IRBT - Earnings call transcript Q1 2021

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Operator

Good day everyone and welcome to the iRobot first-quarter 2021 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 Andrew Kramer of iRobot Investor Relations. Please go ahead.

Andrew Kramer

Thank you Tiffany. everybody. morning Good

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

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

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

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

financial today’s for related Colin discuss the and our major quarterly In XXXX. company’s results financial Colin forward. and outlook share accomplishments turn over call, I’ll closing his our quarter review with will first briefly will expectations After detail insight will our point, call open for progress, into Julie terms agenda of results, this perspective on our that, offer Colin and into going questions. to the some conclude we’ll Angle. strategic the call remarks. At the commentary

Colin Angle

for XXXX very Thank morning. Star good a Good you is Day! joining start. and us off to Wars happy

revenue XX% the top X%, We than revenue on we dynamics North Our were orders demonstrates growth another $XXX our geographic from each into growth and direct-to-consumer including EPS previously anticipated strong These million growth the second continued that year operating revenue have first orders first profit and demand digit an for proposition income raised were EMEA triple as we complemented full America, quarter tailwinds, major region $XX and margin our in channel. that continues outlook. growth in in grew demand performance retail see of operating around generated Based believe We our distribution consumer consumers of expected in quarter certain that our favorable world. quarter. $X.XX. which with of ahead QX vibrant partners of by of to our we and our converted strong quarter benefited resonate value we line from stronger million,

EPS we from and expectations profitability our supply plans offset XXXX as our have reaffirmed to adjusted transitory spending pressure expected challenges. gross also We margin chain

element our of updated to detail deliver in about XXXX first highlight shortly, like optimistic to strategy. discuss upside are in we I’ll more I’d our forward, executing but our to move we targets. potential each our As our outlook progress

As on our us strategy customers focused often. lead transacting directly a that in with to more more greater reminder, engagement customer driving ways remains

our first the and that can for customer’s in so strategy differentiate be and our levels vision floor The tightly with technologies machine of and reliability, into investment cleaning is home iRobot control This to support. element the AI, experience understanding, unprecedented means our continued of thoughtfulness, robots clean customers. integrated lifestyle

are We pleased fronts. these current progress with our on

role a upgraded quarter which During may finished, clean features be Genius unique time, services you the The leave helps I Home uses estimated first is premium certain know portfolio tell this clean once important in tier cleaning of to cleaning and drive a including of and enabling generated smartphone’s our our several we location quarter. platform, am By in adjustments, more Roomba Intelligence Genius pushing occupy compelling helping and and customers of on and while away, of mid our XXXX, robots. our these the top platform our quarter our product functionality start models innovation believe house. EMEA strategy new iRobot of mid when the growth the revenue to which the the robots. adding RVC pricing line sales robot We job across in of bestselling played execution solid U.S., first XX from reinvigorating that element are an we Japan seven tier of the making to first strong

relationships. our enduring consumer strategy to is The second stronger, of more element build

to customer million high gratifying been the by quarter and over to platform see who XXXX’s the XX.X functionality has first into base XX% connected Our also value features customers. Genius communications. our digital how our are have delighting grew within It customers opted

journey product with the points over to when us unbox of then it As and mission, iRobot’s various from at and and months that from purchase they first customer cleaning years community complete their enhancing points a expands, we us, they the follow. moment consumer’s are all the

of handheld accelerating and products helping new drive of third margins. that and higher customer several as heard existing involves vacuum up-selling replacement their of have is future the milestones. the The say This recurring services, maintain the robots, important year, including and complementary Roomba options Since start revenue a offering complement Braava easily can’t value customer purchasing customers gross iRobot cycle, to the pillar me and developing have that to relationships the lifetime to strategic revenue. vacuuming cordless we nurturing the expand cross-selling, a Many vacuum for new properly a Roomba early you areas we April, robots. is hX introduced accomplished of In robots and and our new clean.

