IRBT - Earnings call transcript Q3 2017

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Operator

Good day everyone and welcome to the iRobot Third Quarter 2017 Financial Results Conference Call. This call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Elise Caffrey of iRobot Investor Relations. Please go ahead.

Elise Caffrey

Thank you and good morning.

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

can uncertainties iRobot be in Additional to information of and on or Securities statements Commission. these filings new public Exchange update forward-looking circumstances. the result undertakes found with as these risks our obligation a whether information or and revise no

for and business our iRobot call the Colin financial the for the point, questions. the SEC review year Regulation including CEO the which GAAP conference earnings A interest, website. today's acquisition, financial a expenses and I'll define XXXX, Then call this XXXX; Colin for expenses, EBITDA, and for at Chief rest Angle. of ending litigation property Colin quarter turn XXXX call, before we'll operations G, outlook our Alison the full as may Financial net XXXX. the we and business evening and the Alison also Chairman on third the this divestiture Dean, financial which issued and depreciation, third restructuring acquisition non-GAAP on to and we on found earnings the Company's achievements expenses, merger provide the will last by intellectual amortization, financial gain open On net taxes, of non-cash will disclose over metrics review available third is adjusted call, During for tables defined also December end measures was At Angle of XX, results expectations quarter will compensation expense. of can Officer, provide and be XXXX. release in press reconciliation and quarter the stock as non-GAAP

Colin Angle

thank to report that XX% joining revenue and I last which morning outstanding am total you us. grew Good for we year. another in quarter over delivered very QX excited

in the Robopolis, of our to our market, revenue competitive are us of than regions We to and the XX%, of brand well global States, annual the with quarter acquisition expect of million track important to increased third now the $X. a revenue. where growth which belts, of of to countries of to the operating as respectively our see last region QX European rest distributor closed outlook we in of XX% to and new in our XXXX to of the full year our of between our Continued lower increasing expectations as momentum quarter as acquisition successfully at of our impact Japan. QX on Sell-through, $XX as growth timing of marketing in our positive even to EPS inventory in strong remains to $X.XX control more XX% expectations particularly of for EMEA revenue programs our ownership expected and year-over-year over equates fourth as growth. and the consistent efforts Revenue two by and retail year and several are our the the income XXXX With We brand XXXX are Roomba Japan it beginning strong, the That is awareness total with XX% is year. focused the consumer implement the XX% previously of quarterly in in already XX% awareness channel European offerings largest accelerates. levels. growth over building United States. the year iRobot levels Europe critical million, results as demand our our to Based increasing XXXX, is and than and driven the $XXX vacuum $XX $XXX robotic U.S. million with expect global we marketing in deliver quarters XX% discussed. U.S. on exit and year-over-year our under now for XXXX targeted to investments beginning the financial United improve and we allow in and and successful The of our XX% adoption will cleaners drove

the expected show - Decline XX%. from actuals conjunction resulted on was that though our grew products keeps year-over-year about distributor plans the in in which approximately we aggressive now the Based of months inventory. revenue data due with us through the QX to pressure revenue in decline XX% competitive and reserves the higher during full QX expected than iRobot XXXX, work optimistic very China ability we discussed. grow hand, last year region to for eight in additional market net anticipate hand. sales once of us by quarter, on year. working the underlying continued revenue demand of During to This inventory inventory XX% China as customers in declined promotional does booking assist third in to channel The through quarter and to previously first to

For be the China full revenue of less is than total revenue. year, company to X% expected

awareness premium on In iRobot consumer continues China driving adoption office. in is be western of marketing of the of opening brand first the quality our implementing product. program outreach to we the Shanghai robots. strategy began since our and our focused QX, driving Our It

results have our inform of going coming to will measurable strategy help QX forward. expect out that We

the end Roomba and year, premium high can XXX end growth last – revenue recent at XXX Roomba believe addition the strong higher the of just achieve still With introduced the of we segment. we the

