IRBT - Earnings call transcript Q2 2018

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Operator

Good day, everyone, and welcome to the iRobot second quarter 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.

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

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

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

Colin Angle

driven delivered significant Japan We respectively. of joining XXXX, thank XX% of and XX% of Good over QX growth support States from morning ahead the for second slightly saw the XX% growth to XX% year-over-year in quarter revenue part acquisition, growth the EMEA QX Shipments beginning in and which us. domestic at holidays QX you EMEA and over of by revenue expectations. revenue growth XXXX. United was closed our year. drove last of uplift the

Second and we profit margin, expense. expected, the primarily revenue, marketing some than was higher due to high higher slightly delayed quarter gross

and for XXXX product now $X.XX EPS favorably discuss the $X.XX. XXXX core business reflected anticipated rest XXXX results income income QX second of full operating $XX $XX million our our which increase is will revenue to full-year XX% $X.XX impacting outlook half year increasing these and million XX%. EPS detail of rate, and more uplift tax addition in items increases. reflects in launches, The Full-year several our we the of expectations. factors Alison are to to year-over-year billion, to our operating later. in $X.XX revenue to of the Given the including We billion growth of our year, full-year anticipate

of the year. of XXXX take the for you highlights some expectations Now, rest QX I'll business our through and of

as the for in once be our the XXXX. Roomba of the of quality all US number in ranked straight the three We kitchen cleaners, cheaper, since in was a year significant year one home floor XXX US competition. event in event. have lower Day Prime sold number fourth product considered is featured all vacuum availability care increasing robot particularly number Prime doubling Prime selected Day we for to out, began as are and excited the context for again one We and This in when volume, each Day. Amazon The sales

in Day the material results, Prime Amazon second to US. has our in for an on the performance half it important expectations our QX US gauge become isn't While

similar landscape to landscape we full the relationship in growth. our results Building Amazon to have and featured year and competitive meeting in were the expect and for element for the of year Amazon. the with last the US were We look on pleased in Prime of e-commerce for We a year's first revenue expectations our partner. regions, the were with be regions in Day those EMEA strengthening and confidence those the relationship Japan this key with expanding channels to of to this further distributors overseas high in great. US, be on level optimize forward very the relationship to our acquiring and An our included events Japan the EMEA rationale of beginning was in in time

strengthened Our global coordinated Amazon brand. Day Prime further global our

we determination ITC, order ILIFE, cleaners to bar exclusion QX, made our by initial Initial recommended announced Trade determination October sold remedy XXXX. During of The into from the a regardless Hoover. issue and order vacuum finding expected of appeals. and/or United further approved, immediately the that recommendation certain regarding the now International robotic If exclusion bObsweep favorable States clients. the go infringement publication ITC upon patent recommended will an are Commission, before importation final by effect the commissioners to are XX, and a into

initial very results. the are We pleased with

as excited litigation steps tell launch can product considering you give all We you is we respect I about will What are second although we, you next multiple be are to strategy. I with I activities. IP that launches, are any planning our our can't specifics. know carefully

where our be point. few a lower weeks. will at price of stores offering introduce in a innovation first high-end happening be launch soft will It next a initially limited The for we'll

later QX. Our launch in place take will event next

second Braava revenue by stay were quarter, where driven XX% QX demand growth Braava momentum XXXX. international through So tuned. continued the roughly over

the are advertising of commented we the is we've in additional expense the propositions value has As at will awareness Lack and overcome of Braava this category previously, investment drive awareness of Therefore, articulation suffered hurdles growth. the product's Roomba of the historically in campaigns. critical. growth to

we XXXX TV marketing discussed time. February the and the components in will In run executing similar for the one in to we campaign all last investment sales marketing at same markets. the of is year ran the national QX, major Braava we incremental programs of US, One our

a for additional campaign Japan this campaigns there's and in planned addition, EMEA. In TV marketing later year

continued quarter and sales to our round tariffs of and exploring revenue increased ago, to a US, enacted. are Japan, XX% associated the acquisition, the while performance region, of growth direct. for mid-teen SODC's our to Roomba XX% completed Japan growth in weeks increased XX% appreciate turning US, Mother's holidays QX without XX%. which in EMEA in QX with the XX%. Now, revenue uplift implication other grew couple Day the robust Father's revenue from now low we as the and delivered saw we XX% revenue second beginning international RVCs. outlook included US, through strong any XX% And which We growth has the still of XXXX. by the these year-over-year tariffs In for finally, benefitting options of our where revenue In the at about Day if XXXX proposed consumers to growth currently we in revenue also over benefit we sell value proposition of while XXXX the the uplift sales grew products. EMEA, from a where demand, potential were countries expect announced third from comment We're EMEA full-year our

to call reflect do well from year financial we Day our us XXXX on a In our full-year are expectations current second increased global meeting review to very just Prime the over Our with summary, more financial impact the detail. I not behind will half tariffs. turn our and in quarter Alison way full-year expectations. results any proposed now successful to completed, a