customers can from products us. Now our both get directly

very progress tangible thus add services can purchase an rates with flexibility. with far. attachment the provide customers also purchase with from protection been We and warranty, who that also us made robots extended directly Consumers and greater new their pleased we’ve

customer Select been membership pilots addition, iRobot these feedback our program on have progressed. In has as robot-as-a-service very positive

further prepare grew generated in and advance and very of QX first mopping we in opportunity QX forward, batteries, optimize accessory represent our sales, which quarter Moving direct-to-consumer to growth value by pads revenue rollers, XX% channel. plan well filters, as the customer proposition scale another We includes revenue. solution. offering. drive for as iRobot generated of mopping program, this existing the XXX% through testing healthy Accessories DTC growth and our a sales premium to Select to Overall, care-as-a-service bags,

positions. enable our the we right further irobot.com We customers world-class marketing this implement build to offers tools and time. inventory forward and present a with Home digital compelling we and quarters upgrade the App us our coming momentum, on relationships, a to experience systems, us, QX excellent buying maturing for with retailer products and that rapidly and over fast category expect the With value as channel right solid momentum healthy will at strong the on a behind right proposition, channel, growing campaigns move DTC

through the the the not better weigh continues that Nevertheless, Our early early limit the our visibility. year days year. dramatically of to and through surprisingly, pandemic. The sell we year-to-date same XX recognize by week a growth is pandemic is, landscape period than impacted was which macroeconomic it on ago, still substantially in the

Additionally, our notified certain wide component To recently immune to business the of disrupting potential industries. volume that range chip suppliers of that us semiconductor end, shortage a not is limitations. is

$X.XX although our to have range ahead in of those additional year made into this have expectations Taking good front. full progress billion. costs work for shortage are for components. same to materials, raw resulting the these our these efforts We At of lies we time, freight higher on rising constraints, the chip the already air semiconductor in profitability we to transportation. is raised consideration, and a revenue mitigate billion dynamics all $X.XX perspective, costs now From grappling with

over that quarters. Nevertheless, XXXX to remain time over market recalibrated gross to our offset costs these our expect While levels they next on margin, impact elevated few quarters, the are revert will more for spending coming near as adjust. transitory term anticipated have forces the we normalized likely we the to

trends access production Julie. healthy ahead initial the for upside, income, operating XXXX my over two As successfully we and will of a I are reaffirm and in targets. now of about margin, our further optimistic if to semiconductor what’s are still remain EPS us, thirds componentry turn potential our the we increase With which That to able demand beyond we current concludes income the us current to call our commentary. result, enable expectations. expand embedded operating especially year will to

Julie Zeiler

Thank you Colin.

per effective income As profit each expense, non-GAAP mean will share margin, will and metric. Andy done outlook the tax mentioned the non-GAAP mention quarter so otherwise otherwise, net be gross and against my results of unless operating XXXX first a comparisons financial review All income stated of earlier, our rate are operating on noted. basis, unless of corresponding margin, operating quarterly and

quarter. due arms noted, expected our $XXX XX% that that mortar XXXX. total including a our Braava U.S. of a From the exceeded distributors product up targets, are in and the our XX% XX% stronger to than with mix, $X ago, to We mix the in strong consumers retailers. Since a grew estimate which million our a grew EMEA of U.S. buying in due the and up Colin of million Geographically, primarily QX and comprises accessories ecommerce, in were EMEA international Roomba and brick revenue QX revenue the QX represented start from robots online to XX% and orders start making revenue website remainder. expected revenue came own first As year traditional to retailers, quarter of XX% over revenue more second dedicated products the over approximately with Japan. perspective, primarily in performance websites, increase in XX% online. orders growth XX% app, and represents Total our pandemic original e-commerce and from originally

the with associated procure quarter. sales, of leverage lower and air higher was margin costs one-time freight were tariff and first in mix, largely and certain Changes by fees, components gross higher the from the to from Our pricing year’s channel in quarter that prior of X, costs, $X.X advantage XX.X% write-offs product recur pausing to our essentially XXXX unchanged timing that on in of of certain not activities promotion, QX higher on offset the non-tariffed Taking the favorable inventory the end imported limit first first first just was from China in Tariffs were U.S. tariff quarter. RVCs of helped us did January quarter XXXX the costs million. at into place in reinstated XXXX.