final took our - announced the States. appliance brands International was a and I’d settlement for agreement with the directly against to we several on iRobot’s we will confidential. defend month, XXXX. component the you the manufacturers with during an Now the named with Commission not process to That U.S. from Trade in are like quarter. payment. this exit action. worldwide relative for robots of set date defend March we time. respondents, iRobot provide of represents confidential well-known for a provide our XXXX ongoing Chinese last MSI in and to increased in MSI can compensate The with Last protect Demand valuable in a trial at monetary highlights terms MSI our third decision Micro-Star several win cleaning robotic ITC intellectual supplier certain of early to and International, and settlement information a property. all the an industry The effort October action United remains track other is agreed but with The retailers remaining the quarter. multi-level

domestically is that runway for less our Vacuum penetration low-end market will robot good awareness. than in over drive competitive cleaners. to global and to availability be of ongoing momentum growth expected there is are market full U.S. continue when and vacuum at We U.S. products. exposure, category, With adoption the a execute share future States, gain to vacuum robot even higher space, segment Robot emerge market for to a is year, ensure We more United drive we overseas. to mind excellent Continuing still help year an more momentum the time. than strategy position Cleaning will even XX% growth. accelerating, time premium penetrated Keep against on in for and cleaners, should of Accordingly, time expectations XX%. plenty with the the in capitalize highly revenue household driving always for iRobot in it new because second this This the the most

care jet. While of we diversification robots, and continue Roomba year, revenue our growth overall driving be wet with pleased our Braava and Braava to performance is progress the this revenue floor

and thus been available the We the adoption XX% category category of year-on-year last The the States to advertising and longest been communicated where be highest full of on expect far. growth growth year more XX%, is than in marketing to our the teens the call. revenue majority products of are versus continued have the we United expected high XX% where spent dollars have and our seeing

One through and R&D year their running listening improve customers using our to continuing and then we XX it strong. to finishing In have created very products improve continuing of consistent market-leading ago. innovating and By have continue has a are year about investments the elements optimistic critical deliver features while our to cleaning is theme the far By is a years technology, thus we feedback; deliver our efficacy focusing maintained our these success functionality, position we summary, these exciting that of autonomy. gross improve margins. own we to input. There also and improvements to to continued an category been the of

saw agreement defend and impact early in to current of We to expect our positive on distributor, will floor we International of revenue quarter, programs we over effort targeted enable results quarter review which driving turn third announced representing successfully win adoption I with now the to financial growth drive the the our and intellectual the to capitalize the and Micro-Star largest detail. EMEA protect the valuable care our European in we an QX an completed with call of EMEA market U.S., in robotic XX%. year-over-year Japan our acquisition will With us marketing momentum more ongoing the property. and our Alison third

Alison Dean

quarter, a EPS growth record benefit Operating period Thanks, the million last XXXX from tax and Japan. QX compared same the in QX was by driven with $XXX for EMEA Colin. year quarter, year. new third QX in last was $XX.X up to XX% delivered XXXX stock year, the last U.S., with compensation compared million of standard. accounting in We and included the this $X.XX million, third relating $X.XX $X.XX income quarter revenue $XX.X

the impact, projecting As given the prior to of reminder, our compensation size our rate periods. tax stock with difficulty tax expectations, discrete reflected the direction we at financial and the items in communicated expectations QX future that time for a

items tax also gain rate QX XX%. a the on was Our QX distributor included from Japanese effective non-taxable $X.XX before acquisition. discrete

for view acquired During channel QX provisional gain $X.X value of non-operating at potential XXXX. purchase of distributor we made price EPS. the of and purchase adjustments and We adjustments a million inventory additional the end our finalized reported is time on based acquisition product as resulted to of information or accounting purchase which accounting the final. relating returns the Japanese made The the at of business $X.XX amounts were and quarter, assets acquisition, our on to of income the as in accounting

adjustment from impacted grew U.S. in momentum year-over-year. tremendous increased was As see XX% XXXX, XX%. life-to-date to QX net continued $X.X in Colin revenue the we year, last we saw XX% quarter In QX in in resulting year. as a revenue discussed, of million favorably revenue market with consumer over last where U.S. returns growth EMEA, third in continued year-over-year $XX,XXX momentum compared of the revenue

increased and impact of season. growth high from is Our of full with the based year holiday results, on expected expectations current XX% Robopolis without QX for and Robopolis is the expectations up teens Robopolis sales our

only in select markets are have In expected. We rollout just targeted increased positive revenue programs, already our but marketing as in QX in last QX, to this Japan seeing year from region. XX% begun results

and with as inventory During at XX% the to Colin Japan to in levels. XXXX quarter, prior targeted QX and consistent China QX we significant retailer XX% year QX and over in XXXX. growth the progress reducing was was track ship decline XXXX that revenue revenue exiting mentioned in up XXXX you revenue A grow we we expectations. last recall to on XXXX anticipate QX is Year-over-year shipped XX% our XXX% made orders on as expected in received receive as expected in were declined year-over-year.

