulness the paying Sale a to globally XXXX. Braava fortify We recent RVC launch year To and represent mid-tier new and Genius personalization and in value successful premium to U.S. we software. robot the upgrade down into With room share of two are The our geographic off, robots. insights months premium all this became four make of technology Roomba series jX what's major grew these deliver XXXX each more XX% mid-tier remained Genius strategy and our Genus' highest predecessor product years. greater

XXXX and of In that introduce new series global and terms jX of new last in robots, series complete we plan the one rollout year. Roomba the iX model began to

of portfolio the introduction past this rebranding across We with XXXX, products, certain of Aeris this acquired excited We about product line. least we one anticipate half the by capabilities for at air along purifier November. are the Aeris also followed Genius second of integration new related air the our plans initial purifier in

the RVC as low. overall household still to continued grow, penetration relatively Even has is category

a that strategy new get bringing into success. our our franchise component of central remains As result, our customers to

of the new and a feature or data retain And X% base scaled will transfer new socks acquisition. customers unique move our XX owner users Since expand users cords we to is During on opted help advantage this communications every enables continues add who to avoided rates when XXXX. to XXXX, fleet. copy into capitalizing of launch, the a millions the existing jX smarter fundamental to and mission. has distributor channel to images XXXX owners that prompted. house, upgrades, their our connected to points. customers profitable thousands of with opportunity into believe Retailer their Retail identified have gets November Genius opt revenue shoes, all bringing our this XX% proven functionality new of apps users and million. accidents, We connected Genius continued the one a the maps price a new by that jX are highest with completion We robot our products. jX's for after pet With mission result, when our be XX% robots. into can as sharing more our digital new to to a by and because grew of in customer it when great phone. feature at continue replace franchise into and in opportunity, they like this the are smartphone to took and

sure subscribers offerings during year. is in series globally. consistent robot, to We the a buys to XX%. this and in initiative continue us it they the it Roomba for it Quarterly we customer XXXX XX,XXX goal strengthen segment. in over will use will was that last scaling at a utilization expect global with of key and make us iX year off. XXXX position care the XXXX Having about in the subscription floor expect That our our that love our rollout closed robot-as-a-service was case be to just continue XXXX our entry-level worldwide, enable After to

in utilization CSAT levels We maintain and scores strong consistently expect high XXXX. to NPS and

XXXX cascade believe over in to We XXXX excellent happy iRobot that stickiness with represented our that of saw this tangible sales make long-term in owners. estimate down and driver of our further purchase existing A particular, revenue. behind Direct-to-consumer from certain our growth increased one-third major connected further of will and Genius revenue As increase features us progress these our total XX% customer XX% of their and up made revenue customers. family, revenues. that XX% products our conviction will we in we directly grew estimate nearly we customer robot revenue. into our growth lies We total more ownership in XX% we the In premium ambitions front services in represents XXXX. on and course

Our transactional sales more represented total more XX% a is and into activity mid of customers. DXC from total we teens revenue. drive of accelerate target XXXX grew XXXX as the percentage to high revenue to annual sales approximately as connected Accessory our in X%

new XXXX insights implementation in new we roll owners technology, made In we and growth the that robots. properly this out tools. maintain good their expect of on We from as progress especially Genius marketing with continued systems front XXXX, help

into production. to priority diversification XXXX into to to and entire investment digital is growth. customers efforts This personalized enhance times. highest online Product designed at deliver grow to the Moving the is the fuel is move one app existing the at on to promotions scale intrinsically of important buying our customer stack right initiatives to enable revenue right technology our our website and marketing experience further marketing our right

million supports both our contributed that provide XXXX their will and to market keep premium total cleaner air $X products products our revenue. Aeris our addressable of November our integration acquisition homes progressing. more and generate $XX under Our we ability The to consumers healthier. Aeris with expands Aeris of to is Overall, quarter expect organization fourth in just XXXX. than purification million into

our top performance two half year. that of a tale XXXX second expect of the line in strength with will XXXX resemble anticipated the as we ahead, Looking halves

revenue our for achieve from revenue we the growth to to that important second XXXX. $X.XX full half in about a over billion generated expect and year targets billion, XX% XXXX very which of XX% these guidance be will reasons. optimistic We approximately XX% to $X.XX potential couple Our are ranges of represents currently

averaged are First, low The RVC in years, XXXX. over The despite XXXX. bright on growth double-digit a category category to iRobot's grew XXXX X% CAGR revenue price future, growth maintaining premium and mid XX% tiers. the category with the oriented targets in the a is a lapping leadership our based thanks in very in annual past since with line which XXXX growth two strong

world. for important there's upside further these of as products the considerable penetration Just household around

single-digit high augmented by air mid-teen growth assuming purifier are we from targets, our to organic into of inorganic closer Looking sales. several points expansion