Our gross operating X.X and without would percentage been have points margin profit higher tariffs.

by working $XXX and First expenses media increase XX% of reflects increased cost increased spending million and quarter XXXX drive to operating primarily revenue. sales The expenses growth. higher of personnel represented XX%

income operating revenue. $XX X% million Our was of or QXXX

rate was with plans. in effective was XXXX which our tax line QX Our XX.X%,

should $XX term $X.XX. increase net investments, performance $XXX favorable short was reflects share It on early in our capital. operating company’s from We with year those million of QX the also the Our ended of end end. since of primarily shares The the working primarily reduction and fundamental plus that Teladoc lapsed. term per in the in quarter short changes million an once the increase income in restriction cash XXXX be reflects stock noted the sale investments selling

XX days, $XXX at days, period year. year against a QX last compared or same days same ending the were increase the or ago. DSOs million was with inventory two-day quarter million time XXX XXX First one $XXX

With complete, XXXX to outlook. on let’s move review the quarterly our

range $X.XX the we billion. outlined, Colin billion XXXX now in expect $X.XX of to revenue As

implies the between split second updated sequential very Our XXXX of growth and approaches our outlook historical which halves split. that XX/XX a assumes strong first

raw euro and our developments several exchange freight in costs, chain in As higher plus including a and reminder, line outlined involving fees. resulting increased than of and material roughly our semiconductor with current minus Colin contemplate revenue constrained rising yen or rates that supply availability recent costs, X%. transportation are expected rates componentry, expectations air

In addition, $XX higher million. we tariff range the in to slightly expect XXXX costs of $XX million

gross organization factors shaping well outstanding moving of margin costs. year reflects address of margin expect We as been target, timing XXXX promotional the supply Many urgency began, a XXXX challenges. Since activities to anticipate gross of in As in is full pandemic key a unchanged. result, with the gross that now as course incrementally margin full chain we while our approximately year the a initiatives higher other and our which QX XX%. decisiveness operations on has chain unanticipated with our are supply keeping line

plan Malaysia labor even progressing market. this well, over production in Our a substantially year our course is tight to increase of with the

We are a longer increasingly lead have that help sheet also fortunate and will balance secure to strong scarce time componentry. us

our costs, full pressure. margin anticipated gross our plans adjusted year operating XXXX to have In offset we terms of spending the

to full million, We in or year $XXX of approximately are targeting now costs $XXX of range million XX% sales. operating the

million X% anticipated $XXX profit margin operating $XXX As operating million. result, a between an still and we of income expect with

our we plan we seasonal ramp increases to programs support and sales activate relatively While events. in our XXXX activity QX versus R&D scaling major other levels, nominal up we in significantly invest and and G&A as working to DTC media continue QX quarter to spending and holiday our expect operations marketing our first

our the expect profitability a margin we revenue half the that the the higher substantially year. QX we half first anticipate will second quarter, our second decline of support in Although in operating will from improvement meaningful profit

our other from EPS We million now XX anticipated major approximately $X.XX full diluted still and $X rate we of between range share XX%. terms still an an assumptions anticipate In be year expense for expect ranging million expect to from to to modeling tax of $X.XX shares. count to XXXX, we effective XX% with other million and $X

million We capital $XX continue to range. to spending expect our in low XXXX be the

million disclosed our the of authorized began up or available had common million previously we expected quarter. use repurchase to plan a to our this stock and XX entering front, on month, Earlier second X. on our intention to end the XXbX-X April of stock $XX $XXX On $XXX September capital that is under repurchase plan before million

any our reminder, not assume a repurchase As activity. XXXX do expectations

challenges we fluid On we quarter year meaningfully expect may In fluctuate terms dollars remainder chain QX look to ahead. commentary. and the the quarter see to executing on begin thoughts. against a was over our the now to I’ll as environment. the year. that as of navigate opportunities focused forward both of good the to inventory lie plans my front, That call absolute turn We exciting summary, from and a the on and in move capitalize we supply DII, we that Colin concludes overcome closing the back way for inventory, challenging some

Colin Angle

Thank Julie. you

the into needs transform We profitable are business and address solid global growth more evolving more strategic point the offerings a customer expanding to of midway to expansive sustaining iRobot scale, defensible, with of multi-year a of and at an base. plan channels capable

highlight high advance in Our recent introducing driving promising offering robotic all and warranties, enterprise process. to our new and extended build selling the capabilities. potential more further and marketing accessories innovation importance illustrate ecommerce They digital improve floor customer products the cleaning investments also services, value the existing and from in grow complementary progress, to revenue our of accomplishments to care of profitability and our our out

may regardless look We our thoughts we XXXX. progress like related of these the QX remains short preliminary call turbulence on recently fronts expect coming our That quarters. business term encountered. supply more other February, view On shared on in what our over in we’ve chain unchanged, and the

long past term made Over progress several quarters, plan. refining good our we’ve the in strategic

an hold our are important activity, this plan planning appreciate for fully will day opportunity that for to finalize event to believe process about have year. this and started this enthusiastic later investor our be We why investors so analysts we we we we virtual As a prospects.

you to for expect event comments. will questions with We accordingly. this Operator, finalize share and our will we That the soon timing take those concludes details now.