Alison Dean

Thanks, Colin.

for an of of year, Quarterly XX% growth of was compared from XXXX. was with with $X QX in XXX our was $X.XX QX million million and QX $XX primarily of second XXX million, our Our the was increase XXXX. for quarter $X.XX performance $XXX quarter driven Operating for ahead QX robots. EPS Roomba by compared expectations. revenue last income

was to as first of QX the due demand and and activity, margin intangible domestic the of ASP by expectations, acquisition below ahead growth XX% in $XX is year. on we our million $XXX XX% was quarter year-over-year of and last driven XXXX, SODC growth second cost the increase due million of our fluctuate promotional $X.XX XX%. growth in line to slightly with Japan the $XX QX. acquisition planned uplift mentioned, half, that about for and was end compared XX%, last year XX% with XX%. higher year provided in that high range of the for in operating based XX% year with returns. expense be but, XX% from other gross compared mix, the primarily margin seasonality had at growth margin and first Japan compared revenue of expenses were R&D stronger to last our For EPS originally Robopolis QX million amortization. was driven the in EMEA point of slightly last and promotional expectations, Colin Robopolis QX our $X.XX now compared million for among of this mind in with year expenses partially with revenue operating planned improvements, of QX not margins gross The QX in with half million things. and for the expect favorable G&A expectations. gross $X marketing were of previously compared XX%, margin in wildly quarterly included offset income Revenue gross can was $XXX year by by Keep to and XXX-basis asset The We QX

one to in we of earnout recorded company that Relative from UK as tax, investments million benefited to from principal I'm a income. effective QX July non-operating also XXXX. X, excited our an We implemented $X.X announce of

operating exploring operating We may our optimize I operations. to principal international an recall, of the we you business our company day, analyst then we that our model US-based as establishment would our increased global were As at recognized structure. said change international likely XXXX

around and to This UK, for US. During the now as shift business; currently be structure entity various plans imposes and lower set some responsible operating into statutory our will rate XXXX, London in which place EMEA all profit office. will assessed direct establish operating of managing global the our we tax models our operating centered than of a our such,

now, already this the benefiting was reform; from from further tax Our operational change. and US are rate tax we XXXX benefitting

was QX rate Our regional R&D credit. and the our from of a QX before rate our profit effective versus benefiting XX%, estimated structure, implementation new UK discrete tax tax actual higher items of XX% shifts,

quarter. booked our in resulting benefit, QX partially an we charge of a for discrete for associated a UK by effective compensation with overall of the XX% establishment offset principal rate windfall stock company, small XX% versus exit Additionally, last charges discrete tax

discrete before be XX% ETR full-year and XX%. items is half expected second Our to to

expect increase of stock QX acquisition-related tax impact, Comparing which QX was benefit UK in more had principal fully were effective challenging. the benefit the had to a XXXX the and XXXX in for compensation We XXXX $X.XX which over rate EPS of QX $X.XX, prior a $X.XX EPS $X EPS $X.XX XXXX items to windfalls from US negative and XX% XXXX higher which The beyond. million XXXX. the EPS QX of Key the tax items before reform. QX SODC, adjustments discrete was of to a is

end well and financial We and third before second and reference. with estimates before discrete the $XXX cash, the the XXXX for schedule after full-year fourth down forecast and don't discrete tax from quarters those providing items million so We can't any we statements first anticipated quarter million schedule. provide the of have for actual effective in QX rate items, included $XXX your the for as in ended discrete QX. XXXX to at items tax a the as We rates the

million total quarter, up the During on plan the stock completed The at stock. an and $XX.XX. repurchased we average authorizing a price announced March of $XX repurchase of of of our purchase XXX,XXX the XX program, became common effective we previously to shares