Our at two revenue organic the line outlook with years. CAGR growth is in past iRobot's the over revenue midpoint

confident over Second, that to increasingly our coming quarters. we access the will componentry improve semiconductor are

Our suppliers. existing and qualifying with visibility most an meaningful strategic new from progress components improved both and suppliers reflects our largest dialogue and ongoing chip in new

In performance with over XXXX. our on represent these non-GAAP like like results dynamics modest that turn on XX% Overall, spend into few $XX terms I targets, of and We XX% between this in the financial of us year before of are from will year to our which I'd minutes income improvement range momentum $XX a XXXX our a provide XXXX for review excited and million extremely our expect XXXX forward. our operating will greater call second major the to XXXX insight margin the our year $X, direction. Julie? half would But targets targets. gross to Based guidance. non-GAAP that point profitability significant and believe to a Julie EPS over strategic our XXXX I'd long-term growth represent $X.XX going we we to full do, about turning million.

Thank you Colin.

our earlier, and Andy my of non-GAAP be will results As a outlook review basis. mentioned financial on done

loss of quarterly are income per of were $XXX and revenue and the share against declined are full quarter All against fourth otherwise operating each and XXXX comparisons October. outlined the the of margin, noted. gross XXXX on will expense, results rate otherwise Total mean income unless effective ranges call operating non-GAAP metric. iRobot's operating all we in tax and corresponding loss, the fourth net XXXX unless profit QX financial XX%. million comparisons within So mention margin, stated QX year quarter

major a were delays semiconductor fourth to from XXXX of second addition these half first to key the many we In fulfilled $XX were chip orders a to of impacted some delays. These million primarily delays and quarter warehouses, windows, promotional in snowstorm labor unable that in recognize congestion, The last quarter port week levels, at the due constraints to more combination XXXX. of shortages the than although miss during Pacific resulted caused orders Northwest of quarter. shipping in production the

by working sell strong teams commercial XX% that in was as retailers the over closely XXXX inventory refine their Our the they quarters activities. are fourth Japan with Geographically quarter growth and of perspective, to product our EMEA. remainder. in coming mix promotional a the mix US offset represented XX% From in decrease a XX% a decrease QX up with Braava making the in Roomba revenue X%

year sales Americas as offset and as lapped we EMEA in slightly by quarter Our exceptionally growth declined in fourth ago. the Japan strong DTC sales was strong an a quarter lower

with the between bulk and absorption fixed to and promotion, the suboptimal and year reflected arising spend as largely primarily XXXX The quarter and R&D with higher combination $XXX and reflected percentage target. remainder extend of higher XX% represented the performance on the adjustments was gross costs. working costs was the declined air component tariff higher-than-forecasted gross and board component points expenses changes declined XX.X% transportation, projects split of operational The with of program fourth four quarter much associated lower-than-anticipated percentage to to Fourth production product our revenue. decrease certain due operating pricing being quarterly margin million geographic our percentage of in primarily decrease points and of of oceanic a expense in lesser below of promotional biggest disciplined spending across unfavorable prior the margin as costs, lower points and in associated quarter from the changes QX during pricing certain the five XX% Our in year-over-year XX tariffs mix, higher from media by activities. well The with XXXX. drivers

rate benefit was operating We loss with lower year favorable had our $XX combined in income operating a intangible million. driven the to deduction. QX derived full quarter Our tax adjustments tax fourth income in from or FDII by

not per of our product grew in DTC split due grew investments Two-thirds component evenly mix increased by growth the have air which technology highlighted and remainder $X.XX. headcount, initiatives, shifts products the we achieved combination with of in primarily The higher million our certain $X.XXX was and Operating pricing by operating margin loss personnel higher US, EMEA's grew consulting to XX% with the and expenses XX.X% support nine net R&D associated perspective, was to operating generated attributable decline with revenue and XX% associated $XXX marketing From associated quarter XXXX billion. our warranty fourth share to towards year of million new margin declined X%. revenue X%. full was income tariffs $XX by costs. transportation revenue initiatives. promotion. Geographically Our to was the year by a of X% Full increased expenses scale, XX% International that XX% and grew X% growth. from between XXXX and costs, sufficient yet of expense, Japan's gross XXXX higher and points was XXXX. percentage relatively and ocean