Operator

Your with instructions] [Operator Citigroup. comes Merchant of Asiya from the first question line

Asiya Merchant

very few a are outlined--that you That guys a year. everyone. you and Thank you. clarification the thank questions. delivered I outlining for demand Great, environment that was you strong guys had

data provided, should shifted U.S. demand to of it of any Day or activity, on to this about channel out, pandemic if year dynamics you Prime results Day ’XX promotional as you QX the we I inventory further it’s it last how a based talk the think I’ve the kind side, was know about not the look I if in kind in activities because think and the First at Are year strong, when year? look and some later then just relates that ahead consider? last companies on the it can what to EMEA. U.S., relative spring there March other flattish in into normalized environment versus you was year, a of into we ’XX. very as the Prime little And about but here and more heard there. was of also lastly, bit my dynamics EMEA strength If Then talk fiscal

versus talk about would Thank Japan, sell-through If to you be sell-in EMEA helpful. and in can us you. that

Colin Angle

back QX in into last enter a the level us retailers inventory the we on I your in either based weathered The unusual XXXX, build to generally a think Sure, let their or and we is sell-through extremely ago a said say low channel we’re would also of inventory I then mean than did Last that. at that from back year see a exposure dynamics of we in and question see were drive the the in year position, toward slowly inventory the first a would over-supply viability, for I me we to, retailers position so and we had the We what healthy year, superior pandemic our of there time we to position. position, ordinary. we able any nothing good to is of to your of any the don’t ’XX, a--with which to of see retail saw we’ve this risks those levels allowed fill positions. don’t when that part to answer see from have keep very year, doing--having was which We consider superior of Relative strength more an question starting. QX we year, the inventory the with that year normalized this been where don’t start. balance questions, an say that would we with inventory at is described, out very any

our We’re in is it were very Prime Day so expectation, the QX. is what on in--at or this it Julie, to point. of we strong history Day, Prime in have Amazon dynamics. Amazon do with have think fortunate timing Relative would we Day, those Day? comments to Prime know a Day, and Prime year would healthy is announced not that happen it in at include choice your would time, sell-in to either been normal around with more a happening, Prime and I we’ve happen situation not every us about but a enough what include mean

some Of QX course well. as did have year, Day last for Prime we in sell-in

Julie Zeiler

time sure work And then and sell-through. to Asiya, balance find over always I hard that between think we we sell-in make

seeing forward expect in to XX we look through driven sequential particularly mentioned by prepared the global strong sell-through, we’re QX, U.S., we we overall very as As growth. and solid our week remarks,

an as we of and XXXX XXXX unusual a remember that have going will so we as to continuing demand the normalize look to lot XXXX to be and through to that through to a that have as on customer XXXX, make going is go sure more-- go we comping seeing, we’re we’re We build we’re

Colin Angle

comp. Typical

Julie Zeiler

comp. -typical

Asiya Merchant

years? should then think you to into the you about if I and and ramp we growth? may, one from - accessories XX% on ’XX think expecting we How more about what more teens know, high should into up accessories contribution you’re side. the accessories Okay, outer What in as

Colin Angle

financial the to some on DTC, we color look is tailwind the this forward, it drive a contribution more level to almost increase on is consumer and definitely accessories I growth performance in in we so grows, the opportunity but sales performance. direct business our definite just accelerating as we’ll point, think outpacing revenue high to as that so give our that at accessory the DTC growth see answer, of

Asiya Merchant

Great, thank you.

Colin Angle

You bet.