and primarily to XX% promotional In due from QX, COGS year. legal the million acquisition. largely quarter QX continued driven XXXX, holiday due last amortization and In to margin investments and upon recorded impact gross of similar to quarter expected the decline X distributor quarter was the to acquisition China. gross acquisition. were and in points sales product of we the compared Based including be with marketing from year inventory Robopolis partially for Robopolis sell-through. of sell-in, now mix, season, we last XXXX. costs we margin and QX, we the XX% with the at profit margin anticipate and of litigation the gross we distributor the the other increase of discussed versus points higher the the still pressure fees, the associated our QX, promotional and for expected $X discussed intangible quarter. in in Japan impacts to in expenses Japan same OpEx higher expect planned driven additional elimination Japanese expenses roughly investments sales Robopolis intangible improvement the revenue, the our impact in of about to to the R&D. revenue XX% Full QX typical asset savings by XXX as and to XX%. percent offset assets, be the impact acquisition by primarily and X.X with types last of XX.X% regional amortization points costs, percentage reserves QX by The QX, is to third to year expenses, the expenses increased up of net approximately was acquired Gross our margin largely including addition, QX QX investment expected the on the G&A lower-end, to The QX X than support end results saw lower to other to operating competitive basis support last Robopolis is acquisition-related due acquired marketing XX% and reserves due in continued R&D is

expenses For cash, million million expect full year to the ended roughly in the up a $XXX revenue. operating ago. year, We from to with quarter XX% XX% $XXX of we total

with of at by or XX reflect inventory purchase $XX building expected and year of was expect We compared DII XX expected DII Japan preliminary year. meaningfully. the hold in million should $XXX of cash end to selling million levels holiday our driven for part lower the days This or direct exiting for of the to our Robopolis. inventory retail the was QX days, We XX% anticipate $XX last largely million Inventory increase to quarter of price over QX now across in we add needed be inventory to direct the season down acquired along but we as increase with inventory inventory sales as Robopolis support strategy. EMEA, our

financial between to year XXXX as targets growth is I’ll year-over-year. all to expected as and $X. back to now grow are is expected of year we provide expectations of Colin. to EPS our revenue our million, full $XX $X.XX $XXX million QX well in will significantly year-over-year income XXXX call the Fourth-quarter Our to million for $XXX Revenue operating $XX million of in in QX year for XXXX February, On call XXXX. regions. full three expectations, XXXX financial through turn

Colin Angle

has been year exciting Thank you. an XXXX thus far.

U.S. through company been truly have a to products overseas, We from company. that also distributors transitioning a sells global

this than we which roughly also grow of our expect this brand EMEA, robotic XXXX represents optimization grow growing robotic XX% of capture we XX% reflect revenue. In and customer-driven not year, XX% U.S., opportunities represents we adoption can beyond financial both go-to-market questions. roughly by distributor iRobot’s will In our positive the to products on our continuing your to category creating In acquisitions driving our With expect that, our year. United revenue, share this of tremendous and of States, floor the XX% XX% take category. to a By revenue, we floor we year. the consistent our of see the in year. of address this grow the global which will And which revenue, we needs, from awareness we roughly capitalize our strategy care made expectations XX% the to worldwide products. care of Our XX% represents expect to resulting Japan, for from impact we’ve only ownership but of the will more XX% the of global

Operator

question comes Genuity. our first with of Canaccord And Bobby the from Burleson Instructions] line [Operator

Your line is open.