million Fourth netted Our Aeris, benefit increase the reflects against DSOs from of our short-term of full $XX from period days, fourth XX our The in with year operations acquisition decline effective X.X%. of of XXXX decrease quarter one flow XXXX in the the investments ago. was one primarily reported We ended end $X.XX. an year $XXX quarter. same day cash were tax and of We EPS QX. million from cash rate a XXXX

I'd inventory historical In like Our because moment topic XXXX, year-end million or this the XX spend XX to than balance on $XXX year-end higher a or days. the $XXX was is balance was inventory inventory days. million norms.

supply mentioned particularly I due extended and As constraints. difficult earlier, shipping both QX to was time frames

Our increase our increase which DII a DII. inventory added meaningful driven and year-end in-transit was by XXXX to balance in primarily days XX inventory,

as products. dollars elevated sheet to this and contract at the believe we inventory in next balance our front QX expect on We certain end-of-life our to optimize be days limited, to our will will due we underway higher put elongated time Work support balances is work programs shipping improvement of couple manufacturers and in utilization quarters. inventory, primarily inventory measured frames. stay XXXX capacity also although somewhat We to maximize carried for over

we a As in With XXXX outlook. XXXX result are targeting DII year-end levels that dive take the XX-day said, our range. let's low deeper into a

to revenue year with first revenue decline and X% second of half, anticipate to $X.XX we of to XXXX range an half Colin billion to X% anticipated XX% the half of XX% XX%. full our in to the $X.XX growth approximately expected second coming As We noted, grow billion. an anticipate in XX% revenue XX% will of

against our our compare a we the mix when air gross purification in half unusual newly for As way resemble revenue outlook XXXX volume robot robots, revenue from first Overall, the will generated we XXXX complemented higher came $XX-plus products. ASPs, our expect assumes half, second XXXX's together, very higher half. second XXXX, acquired unit with by of along XX% was million

We completion between work. half XX% in and year expect our second XX% the come air of the revenue of that our rebranding will of the following purifier

can targets. ideal rates. one reminder to forecast every business quarter in manage Since from growth focus timing a on next quarterly that basis and fluctuations we orders full encourage orders the the a we to year large and cause and As of on material even year, investors is our conditions this to our say under annual challenging shift our

decreased will margin a improve rates and contemplate in and level, combination costs. are reductions high partially promotional expense will air lot There initiatives, a euro ocean with be or XXXX that offset XX%. freight of rates We transport XX% X%. that plus and by in exchange between modestly yen at and expectations minus revenue COGS and of we line gross our current Additionally, expect but our higher pricing roughly warranty parts productivity activity increased anticipate the to moving

of currently December on labor, This anticipate terms costs. is million expectations tariffs, reflects we tariffs. across tariff our overarching in higher early total components full and materials, costs million to and XXXX in In $XX optimizing landed our focus year $XX than it

our now produced finalized in contract We in Roomba Malaysia. America XX% As we up product made North road plans, in with robots and manufacturers maps our XXXX both will of XXXX Malaysia. and China that be negotiations for expect all to commercial

range increased overall in of the of volume produced second we exit Malaysia expand the tariff deliver expect our in year, as robots and will and we in we XXXX half XXXX. meaningful savings the As decline costs

marketing targeting XXXX, XXXX operating to higher in historical primarily year of this costs over are The incentive million planned personnel new incremental with of XX% $XXX hires $XXX anticipated costs increased spend approximately the associated working or increase to programs. new R&D million and and compensation XX% range We on sales. norms, to returning reflects

trend necessary and to are working growth, of build-out XXXX This revenue, marketing higher be slightly it. more the G&A will as revenue. anticipated to the our than adding expected to a reflects R&D and operate MarTech While levels marketing talent of XXXX we historical stack and of returning percentage to percentage anticipate near as line sales our support a top levels

expect top we margin spending our currently guidance an of approximately Given X%. operating profit line plans, and

the rate. an dollar share of along tax of effective approximately for around income in X%. XX rate $X mix profits tax other diluted At million relatively count pretax shares. cause In and we meaningful can changes approximately terms small modeling anticipate anticipate jurisdictional a with million of effective levels those these of of expense in We changes notable the XXXX, profitability other assumptions