additional This growth XXXX. our to our to and strategy. facility we $XXX gives addition, increase us to revolving of million execute on flexibility extension the term announced an facility an to In credit

to hold $XX in inventory Japan approximately was $XXX than $XXX XX% for EMEA. million the the need more We days compared or by end QX expect with year million XX acquisitions of last and or sales to with of year, and XX cash. days inventory direct retail million ending expected the driven as

the by change XXX-day average inventory structural days holiday we to have expect previously model, over In expect well to we XXX XXX business be the As said, QX, this approximately we well average below before due of to increase our days in or year-end. with typical in QX plus minus our declining in XXXX, fluctuations. quarterly season DII on support

and over operating time. continue efficiencies improve to reduce capital to working We working identify DII

underlying I’d expectations. full-year Now, provide like detail assumptions some additional for our with and the you of to financial XXXX

we basis number as manage a the region a from results, of perspective. As the rates, we discussed, full-year impact XXXX greatly on have revenue to in XXXX. overall business financial made full-year a of will growth including vary our be due and should acquisitions expectations Likewise, quarterly factors, previously our we by viewed year-over-year

XXXX, being now delivered revenue with year. billion, we year the half billion the $X.XX revenue XX% For second of full $X.XX of expect roughly in the to year’s of

positively XXXX from In addition revenue the the of to impacted third acquisition the the the uplift will European business, through be by of traditional inclusion second-half seasonality quarter.

plus rates rates, or euro and yen revenue roughly current in X%. range Our line with minus contemplates expectation exchange

but the revenue in significantly launches the and fourth largest in full-year We XX% highest declining be to rate expected Profitability with QX, year-over-year and be QX, will expense QX moved support increase QX, smallest QX for each by into continue QX R&D as sales quarters, double-digit of prior years QX, increase sequential growth be due decline not The QX QX, revenue, in will XX% a quarter. over expense revenue increase of QX, second of as throughout driven third-quarter the lowest increase as year-over-year the in a the from season. is quarter QX. and and but first We as is sales In our typical, growth sequential is and as and still revenue marketing, only will in to percent marketing to and third expect between our to to selling the from quarter, percent closer higher quarterly modestly. the profitability expected of like to than revenue, of the but XXXX, expect that quarterly QX. QX. sequentially before product between

revenue. year, For full to the total we to expenses of XX% operating expect continue roughly

guidance household for of to the with our year still incremental awareness launches with adoption. is assumes expense our full sales the two drive continued associated full-year acquisitions expenses two-thirds and forward provided One-third into the primarily spend. incremental Our the product our in Roomba remaining continued and campaigns higher associated marketing investments integration, and XXXX Braava and spend worldwide by reinvesting a marketing gross margin of

$X.XX items, As now we full-year $XX of $X.XX. expect a $XX income million result of of these to operating all million to and EPS of

and iRobot the our are back first I We Colin. operating future. results ability the in turn will very to an for benefit the now its very also pleased delivered about having call and increase improved expectations to shareholders structure half excited global with the year. that I’ll our am

Colin Angle

Alison. you, Thank

consumer the the the leadership delivered in first-half and about In our products I robotics. have We that strong expected will ahead. am we very year of we second excited will launch the half, reinforce rest

and the the which further and will Braava validated first our we will strength build we competitive and further questions. revenue half we drive execution With to strategy the the most shareholder that We develop effective this believe category our take growth that, will the technology ITC, of IP the positive moat. growth momentum the With have consistent And portfolio, way is initial of ruling our of family sustainable to widen leverage your value. from diversification.

Operator

[Operator Instructions].

comes question of first from Our Camma Frank Sidoti.

open. is Your line

Frank Camma

morning, guys. Good

Colin Angle

morning. Good

Frank Camma

the launch Colin, color launching any it. product way Hey, want about any Hi. to I don't you the give give But about itself. could you're details you know or the product on

the about, mentioned first – You talking I'm the next one one.

exclusivity give to that to stores. gauge limited said some your Is or demand? is You partners that

Colin Angle

not rolling the but we singular launch, think And we're soft I'd mean with it event, controlled in big we're that's out So, having give. a our a like color partners. way by I that to

Frank Camma

on available be as I That's online the where it it in with I'm will well, But just question? bricks-and-mortar, or going Okay. your guess? store really is

Alison Dean

and August there that rollout stores elsewhere. a limited in no, available be be will And, press will not it It will further in point then after release.