Bobby Burleson

morning. Good

Colin Angle

morning. Good

Bobby Burleson

in here sets right couple of A terms now curious just morning. partition Colin, mentioning this, more pricing sign part you competition end at – the the quick terms as of in just us U.S. just simply of, feature increased high end good kind from you guys help your aggressive Can of ones in to low-end or strategy? of, low

Colin Angle

marketplace. category a against as does we and in thus targeting rewarded. We of and just area natural there market fact talk to a develop maturation property about non-cannibalistic the our gross that our States, expect I far areas be strongly that when – It’s helpful? low analysis as sort big particularly see are evolution. the the the material were we the the supportive the the next lot where have been grow United obviously bottom because few a of it’s end. growth. least at the lower to-date, that occurrence. lower And dollars, and opportunity, the are We margin where that are price start hasn’t the would gross are and Is market, thus lower function this cannibalistic to really seeing to point opportunity we’ve profit, the it February. much, of our in tremendous emerge by going this enjoyed XXX in we growth bright bucks having intellectual product not innovation the of the of at And exact given to that time, mean, this from we a over But, the of anything numbers lower of you seeing yet, still in goes products are view we it but of remarkable generate way range, bounding because that – and at at that, margins, years. more sort some $XXX don’t that’s parts category, this not see future. the inevitable in We it roughly we area to think the in actually overall low-end maybe end, most maturing market a is points Won’t not and and give that, Above is growth

Bobby Burleson

or XXXX, helpful. items few aren’t very happened competitive that I table network on still guys am and back what’s given or color operating is until this efficient And evolving then, quarters given the organic just in growth wondering That’s think China, XXXX? February, know a stab is on you at landscape, growth you acceleration rapidly taking in had organic you something emerging a and competitive for expectations I the whether but not

Colin Angle

the think positive we have adjustment in a clear, China in fashion. to guess, continues move through mean, grow in we strategy in I But I think needed new to did see, to continue happening the work that and China we sell-through that resulted I I moving to what’s premium we that the today. story be saw some an just segment and good in and performance inventory which is

the So, think second But be China story. to growth the that of a coming overall America. it going it’s is to I not story our contributor North is,

what’s that is at in cleaners growth not category and vacuum of so the globalize America we this first I that the emergence that and believe we part end side. deceleration question, what robot North our in of – view your we could the of the answer of top North premium America overall accelerate adoption see of signs a going something happening definitely at seeing the low to my need on back to a look in – segment we you we and the think that of growth to see are believe that will first the

Bobby Burleson

great. you. Okay, Thank

Colin Angle

Okay.

Operator

Needham Jim Thank comes & with Company. from Ricchiuti our line And of you. the next question

open. line Your is

Jim Ricchiuti

Hi, good morning.

that you for a looks some clarification revenues revenue on previously and you expectations like for the to Just Robopolis had given doesn’t year. change. the the appear guidance It –

us from it you to So, mainly Is that’s are market. today fair like the that say? U.S. the is, increase giving that seems

Alison Dean

U.S. EMEA are right. bit of but in We definitely as the didn’t since specifically guidance in to impact expectations for a But expectations up an market, increase have Jim. our gone last quarter, well, change. had relative overall our The the incremental Robopolis, you

Jim Ricchiuti

like QX, guidance, implied a looks wide it’s is $X.XX. to you And, there Got and earnings for the earnings forward range. mean, with it, okay. to look I respect it the

be us given and think some So, tax if really sense, the parts? What expense? marketing Is here? you get we maybe I you’ve gross other, help about about should going margins. am what how I major the mean, guidance be rate? sales to moving trying could Is variables to are it it think could a the for

Alison Dean

Robopolis but is Well, there also impact a range about to that there. well, pretty bottom-line think the guided significant we as

could the that And in in significant many be variability got just entered for as of so We’ve occur a a just sizable range our having size record that of and accounts of accounting come of a usual, is have could QX very variability quarter under provided to pretty initial our there Robopolis and then give give the we’ve but for in a and purchase We different will us. it there could of that belts. expectations to we’ve range we in lot factors, QX. so, impact in you the quarter tried do happen. there is all incremental and a that quarter across terms It first to the a itself. is reflects range that

Jim Ricchiuti

Okay.

helpful. out from were respect that question is for Braava were real will that’s last sounds with And the Braava, Now it just maybe in be Braava thought of year-over-year, it I got just tie you’ve product this down I to strong down, momentum fact in of U.S. is, you to in would a weaker revenues units like in that Asia, The good me less parts to some one China. been Is expecting be performance Asia? the that mean, than particular in case? turning product have a particularly always maybe

