iRobot (IRBT) 8 May 242024 Q1 Earnings call transcript

Welcome to the iRobot First Quarter 2024 Earnings Conference Call. [Operator Instructions]. A question-and-answer session will follow the company's prepared remarks. [Operator Instructions]. I would now like to turn the call over to Karian Wong, iRobot Senior Vice President and Principal Accounting Officer. ahead. go Please

and operator, everybody. Thank good you, morning,

me Vice President today's are call Executive and Weinstein; Glen and Joining on CFO, Zeiler. Julie

remind set and events I statements performance. would will the for forward-looking everyone including fully will by SEC discussion financial disclosure our deduction G, as under to include loss today's expense, discussion that our operating performance actual defined regarding underlying operating uncertainties financial results be as the our statements from net loss now reference margin, non-GAAP financial future Before measures into of in statements this non-GAAP as SEC. Related iRobot's of help today's to date. today and We of These our operating as factors non-GAAP and reflect that gross with call, materially representing call, any and risks conference certain potential. cause to agenda these views during that These is like and future transparency non-GAAP we additional I are our considered views provide detailed expectations to filings financial should share. risk only the non-GAAP results A Regulation per factors not differ non-GAAP forward-looking could subject with the subsequent believe reflected statements.

in discussed unless on measures non-GAAP the provided all comparisons our provided as well call each at basis financial only, the of measures which will outlook website with these be are of first to metrics a stated evening, our otherwise, available earnings as of conference definition metrics are of issued on quarter that be directly measures, will non-GAAP today's financial XXXX. in and our these first historical on quarter comparable most reconciliations Our is press www.irobot.com. Also, last GAAP and financial the release the financial

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

Good morning us. and you thank for joining

XX announced was First, the as Gary Energizer. in leadership positions all, Automotive release and he CEO In CEO held a new has press of immediately. night, Gary I'd record and has experience Playtex the at a last more like executive and note of Cohen leadership previously as of turnarounds. senior Gillette, to successful Timex and than separate appointed years Board iRobot's that track of effective Qualitor

with iRobot's He lead advantage to he the our looking forward and commercial want investors he iRobot. brand. partners During operational transformational talent at and nearly our behalf and up overseeing company the leadership meeting Qualitor, aspects I On product well competitive Gary's and I to speed. know tenure business, employees profits. team, Gary the company's to doubled across will of to to sustainable revenue build consumer-centric commercial including our is comes excellence, strategies, organization as a working innovation, as strategy, all the of as welcome and

I'll progress expect you iRobot the and our implement today's took can restructuring call, our share to to you with we near-term Turning have with made what elements of action QX On results. to forward. discuss our from We moving operations. quarterly in the improve plan key aggressive plan significantly

fourth iRobot's we more we and ability of first exceeded quarter we in With goals CEO on our subsequent innovation. In our confident are all on the in first build we the new successes our with achieved outlook the and to the legacy quarter, place, call a the quarter, release. set in out

restructuring longer-term on plan had Julie and important business Later in competition gross with operating structure growth spending consumer designed $X.XX. with initiatives. In full by both the of represented net improvements to to all is million an share trends we XXXX. Operationally, we sacrificing to stabilize our domestic for and XX.X% total, QX loss without reported financials will market outlook regions. the second detail, performance cost first appliances QX margin with aggressive provide expected, our with respect loss greater year of significant quarter and for million overall of of a As our QX across along plan. a call, our $XXX The reflecting the by affected current we environment was in step our the $XX generated revenue an per

our simplifying sustainable value structure, business to concentrating core on model more a and committed are We cost drivers. implementing our

point in We fully segments our market that premium well market extend segment. brand products to are in innovative the as reclaim leadership and leveraging participate to leveraging price the cost positions and mid and more our new launches or product entry balance as

addition, our with bottom are discipline more scale developing liquidity structure and In plan, and new operations, management. line In Chief improvements. near-term are concert spending geographies Restructuring that are we streamlining and our aligning cost executing we focused expectations Engel, offer revenue we greatest this increased efficiently drive driving cash products Officer, profitability. In Jeff the with on enhance our and to

paradigm in entity global through functions provide plan and terms and centralize Two, attractive parties contract to expectations. The relationship is partners. margin new generation marketing to is streamline business gross engineering greater our expense demand margin reduce focus and marketing our our and near-term our our with our revenue our to nonworking the functions, care unnecessary Three, work gross with certain cornerstone efforts pausing noncore be fees; fit including a by business. and unrelated plan our four, structured to and of to core more activities of removal discussed, footprint and improvements manufacturer. more estate floor R&D agency reduce those one, and real third manufacturing design efficient the achieve needs of to the on current improvement costs relocating previously value use legal As