Frank Camma

built press products? be for that's guidance right, your do release, have okay. fine. won't But you sales into There a both All

Colin Angle

Absolutely.

Frank Camma

Okay. build like new And to for you or was have far is further to inventory you products. for stock more incremental out a of the launch that, the that any surprised as you up on as QX them I call didn't Don't before on inventory build? event,

Alison Dean

in we Yeah. We half inventory end anyway expect do quarterly support fluctuations at as our do to of the business. year. But, be significant higher remember, we second QX the of the have

Frank Camma

Okay.

it's even that not it's So, not seasonality – the already. given two new material, just it's though products,

Okay.

Colin Angle

the right That's interpretation. not

in again, new from We building as that the inventory the we're that, inventory, what is products count models for QX. older just are models. is that ramping building And We're to newer do normal time. our up inventory shifting in our the so

extraordinarily that might will that inventory years, of while from the so, be. not And prior different ramp look makeup inventory build

Frank Camma

it but seems then, incrementally it. XXX don't your with drivers, XXX guess got somebody to a it. sort past, it's choose too XXX I the and and finding into where this is described the series. that given much I'm going that know why than is, It's I the clear. consumer. I I different of revenue series. will would the Okay, that much, Like, from are the like consumers price choose XXX is of more research being all the consumers want are But got and got point? read That's to say Alison my price the see way this series you point. but I to middle XXX the stuff, question expensive more in given XXX can up what what – the series over that from – And whistles I is script. the more series really – just last does that And given the makes way the question going little the the sort bells the it's

Alison Dean

my consistent between has in last So, with comments several the XXX that Frank, quarters. mix been really what we've XXX and seen

at of about been couple of consistent last a we the we've quarters. has So, a amount and XXX while, demand the as very the strong over for that And talked end see end. XXX

nothing how between revenue that really split two So, there was models. new those in

Colin Angle

is little down very points, to getting demonstrated we success that continued put price in into color, think which a the strength pushed think entry Prime material, only. I premium I not at are the simply Day level

to strong important across that's And points. that I very the Day. continue price think most and result performance of coming have We Prime a probably material out message

Frank Camma

Got it. right? low-end that fact, – still be in can, that competitive and And you obviously, margins, maintain at

Colin Angle

Yes.

Frank Camma

guys. Thanks, great. Okay,

Operator

comes next Our Troy of question from Piper. Jensen

open. line is Your

Troy Jensen

First off, congrats quarter. on another great

Colin Angle

Troy. from you, of questions Thank Hey, me. so couple

but looks First ASPs, basis. is and like older of sequential some year-over-year on products, know it would guess, activity I out assumption the trends ASP potentially love the a down promotional of on I on they flushing here. thoughts your to kind my were

Alison Dean

up. is activities. Yes. by a wasn't gross we're unusual. driven of Net, The promotion ASPs little. There normal that were actually down anything really Part

of In bit in had little promotional planned. the as activities weren't as planned we as fact, originally of some pickup to a expensive QX we had run had we

the So, note. really anything think ASPs. We've got I of there's typical fluctuations particular don't in

Troy Jensen

I to think was know the be curious us you Okay, for top perfect. And then, sell-through you, in resellers what of QX. the that in XX%. US told I'd about that in five Alison, QX,

Alison Dean

much the line obviously, in our say and for by the was it with regions. countries sell-in different quarter. Our sell-through rates very varied, I'd

Troy Jensen

I are question, Okay. likely these being and lower be sales-out like same normal big may sounds products out. change retailers, inventory of they're have the the in my with that it to about than assumption, But given kind coming would channel your been my comment sales no you channel answered I next guess, just there's new implies it know guess, but inventory.

Alison Dean

last end – think from the QX inventory dramatically were levels Yeah. or of I'd they inventory the say at are year. changed are. I don't where where channel the they normally they've

Troy Jensen

Colin, some get plan do here. competitors last Okay. But, success IP and the larger one given targeting of I'll with this I'll your had on the cede you question you've now? floor litigation,

Colin Angle

Great question.

are our we considering seriously as to what next our are. very I options think that steps

with strength As of as I pleased IP. validates very said, the outcome this it our

And about options Can't that. attractive go further next. really so, we have think definitely, what's as very we than

Troy Jensen

keep Yep, up understood. All good work. the right,

Colin Angle

you. Thank

Operator

Merchant Asiya Our next Citigroup. question comes of from

Your is line open.