initial EPS to decline expect we range GAAP outstanding return our on end the over our recently we since to our investment. lockup note as gain approximately strategic quarter One Due sold $XX in our $X.XX an value of the our in stock We other Overall, of at will our year million income/loss. result, loss EPS GAAP investment GAAP assumptions. XXXX, of our period. a quick the Matterport an Matterport results significant $X. XXXX, the end recognize in results As the with full first investment from delivered to this in a in

operations other fundamental in of XXXX low given our XXXX expect remains million We revenue. to business our to terms modestly our be X% of XXXX In or financial from spending cash capital in XXXX levels will guideposts, anticipate range the anticipated that capital Overall, performance. minimally improve expected approximately XXXX flow we intensive. mid-$XX from

and In XX% QX terms of low QX range X% range additional $XXX of million in and revenue decline QX approximately some to X% anticipate growth. costs color, we would which currently margin currently tariff We quick a a the from anticipate between million $X million. $XXX

operating mid-XX% expect the range. We costs in range to

to our a operating range $XX As $XX million we expect loss from result, will million.

we believe within expectations call made color XXXX EPS drive progress fuel per demand half made $X.XX. and and our strategic loss to summary a our some That concludes In net us coming anticipated on shortages chain as turn costs. share now XXXX it ability further very expand additional beyond. range higher-than-expected our Colin the in year. improvement business, through commentary. managed growth for for and supply we back between and that second Our component to the challenging and a help I'll Nevertheless, XXXX my is to prior of absorb QX during be meet hamstrung of we to delivered will QX profit $X.XX difficult important

Thank you, Julie.

underlying sounded easy by we and year to achieving specifically billion XXXX XX% relatively XX%, demand As fulfill we More margin that to access EPS are financial the our on our our to into the gross ago. expect We to long-term half $X.XX. revenue serve between months $X.XX performance unveiled at and model operating springboard outlook our and been second to devices we've $X.X behind the deliver in as mid-XX% critical margins to to expanding increased assumptions is profit improving XXXX, that fundamentally financial between to half billion grow achieve a $X.X long-term our of 'XX model range our this primarily The low satisfy. we've second semiconductor between two outlined understand. the Day unable production will and Investor that based accelerating believe the

the We We people of double customer Genius robots new the our performance of because next own reasonable anticipate with and more than base more much robots with our retail expansive Roomba Braava delivers at more a and directly consumers between as years growing air growth will who more over that spends loyal customers connected way three and DXC in to expect purifiers them. growth faster products the channel We base buy our like increasingly the customers choose believe of our us. existing and size iRobot collaboration of largely an money level accessories and other directly.

committed improvement. years. in We significant We're tariff be the our in volume that of if next disappointed XXXX over margin significant a product will anticipate $XXX candidly 'XX. be our the we'll our expect air end the produced shrink purifier gross will to as Malaysia. America growth this of that meaningfully cost We for million-plus And North majority category vast by anticipate in we sales not us is few

We also a expect effort the achieve and our cost operations. efficiency ongoing supply gross across chain and expansion margin our relentless to will DTC benefit headwinds, of greater from scale easing further

initiatives, has most as plan to we of In will our leverage Those year. while terms fund operating our generating we our a growth more promising spending move improvement of point and will the past are ways or in dynamics our that exit our out calibrate know compelling us enable operating material accelerated XXXX, to of carefully hard costs each operating worked believe for to our profitability achievable. I EPS expectation both incredibly company in entire targets We team help year performance. the over forward. that underpin at and our iRobot

in employees that will build opportunity targets our create our exciting that and value for their how our lives help now. the our with take questions achieving we concludes motivated are partnering financial are by remarks. we've ahead ready that customers. us owners That Operator, intelligently products to better. We long-term see substantial lies make believe It's our are shareholders, our of to success the as All future. we the their outlined to

Citi. Thank you. Asiya first question Instructions] from [Operator comes of And our Merchant

is line Your open.

you the Great. your about a follow-up the Thank year. are supports I opportunity. that second quick the semiconductor And -- about half? second what then for challenges. for obviously, that ASP the kind talking the would expectations, the ease question have in on in half in What's inflection you growth I specifically the a in baked you semiconductor of talked on assumptions. have Colin

didn't you Julie shift think mid-tier talked lot fiscal fiscal that here also mix function of I benefited already if as missed, premium the about I from in Thank you XXXX XXXX. ASPs going increasing a a a guys in Is shift and robots? to you.