Alison Dean

last year Braava and need to are that category mind Braava as that introduced when year-over-year decline, you When is we dollars Asia. a keep year, units last looking versus jet QX in to QX you at

last products, in had that sell-in jet initial those region. the to QX year support Braava So, particularly

category we of little to in are in year track full the the of be full just us bit telling expectations that’s across year-on-year again, increase itself for the just year. one those it’s isn’t and comps taken were those general So quarterly whole on story. pleased and expectations The

Jim Ricchiuti

Okay.

other potentially that to more the way Asia? had begin in as QX can we So, normalized turn the in comparisons see get you

Alison Dean

Right.

Jim Ricchiuti

very Thanks Congratulations much. Okay. on the quarter.

Colin Angle

you. Thank

Operator

the And with our line & Frank question from you. next comes of Company. Thank Camma Sidoti

Your line is open.

Frank Faiella

guys. is on Camma. Faiella had a guidance. Frank the on This I Hey revenue question Frank for

Prime any impact With Amazon quarter? the there on Day, third was

Alison Dean

No, second really had the quarter. would in we that was mostly sell-in – that no

Frank Faiella

touched And range in thanks. in you then, okay, general? the quantify do had the just jet on but, in decline decline much China, on kind it, Okay, just – you with of how a the China of Braava can to

Alison Dean

terms of In year-over-year, was across but decline Braava jet that seen Roomba decline Braava in was that part both the we’ve and of for sure, China year-on-year.

Frank Faiella

That’s Thank have. helpful. That’s you. Okay. I all

Colin Angle

Okay.

Operator

you. Thank Piper comes question Jaffray. And the our next from Jensen Troy of line with

is line Your open.

Troy Jensen

congrats and on morning here. net good the Yes, results

Colin Angle

you. Thank

Troy Jensen

a function just quick Braava just happening I of Or is a ASPs a mean, shift Roomba? down that so, on mix Roomba? that there bit little sequentially. a are mix Hey, is within within question and also

Alison Dean

Bear with me Troy. one second there,

Troy Jensen

here? up or sequentially that bucks number stay Allison, was on It XX you year-over-year,

Alison Dean

regions the in mix have and definitely, terms sequential products different ASPs. of an Yes, on can impact

Troy Jensen

would kind I weaker, lower the price be will positive? mix being China with and assume of there products So, a shift products, lower

Alison Dean

of the first didn’t I Can you repeat that? hear. part

Troy Jensen

going on say. China, what’s and go – ahead

Alison Dean

I just of second first question. your hear the didn’t part

Troy Jensen

here? be would mix you – products, maybe China – that was lower saying rate going China’s assume that on ASPs, will that, down so, would shift so being the low of but there for much be is multiple kind I with end positive dynamics I ASP

Alison Dean

multiple quarter-to-quarter dynamics those impacting sequentials. definitely are There

Troy Jensen

you then, be your what me, can That’s going just on tax Okay. think us XXXX? excuse or of thumb. Allison, you help helpful very right. to All rate XXXX rule for And is

Alison Dean

are in At wouldn’t to this see tax I rate, and of the rate to the seeing XXXX. major expect for XXXX changes we effective is that year XX%

Troy Jensen

good work. Great. Perfect. up Thank you. the Keep

Colin Angle

Thank you.

Operator

from question of line Thank Fisher with Jon the next you. And our Dougherty. comes

Your line open. is

Jon Fisher

Thank you.

QX, surprising follow or look units bit see of year decelerating to you the the the to When had pick a big that kind kind a in huge mode of on in in guess, year’s when then especially push at been further half a XX.X% a a growth question, sell-in here up and decline unit then in a to trends comping at we I price on first unit QX, and Just like of in sudden all XX% you time, change. of see we a I’d growth, little price. change growth that’s last are same sequential in me this

detail that QX or just, or like more QX guess, I was all So, going consider XX%. from I’d incremental. sudden declined I that what half from unit don’t of changed average to up and a meaningful, lamped exactly on QX, growth slighter price a I consider first dynamically little on significantly that