Michael Cadiz

is just one Hi have there. Cadiz question. morning. at for I Michael Good This Merchant Asiya Citi.

likely most tariffs consider would affect Given iRobot affect any you. how Thank to the you consumer? recent tariffs would likely passing do that this think that news And most Roomba, demand? on would

Colin Angle

Sure. not the looking questions of There's or going how remaining point, way react. this will a have a at impact. to all through we we our At this as alternatives. exactly pass strategy to we to either what's happen Realistically, And we're lot and mitigate time. it at find determined

of attention. So, it's getting a lot

Michael Cadiz

Thank good. very Okay, you.

Colin Angle

Yeah.

Operator

Our Needham comes Jim question Co. next from & of Ricchiuti

Your open. line is

James Ricchiuti

a The strong. morning. in and was or whether in both it about was the Good can you. EMEA skewed Braava in bit market Colin, international Thank very little talk Japan balanced more growth toward you was Asia? that

Alison Dean

Jim. Maybe in had We for both but in across both Asia Europe bit more towards for was Asia, regions. Braava, representative little growth QX a it and

James Ricchiuti

Alison, in say growth in market? Braava the you what US can the was

Alison Dean

me Give second. one

James Ricchiuti

looking the had for you're products. just new respect with to was question I While the other that,

XXXX. to that still your contribution talked XX% XX% You expectation? before in Is about

Alison Dean

in second single-digit was? original Americas. your in on back get question sorry, to in just I'm growth question, the was so Braava there Jim, QX your

James Ricchiuti

was on The just the second new products. question

I think still XX% you've revenue contribution That's in to about talk XXXX. XX% the expectation?

Alison Dean

That's still Yes. expectation.

James Ricchiuti

phased we can't QX, a I'm rollout? about think a widely to whole available domestic trying going if going be. you in and there how products know to are they're both I These just available be international lot, be QX get of more but to will or in a say sense

Alison Dean

phased that from those a products about won't typical as but be talk are start. everything everywhere the rollout. we We as might launching right launched, more that No, be

James Ricchiuti

the light maybe improved mainly at customers, relative about how is of to expectations thinking last question the year wonder what you time, could say for just, half, consumers? – season, macro this an I clearly me is anything just with environment for in second your respect And they're major final about holiday Okay. retail if to

Colin Angle

strong It's at that that the growth and Prime say on is – a sell-through category. so enthusiasm the XXXX They've – grow high continued level its would are seen again, buoyed attention category strongly, the in of very I bit first against half iRobot that to the there by continue enthusiasm of about category doubling another remains Day. the vacuuming for market they robot evidence placing continues and, high.

James Ricchiuti

it. Congratulations performance. Got on the

Colin Angle

you. Thank

Operator

next Northland from Our Capital. comes Mike Latimore of question

line open. Your is

Mike Latimore

Great, thanks.

Prime it those success, I Europe US. On carry-through kind the of US? guess, have just Day guess, last saw even the regions was Prime broadly. as of other Day I year, more and you the year, you across in kind on and – does in success similar were across in retailers, This Japan

Colin Angle

our would little Prime It's Day really benchmark performance US. anything But year we And the outside first we it a I participated that we to against. in early. have is very of say the don't good that actively had results.

people paying but I not And happy, so, whether would were to be very to be. would what speculating it attention we're say or effect

So, it's a we're of. great proud result certainly

Mike Latimore

high-end features first And high as release new you past, talk a lower you the about defined features? sort having Great. what In then, product end have this price. at of

Colin Angle

available features down. example. to in tried That would through high-end the now a generations ago are product to the feature be back those way line. that changing into robots it's all one brought bring and game have features consistently and our then Wi-Fi worked at We've We bring high-end really the few

throughout entire technology line. Detect Dirt the our have We

to in And and if line. those value, are so, of specifics without cost you what some our for products down the customers have the truly pulling doing, looked at getting our we into differentiating things candidates product much very reduction of we're it the that

I where that's that think will stop on I So, one.

Mike Latimore

And in just half costs of on the guidance legal general one, last year? any the second

Colin Angle

Certainly, out ordinary not change of over, that's it's winding down. we've is the suggested. what a but the litigation from Nothing

Mike Latimore

Okay, thanks.

Colin Angle

Okay.

Operator

from Mark of Strouse question JP Our next Morgan. comes

Your line is open.