Sure.

start I'll So off.

longer You asked providers We're last This with much in about aggressively been supply. putting shortages. commitments a of the the is since our something place semiconductor working we've chip middle ensure year. semi of to continuity

disrupted of which and surge robot, are less some components was logic functions room year. demand microcontrollers, last of microcontrollers operates the some production the chips, was optimized older manufacturing lower-level quite had thus tech those lower lower-level but the include components frankly use as on that critical they some to Some the of processes, of the because integrated more

so a year digging efficiency. whole chain lot when a for a of the this hadn't semi were commitment of out to on is way the we demand forward-looking of last done past supply that optimizing required in And that plans has in we

is the year. of talking full we're chain a about continuity last adopted to that so plain we supply And outcome what commitment

wishful is it is anticipated carefully backs the And our the that the guidance we of supply architected so see, demand agreements will not our meet to we expectation the by thinking, suppliers. on that have with

ASPs. which for XX% guide the growth. your on I'll our If jump Asiya, about year, revenue I question then And XX% Great. on think aggregate to in is

down I and think it growth it's into organic important to inorganic break expectations.

with several expect said with high of single-digit associated growth we remarks, of mid-teen our growth our our in acquisition as guide prepared to coupled points So in organic Aeris. we inorganic

ongoing If then we primarily growth an with mix associated will the that in increased ASP that at and some of there growth DXC. course continued organic the well you see we've expansion in is assumption But mid complement also we at seen look units. that as with expectation, tiers, premium is of of look market our particularly, as expectation an it driven and by the

what to. If I the was a the Yes, that's Okay. ASPs. higher getting component DXC was of

Okay. Thank you.

Thank you.

from comes Babcock of question America. Bank John Next of

Your line is open.

and a taking on guess, mean, these quick to some morning things. it the just to seeing? lot of of able a category actually is the was if not broad opportunity that wondering products a I have even for I that margin low pricing say, Good of looked to to follow-up of just demand. your on Hey. you're I question, at ASP but I like on offset you different able a single-digit you achieve seems my impact competitive, percentage get, might last questions. that clearly across increase potentially some Have that if, side get pricing. And might be the like recognize cost thanks range been headwinds categories

you've to extent XXXX? you're at wondering Just looked how the what that about overall and that for thinking

Sure. in different we're looking This ways. testing I'll that. at something is take continuously

things going that There competitive, an market in see there's assumption is opportunity an other think models XXXX. are I the more for some some in So in you way. other can areas

our premium in certainly shortages. fully going for to that that to we global the launch rolled of product out. unable one It have because rollout back was were XXXX and differentiated which manufacture. that our is of scale of were plans short be XXXX the is the That was drivers the chronically we us and of needed will One we robots most jX, of distribution in that limited in

the year, of a last tier very some category general, As premium segments actually the growth, in we the marketplace entry consolidation. mid robust products demonstrated growth think about while actually levels to saw very, or

our so, -- us the and And player optimism premium underpins favors that also ASPs. as this around

for obviously And guidance as Thanks XXXX Okay. as since Day, overall, that changed your thinking just were then for color. what's far targets? in about that the Investor preliminary the those could talk you recognizing

I don't Investor the has think changed anything Day. from

what year consistent numbers full are we Investor conveyed the think I Day. what on we with

just on we shortages Investor then excited that, tale impacting Day of of now acceleration and best the color enjoy first our that are tail or two the and impact second supply this is two giving think significantly foreshadow the tale we the the to quantifying I the additional halves in of half we're that today end of to did half. we're cities the

talked said, Certainly, balance what Colin about. this margins from that we just we there. our expectation December. prepared of in in remarks, overall look to I to around we our gross tariff add with is and note factors, I on a as we still then, number about agree John, And line talked with it's I'll assumptions what changed important -- think But

then before last Okay, great. just question it I turn over. And

Any can come far helpful. revenue accessories? customers, back, on to from be would buying as you existing premium robots upgrading buy more they are customers As color robots? when tending or replacement that they Are to provide

to those experience more it disclose is have obstacles robot you as with your because premium abilities can't features have general The laddering I simply of that superior We premium this that. you mission completion, have robot purchase the fully exact that more -- a is understand superior robots. more quantify desire to There's of the demand. don't are benefits have more buy -- customers more your this percentages. repeat repeat take customers part likely driver with precision control But of journey in to and of up avoid