than of products contract past, benefit mature design the bidding shift these taking of of flexibility our as is manufacturing half key chain, primarily the along with to for packages we and This to on competitive we relying in inventory. supply their goal extent in XXXX improvement the unlocking the design year greater moved manufacturers to which of the a margin, P&L, year of selection. out component expertise second gross the of higher-cost are full advantage in see in expect in are expertise have in We

our XXXX, with rate reduce number forward. $XX of the below manufacturers enhanced to consumers we XX% work. our a the development R&D XXX maintain representing from at the of an early launched to customer looking replace Essential These Roomba points and approximately with of While contract us They the with our expenditures, with contract benefit to to expenditures going at we revenue. R&D are costs allows our improved our second are respect lower-value of particularly margin gross the reduction a we and to balance an million exit R&D, Within year-over-year to checks, see we end working engineering robots paradigm manufacturer in that and expect are on experience. The changes making quarter. are represent commodity product price products of series very we new with first successful

partners, on continuing learning increasing robots. functionality complex are design higher-value we reliance while the to of core to Importantly, computer robotics, are third-party and vision, in mechanical we invest improve our machine

consolidating geographies focusing we sales resources and marketing, and efficiencies. limited our are marketing on for greater For efforts

represents it this on short more approach While overall demand our put might in term, to pressure a the disciplined revenue generation.

At QX expenditures as QX e-commerce, continue conversion. on of in do was XX% This SKUs digital revenue the on focus is Yamada, points in significant based media geographies, represents X% sale electronics while on quarters. Again, to existing certain our in to be in marketing customers year-over-year, anticipate XX% a larger sales channels sustaining how service we few Specifically, the a front of a even we focus customer iRobot at to of and we regions. expansion over that improve than April, based saw transition base. limited being an in began improvement largest to of plan more on fast-selling our end those focus retailer. not to to of and down cost rate Japan's we from next revenue markets part selling and distributors contributed customer end-of-life in This opportunity a in and QX,

the expenses marketing of to for reminder, of spend nearly Mother's and sales in QX, we decrease expect decrease approximately a in marketing $XX see have Day-related full overall million, in while As including year, working million. a we some $XX marketing a

headquarters. lease taken of commitments our to subletting have Massachusetts in steps we global excess and various Finally, space increased terminate

and operations streamlined have across we count addition, G&A. In head

improvement all from we XXXX. significant quarter, anticipate cash our in these year operations outflow full XXXX last actions, we As mentioned of compared on based with a

also anticipate operations We cash positive flow in both QX modest and generating from QX.

the near-term actions are taken generators. and at the and expense not innovation, efforts growth business, are include of taking initiatives, on which essential our operational the being revenue of to stability While we financial they development are iRobot the longer-term key

short, new quickly and X we focus weeks of to consumer we Our and delight X top robotic released to to our have about, and marketing rated believe coming vacuums. are XXXX people X iRobot plans an and business. iconic and the guide key executing great decisively with we are positioned ago, sales driving all products models moving well passionate near-term that at positions products. the we online held customers. In robots stabilize retailers brand reports top About on its is and X focused have

team in way deliver was represented quarter looks we The an of first progress. The With I'll that, previously. able proud we outlined the promises forward on journey, turn continued our the iRobot's on to it to are to Julie. important and you call the that updating step

Thank you, Glen.

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

operating each comparisons All of against unless gross margin, quarter loss, share otherwise, So operating metric. mention of non-GAAP corresponding noted. expense, margin the will operating net and loss otherwise unless the first quarterly per are XXXX, mean stated

declined exceeded As Glen quarter, X%, mentioned, first orders driven a revenue year our X% prior EMEA metrics. ahead all of million, XXXX the first U.S. DTC across versus iRobot's X% in as the XX%. of expectations of as and timing our declined Geographically, Japan and by totaled QX solid certain $XXX well decline performance. our quarter declined the results expectations, slightly

the reflect results in the recent Japan a low yen XX-year Our against dollar.