Alison Dean

necessarily dependent One basis over forward, on thing look doesn’t in get given be will got and it look in That again Certainly, focused going impact can that to indicate very mix lots of to annualized encourage fluctuations you what the – ASPs. of mix at how was the evolves than QX more mix, the the there. because and the happen say QX. year overall we’ve time was is, CREs continue you of mix to higher would XXX over encourage not will an we I one the full product overly quarter-to-quarter, ASP from on change in in any quarter and

Jon Fisher

was of EMEA, And QX? season that in did Or then sell-in China, occur for standpoint, those from any your QX the a fall sell-in, or sell-in? did October U.S. in, will in in all holiday those

Colin Angle

quarter. of to holiday how happening season. looking it’s fall But definitely a QX record the The support year-to-year We sell-in of and happens in it a like as out. a had quarter as going said, to right really sell-in lot middle varies in QX to is actually Allison so the boundary strong, certainly from very

or down, great a both anticipating either a of the more a the QX percentage how breaks it’s in or, say it’s sell-in a not are but are rolling quarter the so, – of an quarter which in great driven we by we It’s dice or had and And XX-XX it’s we XX-XX. season. QX can’t of whether XX-XX supporting holiday

Jon Fisher

then, final just one And Okay. question.

and that were sudden gain It’s three less mean, was you is in know you that over on a guidance being in than Japan, the acquired that going you changed was again it’s now, expenses I the am to on a has a every the They in I from a April, guidance decade. QX, said was the in expected distributor of a gave guess, QX, surprised February, guidance that been product. Allison, to well. and you QX a pushed relationship gain surprised fairly QX. report lowered two distributor distribute distributor you acquisition. on I that the like I July, months, out acquisitions there should the for I Just am gone and sudden be have QX are there we’ve taking is there that, to business lowered of all – your distributor, in drag all a numbers and to your that

there numbers why the has – So, so this is much there volatility so around been Japanese acquisition? much in distributor

Alison Dean

to now Japan as the private under things I is had this able the first are are performance a period think even the on at take of the and very to When the business allowed a last those very our adjustment regulations measurement transitional to company gain was acquisition within is we relook the The we beyond is some the how bring anticipated fact pleased call, am gain this now you assets fair very a the I since that deal to the we than So, is there that’s exactly am with be pleased the pleased better expected value is public based am that The XX% the we accounting growth was I to before operating made. acquisition I still an record. by it within the performing. and revenue typical But and had with that operational same. XX%. operation on quarter. deal umbrella,

the very performing business think I and well. economics sound are the is

Jon Fisher

Okay. Thank you.

Operator

Thank you. And comes of our with Strouse next the from JPMorgan. line question Mark

Your open. line is

Mark Strouse

morning. taking mix hoping Roomba. was of generation Thanks questions. just for talk by kind could good of products I Hey, the about within our you

quarter, necessarily low and year series, high of end of is less comments you the just that mix which low the around trends competition have guess? for of for of investors range product, XXX the about should for provided versus at think end or understand XXX But, you your competition want the how whatever So, any that not last and at over which price competitors kind end. the the primarily business XXX your to but given low increasing kind

Alison Dean

Year-to-date, series series revenue we’ve XXX the series XXX XX%. representing overall equally about about got globally XXX with about of XX% the the and being

ahead So huge of but individual XXX the XXX, slightly there is difference the a series XXX not year-to-date. is and

Colin Angle

that… I think And

Mark Strouse

Okay.

Colin Angle

mid create continue. entry-level our reason level, our At to strength to for and customer with marketplace believe price success in be mature going – expect compelling in a points the to promise its we high be is that range. maintain our a a iRobot would brand We that which more

percentage larger there where be total with franchise into that time-to-time. But something should is, their entry done price point the will get have you higher that things products, special from to continuing. something we that But the our people mid-range in Although offered the we’ve of imagine SKUs revenue. is premium us point

quite we with are happy emergence. and we strategy from this premium it think benefits even low-end this resilient is and So,

Mark Strouse

All right.