said as accessories revenue where customer like And if still we exists the it's even away, existing then base. been say that you XX%, thing last that and very quarters highlighting our in the enjoyed would piece on of our XXXX, number take small base I've overall to just a it I but opportunity with growth -- taking one in something add we represented of to that good that in we

with new move are marketing production So, seamlessly more to technologies into those able opportunity we connected we us interact as of number there's across those a as customers, fronts. for

you. Okay. Thank

next Thank of we And Chris you. & Company. Needham Grenga have

is line open. Your

And my that customers Thank Is then nice question. Hi, in to you supply chain? to on DTC, about you sequential e-commerce? Thanks good connected QX-QX? factors gains headwind morning. the in do the following Could a for expect growth in bit talk specifically see that contributed taking the you. primarily the

And by we as multiplied So, mentioned marketing DXC. to by opportunity XX% of XXXX our math addition online then conversion connected XXXX. we in growth strong on up over continue in see It's just the I size. it's we augmented based then continued line underlying Aeris do increase base. the the additions to our expect gains in that and the to bring further tools rate base new in as product improvements an basket

QX in So, overall the of contribution our hard did revenue. expecting throughout to company significant of XXXX XXXX supply was pretty that and the a not comp either. because DTC's grow and will we're year really the DTC performance certainly improvements for dynamics help the of just -- XXXX in

we're to customer it's in -- and power performance we've the QX and coming very, excited unleashing So, look were year. XXXX. about But of made against forward in base years and to the investments growing unusual very the two we off XXXX DTC a this proud

the effort, you. update days that that Thank that subscription provide early color be And great. or it's recognizing but you. Great. the quarter still service any any you over for Thank could that would

Sure.

very I excited think remain about subscriptions. that we

at scale and the the behind KPIs gain that to dollars very in we ultimately expectations. modest marketing driving continue We specifically rate speak as to us underlying subscriptions a availability financial allow confidence more about will the

explicitly So, this update earnings no call. on

from a more in you to should excited going I expect play more year the have think us I as will But subscriptions, we later the subscriptions role forward. say, bit around about optimistic hear, data. remain can and we

you Great. much. very Thank

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Ben we next Research. have And Instructions] Battle [Operator you. of Thank Rose Road

line open. is Your

are of in to logistics since QX, been rush easing relative Julie. for holiday products of and have season? almost Question halfway that when we're back to lots QX. good transportation you, costs, those Thank costs get With there to a respect up particularly looking there morning. big may through before indication some the any and Is

look a very the with have we one expectations provided in small and we're But It great that's remains is guidance. at terms of goodness. seen we of Yeah. it's pricing say, consistent we've environment. a at what I transportation, question, we would examples overall, there look and as seeing say, It's out closely. as would ocean I the what challenging –

that, positively, something there's we in And negative only these Yeah. bright some be But It's talk that. continue in they're could spots this to shipping grow, anecdotal. vectoring costs signs America well, North point, to at if looks EMEA. about

and fingers So some systemic we're are that this improvements year. comfortable crossed with our modelable we'll our current expectations, see over

for new with just assume that incremental or revenue, that other clarification. any to categories Thank contribution some you're guidance, Okay. be does with on and is in regard And it clear now, respect to want or based you that product acquisitions? Colin from to categories right products the XXXX

It beyond does air out rolling not include progress acquisitions we new categories Aeris of or purifier new as the business the described.

benefit this So customer $XX all million which from capabilities, from our from the the will continue connected it year. we're growth year, get and throughout to will Incorporation branding over hoping Genius in and this base, the that,

Okay. to you examined just regard with any that's there with more Great. it ITC. expected update that one of And may question, line respect if the concluding? might current I your being by provide the case Is to time

at then, and so should no say that uptake. more that to it's verdict time. have a have point expect to at indication, further ongoing a we activity We April, of in end Until have an the

Okay. Thank you.

back Kramer questions in no queue. will Thank over for it Andrew remarks. turn further Mr. I'm you. I the to closing seeing And

conference today. talking Thanks look We weeks months. everybody's to so the We forward call appreciate our folks and concludes much, coming support. over again. Chris. That with – appreciate Thanks

you today's participating. for all Thank concludes conference This call.

and disconnect You have may now pleasant. a