Mark Strouse

morning. taking Good questions. for Thanks our

could on and the shelves the it Reading year. last this in Europe Chinese Colin, competitors that the your coming more mentioned call, in into potentially happen today, comments mentioned So, that optimistic US when year, much into you more call. than me, the last similar I'm to maybe bit reading last to just but looking about environment, too it, a competitive talk sounds you

First all, that right? has changed? I about am so, if talk And you can of just what reading

Colin Angle

stabilize strong models, think that Prime competitors that in that, half. saw it through the And think certainly these again, availability I the we dynamics influx We've QX. Day And did in there at marketplace. okay, take, exemplar results I favorable an the what at disrupt, maintain ability demonstrating you much an the as of the share we end is in the do significant they are new marketplace, to first how look of high how change seen while much our low Prime And they strong did low-end relative performance Day. did very did at iRobot they performance its maintain the to of end. of,

so, enter very environment, new good performance market the competitive, certainly the market predicted and that, somewhat without at not is a disrupted very laid of to end rates QX, out. was them indication demonstrating that for while growth substantially certainly allowed the the there disruptions. I think is And The yes, impacting we had that

Mark Strouse

sense. Got That makes it.

Alison, appreciate And you're I of running you on way a to of evaluating X% to a are to thank that margin, business still Okay, that with help? of into you. potential I'm very can the overall US that business, guys a a mitigate US thinking then, I'm on level, the getting again try in kind tariff worst-case gross of math follow-up you anything tariffs, scenario. Understand just impact about can mitigation, XX% the through of you that the like your your impact to kind or high mix margins, from but your that. gross kind and it about do X% there But is options of just

Alison Dean

those going Yeah. of financial speculate to the tariff changes. impact I'm not to as

As we've no point. the guidance said, of impact this assumes our tariffs at

speculate As but you dealing we going with. it is really about assessment the that We'll going learn more and to and something that to impact understand now. it, I'm guys, share do with of potential we're this be not

Mark Strouse

And then, last quick, Okay, okay. one. real

guess, So, play second [ph]. specifically sooner for application for we Is a called these kind going more something without there? about of in trademark that later? could something a Imprint I a that that saw is see rather up it half, we the you're of asking coming long-term products than

Colin Angle

interesting name we routinely features. Certainly, think that with very taken trademark we associated that's work to particular term. and could We that think be protect the a name

used, like. leave how when So, term it's speculation a be and you to how I we to might but the will that I as say that would

Mark Strouse

okay. That's for very it Got you us. much. it, Thank

Operator

question Our Research. comes from Bill of GARP next Baker

Your line is open.

Bill Baker

of hi. regarding Thank second me I'm the the productivity My now, it in growth now, now United half right And above question growing when sales that terms of rate. gains, at spend. new looks moderately curious, forecasting introduction, And look in to you you're you you. States. the marketing product a the without is really XX% are Yes, like,

are the but company percentage you look a For they revenue. are whole, nice, you of up as as like marketing a ramping

Maybe little and of work you're is not being you're light it can you sure as marketing? the changing tell with them that? Is that changing how So, a on [indiscernible] and just the Maybe whether or I'm less about productive? you just conservative. shed productivity more us this

Colin Angle

Sure.

we There's I which QX, our into generate definitely, momentum a we to ramping That our with question. QX your air Day, in incremental we sales. think marketing which then, lot over around off, it spending QX, momentum a up cyclical And going to drives in where unpack quite successfully QX, on that little Mother's sales. driving before, in quieter and carries spend nature first and goose then the summer Day did again. a Father's bit nicely

year energy, natural not we so benefits goes go definite There's a the is on efficiency. is injections to our that those from generation our a our of of and a cyclicality apply dollars what that to marketing peanut and A it. there That flywheel. of entire level there analysis butter. marketing marketing sort way spend second is and demand So, is pattern against

the region. do the So, to lot incremental the dollar And in that a particular of a what every is has with ROI spent? product maturity on

were than company, Europe example, that United and picture big there in efficient developed you global on less where Japan particularly sort US, in of an still And But positive, not better, States are positive would were dollars opportunity resources we ROI, more the and we're while the a a a that, it in as spending that to a the money building ago. then and generation world. as material the Roomba years efficient regions on mature, that develop year are – so example, we much we it less building top than as so, invest and US we're say gets is spending and of as rest against more stool, leg And our on so two as Braava. is in in and against ago demand in unlocks second strongly frankly, of

and to financial develop have And with – of develop emerging targets. a so our that can then, so, we to regions Braava we're growth where within commitments sustain model profitability marketing as long-term think a our over commit And spreadsheet moving that we the around it the committed giant time. are to dollars those category, of we optimization

creates a have to the making lines very our we work and quantitative for US approach winning to so, diversification drive in opportunities globally. growth of and marketing And and spend Roomba product marketing dollars increasingly