a impact, XX% cleaning represented XXXX. in unfavorable revenue. period. From foreign more Revenue currency quarter Roomba products Japan of and total MSRP between $XXX from revenue year, robot QX X% total the Essential, an of over compared X-in-X quarter over XX% the prior prior as and revenue reflecting MSRP represented premium the first in of or total XXXX first the and experience X% introduction approximately Accessory mid-tier Excluding robot with iRobot price decreased in the an year robot last with product X-in-X the mix grew year of sales point. lower sales perspective, of $XXX the XX% providing XX% represented a of period at robots $XXX from Combo same with the

quarter revenue. in DXC revenue versus total North our first a Japan In year EMEA, America of and DXC decline the XX% a growth X% grew quarter, XX% currency. sales XX%, XX% first Our impact of or by represented with excluding prior the foreign decline offset of in the partially

QX Our QX in gross in margin from of XXXX. XX.X% improved XX.X%

during a annualization partners, overall reflects all actions in disciplined benefited partially reduced expenses development quarter manufacturing Our restructuring second decrease is primarily result cost spending We of and promotional and a product $XX marketing disciplined continued of generation pricing focus by approach demand the spending of spend, new gross across the million. The the reduced actions drivers functions the the plans associated the restructuring people-related taken efforts, previously half the contract The efficiencies XX% to and XXXX. aggressive initial across first to the the with of on from of operating decrease key our with quarter. XXXX were paradigm organization. announced more offset impact by margin our

operating an the of period. Our operating $XX year million to in loss of $XX loss million compares ago

from million, with First in loan. associated reflecting of term the by expense nonoperating change partially loan. was $X value term interest interest income benefit the This cash fair was offset on balances the to expense quarter our and

expense was million. QX tax Our $X.X

December share by the total employees, its XX, workforce net quarter the was first of the loss per company representing quarter, $X.XX. In of first approximately XXX company's XX% reduced XXXX. as Our

nonrobotic results exiting $XX related certain as primarily million Our our QX include to related costs GAAP with associated severance restructuring for program, initiatives. a charge the costs floor care of and as million $XX well

of approximately QX. of cash quarter with cash cash the subject of the and $X.X Amazon million $XX equivalents, charge end from of which million an net the cash loan proceeds $XXX of the aside for million decline from $XX a expect ended We QX, the onetime restructuring $X $XX totaled set In rights year. We and the future additional term purchases. repayment across million, $XX million, million for to operations inventory included remainder flow in limited of was Restricted million fee. termination with from the

during QX discussed our excluding flow in flow and in expect proceeds, QX operations cash negative As we net both call, both positive and to QX operations from the cash QX, from generate and expect modest we QX.

within quarter. period of up a was compared ago with First XXXX timing the certain the same the orders XX year days, flat to QX from DSO quarter due and slightly of

days continued days of million carefully or inventory or with QX Our compared quarter as with million inventory XXX managing $XXX a balances reflected and reduction on XX of XXXX. balance end focus was $XX

on As for at-the-market offering further our flexibility common program shelf $XXX February filed of our sale planning enhance to S-X statement the our million and on discussed call stock. XX QX which strategies, company's XXXX the a a included provide to registration capital liquidity we

first $X.X and remain will working continue quarter, X.X we our sold we efficiency focus XXXX million I for Careful our working be have progress in of key of total management proceeds managing shares in levers. the pleased During capital net to the made with capital a million.

outlook of our yen call, our XXXX. of our outlined providing as new as product that updating the on QX weakness well year We outlook the timing are given introductions and the on XXXX full QX we

our range. low half during discussed to to high As we first QX teens XXXX continue a call, decline expect XX% revenue of

in in XX%. Operating that the first QX to a orders weaker $X.XX in range of the we this of prior half and expected in range range anticipate share. share be million the noted QX QX quarters quarter year, versus growth anticipate is the expected million, XX% $XXX gross expected year for in year. Based also per the loss last and our be on million we terms the We loss X shifting of yen, million, is $XX revenue is weakness per $X.XX of of we and range continued of of to of to the into to margin be from to QX QX and Japanese $XXX as stronger-than-expected within now year of the net to the $XX expect

Japanese half year full $XXX the the mid-single-digit that of the revenue during revenue we come and continue the comments our the our year. introductions, new XX% anticipate We with the revenue given the in of of of than expect For in to XXXX, million. year continued half weakness the anticipate timing call, range now to second the full will second we more $XXX yen the of in product QX Consistent growth year percentage. of million