Allison, And margins I now more the gross for closed, that now is to gross have give used deal which with incremental. information bit the capture Thank helpful. that’s Robopolis you a you. business, will margins was that hoping the Robopolis that about then, Okay, to

have out I that you guys based laid there. both think, previously disclosures on the

people lot I kind somewhere backing of so. into of were XX% or think around a

there see to would help be right can if is say, sits any great. wanted in ballpark you it anything Just the there that or

Alison Dean

going in So, business again, the margins, you we expectations XXXX. will gross adding inventory. be our And comment we It gross iRobot’s in into to Robopolis the decline by margins. What gross of a that margins, on to the dilutive will elimination based be is margins the not profit of to have I our be will of our impacted to gross do the XXXX am gross provided margins. have intangibles and how the previous that because Robopolis amortization on acquired

behind margins gross perspective, about our profit intangibles all amortization nine should XXXX. Robopolis addition until of through that period is Going expected say of will But a be quarters. amortization amortization carry impact have the to that is will gross to and continue through we iRobot’s margins the the on and XXXX elimination get an business the us to that from into XXXX, be in I’ll the

XXXX So we gross And for February. in expect that into guidance to on you XXXX. further go margins we’ll give

Mark Strouse

organic okay. it the I to it, of answer just target for quick Is back And believe about missed one for still to, but Got February, I that XXXX follow-up. don’t – it. Colin, acceleration kind question for I think, earlier to going then, just want acceleration? was Bobby’s XXXX, your in I

Colin Angle

there. LTFM our got model We’ve out

We update on February call. in XXXX are to going the it

less being wait going XX% comments are the definitely U.S. detail still internationally growth certainly, about to creates is in of front us. addressable some the the real landscape But less far you made So, to where market us. to I in than that a on that have get underpenetrated, than

Mark Strouse

it that’s so you Thank for us. Okay, much.

Colin Angle

Okay.

Operator

Rose question from Research. Thank our Battle comes Ben of you. with And last line Road the

is line Your open.

Ben Rose

the on fourth just separate Is the of in to that of morning. Allison, last impact Good versus question. the margin the gross quarter? to it follow-up part amortization elimination the possible profit

Alison Dean

is elimination talked that in component. to asset, Robopolis reduction. and Yes, QX a of point of points much the a QX profit the XXX larger is intangible about basis the say I’d reduction amortization XXX the the We is that quarter. majority The basis out about

Ben Rose

since over guess, how XXXX introduction I as strategy there perhaps might it And, new series one XXX of migrating the products can a the of Is anything flow regarding models. strategy might over and understand that’s couple of I basis kind of and the anticipate last those your it’s guess, couple premium of the share Okay. years Roomba specifically, some course might, of years the of now other you marking the the that with unfold. of of kind premium been just of Roomba the kind and for sort to thoughts us, capabilities just on I of the

Colin Angle

question. Great

our which strategy You answer. allow position. investing will us But long-term are to in roadmap. a excited like are very premium think we – wisely are going certainly, very We my we have about not our to maintain

we to We we as that are or the home, to going point the out are systems how smart the work the it robots Braava are to very getting we in a together in – are about as about role play in traction the consumer look solution. look going days about the early very going make single complete the and we And which think are is out more are the industry excited the solution looks this as we the home. technology than it category

but and exciting a future moment time, unfortunately, this and to about But of come forward talking launches. lot in plans our our to we details. got to at we things look So, is to get in – to there wait more certainly the you

Ben Rose

just by regarding other great. the be property in few perhaps ITC new then, additional as you particularly last perhaps or is infringements one alleged pursued intellectual on intellectual chance on months, Or lawsuit? of ITC any of could that there be ongoing that And property? their based of added products, assessment introduction the assess based to separately Okay, manufacturers – your the here question just lawsuit the competitors some

Colin Angle

I’ll things say. couple a So,

we see action. new how From iRobot First, would works. to this Anything would not a to a would be defendants us current incremental will That’s intellectual you action. defend do it mechanics have its not adding or that property. aggressively perspective,

Ben Rose

That’s helpful. Okay.

it you. Okay, that’s for me. Thank

Colin Angle

our All results. support call. discuss concludes again XXXX QX to look earnings XXXX in to talking right. February of third appreciate Well, quarter your and you We forward that with our

Operator

in a This have conclude Ladies today’s all gentlemen, day. disconnect. and the you you thank does great may Everyone conference. program and for participating

iRobot (IRBT) 25 Oct 172017 Q3 Earnings call transcript