Bill Baker

oriented? you Great, thanks. Is still primarily by… are challenged And

Colin Angle

a marketing. definitely the be TV, to years not biggest online TV – from would shift seeing a still from might We digital high-level slow I from activities. online say and investment performance from singular two shift case. now, our We're – that is but probably strong there's marketing that

Bill Baker

Thank you.

Colin Angle

Yup.

Operator

from comes Research. Battle Rose Our question Road next Ben with

is Your open. line

Ben Rose

morning. Good

Just for questions Alison. some

almost of the G&A recall sequential that time from there to basis. are decrease on that there seasonally Don't are other year. I nature it's things May million non-GAAP looks sequentially one $X at down ask kind expense declining? that last like in a QX quarter the or QX, March were Looking expenses in were

Alison Dean

quarter but not QX anything a of legal but nature. were expenses later G&A. going the There on we one-time terms in is really was the unique due high will litigation, quite our have really legal in from unusually for but in to Certainly, of expenses year, probably us an legal nothing high else perspective, in

Ben Rose

offset dilution? the regard repurchases options been may is to I back share to what minimum at company's for ask share executed, a the forward appetite Okay. going having With

Alison Dean

With we take. actions wrap-up program, readdress want will to this of we the any other

we're is in want share As forward. suppose the another terms we uses in that this projecting cash make further repurchase to we doesn't but end take about look going to this year of any with that now program million fresh point, cash that decide at said, a $XXX and program, concluded, whether we'll of and

Ben Rose

on size your [indiscernible], acquisition. of to iRobot of been any this refresh a increased you kind done Could cetera? company terms the the you the be maybe And being quarter while of in limitation that of appetite fact reminds framework of the potential the terms it's for in just just a quite revolver has memory for et in use dilution, any me past comment of either that acquired, kind since

Alison Dean

actually, Ben, your two acquisitions just on we So, year. last first point, did

same don't of So, terms view. we a in it have being the while,

Ben Rose

company. I sorry, I'm la meant, acquiring meant a Evolution a [indiscernible] product I standpoint. from Robotics product a

Alison Dean

Okay, understood.

individual increase us to little gives acquisition us facts expect the of lens a little would completely With revolver, to the shouldn't our our think increase helping opportunities but, the a related certainly, size we're a be at, looking think we that in the core the of can the particular really circumstances to remit, helpful bit. of the in would the acquisitions. really room about of threshold area think go But If be in don't opportunities. us put looking out we're. to that of deliver strategy, terms and us more on widen more within companies we for revolver you size acquisition We of our they obviously, gives

Colin Angle

would the have benefit strategic largely that going as technologies criteria within consumer distribution as Companies products umbrella would our are brand emerging from our Our think be that at, be and to is space. we unchanged. could fit that important power robot look global things in we well

and themes of so, high-quality team have of again, active when certainly Evolution-like those acquisition part look pursue. we category we continue opportunities. your for, And, strategy – to it is and, are an I to we're think, And that targets, at our is find looking

Ben Rose

for you thank were that I that overlook the I mean acquisitions didn't – color. to you. distributor Thank

Colin Angle

worries. No

Ben Rose

million finally, the out in of could intangible Alison, for much just that second amortization terms longer $X.X you how for then, just refresh go thank – And assets Sorry. And in the you. quarter, impact? us does being of quarterly

Alison Dean

acquisition, the full is of amortization driver to is across XXXX year largest quarters. although from million, it for Robopolis XXXX. to evenly slightly in than XXXX, less the will be a Robopolis about And is be that So, through and going the here impact impact split with four us that's amortization XXXX, $XX the

Ben Rose

you much. very Okay, thank

Alison Dean

welcome. You're

Colin Angle

October call. with second our earnings your and you in talking forward concludes results. QX look XXXX discuss That We to support quarter Okay. to appreciate again

Operator

That concludes disconnect. may now Participants call. the

iRobot (IRBT) 25 Jul 182018 Q2 Earnings call transcript