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

and X.XX of based outlook. contemplate rate expected estimates for The the FX Additionally, expectations impact XXXX revenue Reuters of year XXX of using Japanese will Japanese euro our also margin exchange a to XXX yen rate exchange pull. remainder the gross forecast our yen on

gross XX% improve margin margin expecting our above XXXX now rate that we will gross of anticipated but We with continue QX to XX% to average an exit an XX%. significantly anticipate XXXX gross margin are

we a related as and As from QX P&L, against our will expansion the gross that reduce expect from XX the we the moved level will and year We half COGS onetime improvement in our and to from improvements expansion. savings margin compare cost improvement year, productivity more of actions XXXX second combination mentioned, we quarter significant expect Glen reduction and of in initiatives in pricing fiscal the margin costs to this adjustments. stronger QX through margin fuel annualized every with taken XXXX anticipate last modest gross show XXXX inventory sequential elevated the

resizing $XXX are align We reflects structure operating on cost progress of with are more near-term targeting the million revenue. with to revenue announced to expenses our XXXX closely and structure pleased approximately The XXXX cost efforts profitability. million from our drive and anticipated decrease our expectations range or now previously in $XXX primarily toward XX% of

our the currently the with a the X%, and to execute Given an our and half negative in of year line profit approximately to of the efforts considerable make progress guidance full in We half expect first first we restructuring plans, negative loss we of anticipate margin top operating as in spending operating an year. operating X% half second XXXX.

other assumptions net adjustment other modeling million of loan. and value XXXX, $XX terms approximately in in notable cash million expense associated now In estimated we expense term interest around $XX including for $XX million, our of anticipate with fair

We also under approximately expect tax a of any by expense additional of ATM. jurisdictions. foreign million, We XX.X shares, our diluted our approximately of driven year share exclusive count $X issuances million full anticipate

we $X.XX. range to loss from per to year As share our full $X.XX a result, net expect

capital-intensive. Overall, I'll revenue. million XXXX now of to $X In financial of call we over or capital commentary. spending our the for back be remains guideposts, turn terms concludes comments. anticipated Glen XXXX some X% other approximately expect business That minimally to approximately my additional XXXX

you, Thank Julie.

long-term delivering questions. remarks. Operator, value That shareholders, plan progress pleased employees in with We foundation a customers. to thus ready our our concludes take operational expect far, we're we that for will efforts and XXXX our and for our on our restructuring the solid are provide our

from our first comes And Citigroup. Asiya with [Operator Merchant question Instructions]

on on on think seeing you of the there And kind stocking back Are pushed marketplace. we out orders. half? retailers, here your resume kind believe the retailer elaborate was through both Has kind e-tailers? you operations should you in just think retailer of kind activity if going could about acquisition, you were competitive expecting you momentum you be Or sort dynamics the of up I here a If the ramp as that had you're back back in seeing guys? to you when come that how ends? And of

Asiya. Sure,

questions. So you asked a number of

Glen and all, overall environment, QX, regions. part as aggressive we I sluggish. That consistent I market a think be an we continue result progress And on we partners performance at work across see in look with we're SKUs, and and and of to relatively QX, discussion our all see in said, fast-selling performing consumer with see our retail end-of-life continue some a we're overall very of across making. market goods variation of on First roughly the reengaging pleased as to we some noted, our expected that competitive with we think and we durable as as to for

have that further thus you do want Glen, on We anything? make to far. add no to comments

that beat we're driving in products innovation price seeing in dynamics us -- EMEA from it's No, increasing market We're the different, and enter at slightly third and a in and various adoption seeing U.S. but sell. points lot which certain the of really Japan. these the as jurisdictions a the and in what meet the are market to parties, jurisdictions and market I generally competitive highly think also all Look, it. covers is in the this

the well. in half Okay. And flow any we Should for for expectations Or understand this like and here ] needs to thinking warranty cash guys you about capital cash back follow-up, meet needs? the how think working infusion? a half the of just on I you your is anticipating as are cash -- OpEx sufficient back be [ do given year, the the cash then flow.

Sure.

remain careful And we focus said work So management went have year. we discussed, filings, efforts discussed will cash in process through loan. rigorous quite significant liquidity as this in a a our turnaround our for our team through our and I term and we've establishing as

modest in that to We both to profitability QX and will positive QX. to for modest at opportunities and cash flow drive return continue look

this no portion remarks. for now of with And further call. closing turn Q&A the Instructions]. [Operator back to over will Karian I questions, Wong today's the conclude will call

updating for great our us look you, our today. Thank joining on everyone, QX a forward on We conference progress day. you Have call. to

for And participation, your this disconnect. conference. Goodbye. and now will conclude may you today's Thank you