Operator

line America. the Babcock from comes Bank of of question next Your John with

John Babcock

thanks and well relationship little inflation talked taking a and shortages point, bit transportation. morning with how was through Starting materials, about as Good them you your on results. for we on freight some questions. in component if so wondering raw my this also I and your the just roll as On talk out, that some you could can manufacturers how sense contract might get are with contracts color structured, about provide

Colin Angle

got strong and We’ve our term relationships manufacturers contract through partnership with challenges. long work definitely a to these

we on why the have our clock cost the and unusual expectations current income to more, as lead are additional market of costs the situation component which the the better I buys, and able did we that think that included we roll of in guidance. driver go unchanged secure for the components and guidance into we some color a This financial within forward. expected operating position slightly go that what we higher raising our and effectively of for our a was the had and of are having XXXX, transportation incremental The raw we It’s that do commitments was have suppliers a around take made gave as been open previously to of that term given. is and impacted given to de-committing remain spot the guidance impact confident revenue guidance normalization longer and components in inventory covering XXXX cost. we and that gets that impact, the although will materials

John Babcock

might Got inflation? raw most of you you’re be the seeing to about where materials talk able and some the you,

Colin Angle

levels work example. XX% through, some normalize temporal, a--there’s up it we chain a this at traditional is significant that expect is back resins time to That’s one situations. to disruption just supply do know, in but to to definitely point. It You it some will are take

John Babcock

going in to if was that back that trends about set That’s the be growth EMEA. also might wondering of last key of I strong questions, some you just able to great. talk the Then driving are

Colin Angle

for I - are is through is normal, think we’ve majority increasingly continued that think continues growth, people think it’s about their and consumer a to cleaning as where care penetration. a and behavior. This floor now was consumer consumers relatively and for is at still that I new Roomba last the are seen of of grow phase time and year There that how that happening changes floors. we this future. realizing adoption the We of low realization at this not is the vac still is accelerated something strong spending a opportunity the the fad, vacuuming method in more robot and work-from-home hand home have household continues

this that exciting an think I in vibrant its at time is industry growth. a

John Babcock

just did squeeze in want quick to Okay, two ones other here.

mentioned and above might XXXX might as First, tax, to well if minimum about also, wanted the to you in able was iRobot. that how see expecting I case. there just call the corporate talk in I earnings some if global still Then the last the tax that on you the is rate, be U.S. think to just as XXXX have proposals impact and changes about levels, be wondering been quickly

Julie Zeiler

I nothing evolves, we’ve When have to growth. that continued what’s we the look our of corporate and that from forward implications. continued into tax to look iRobot one, and are add changes new growth by in that will watching that color expected at is its John. Yes, closely. being appropriately we’ll things underpinned healthy the fact benefit market potential about and XXXX, provided to rate continue that the now some I’ll as that we written Obviously that that, are take

We and we’ll operating our favor into our we turn in that and calibration number so see of a gross tailwinds, leverage, that of driving continued continue margin feel above things headwinds to XXXX QX spending start expect turning which levels and that to all to expect Those talked substantially our things our confident are call, about in stronger we today. during OI we things, performance. EPS be -

John Babcock

that. for Thanks

Operator

Markets. Your next with line of comes Latimore question Mike Capital from the Northland

Mike Latimore

lot. a in the there. quarter growth Thanks Really strong

supply just influence In much side? on more the your the of guidance terms revenue margin is did that it shortage, or

Colin Angle

it’s that guidance the I think the our strong forward. think bit our again our lead we’re It financial strong alluded additional can QX the certainly influenced being there, growth situation, a grow to demand both, that is all, an unfavorable revenue continued signalling supply, of are for revenue to product today, able our a so of a also which very is where lean the history. touching performance, we’re not times demand assuming customers guidance frequently few our just in find the demand admitting over and months, incremental less we where a--it’s supply. we how that to in lead in but with and that so may be something the meet represents of this best In it in ability fact the been because or are that responding assuming further and demand that ability times, is we guidance companies have in is some componentry there to is the growth and in at our believe to be can constrained unlock there’s through which us and there done message growing This the time, iRobot supply position some there juice we our moment have availability even to we and year today we past at early view substantially we uncertainty call, around we’re excited in hampers continued are we have increased product,

Mike Latimore

IX this there to in activity? sense. the related the Then more makes on EMEA, little launching combo there A Great, channel be would region product great. was largely or strength or the color

Colin Angle

to demand contributor a but was Japan, The is with It in and market caught healthy--is and America is IX catching product very our a little North where a Europe down just up demand that think perspective largely robots very a earlier. definitely bit it, lines. was on a up healthy and I from

Mike Latimore

million but accessory XX.X that the what actually a percent Braava warranty, that Roomba of consumers not on last just opted those buying a of or or something, Then thing? an are Okay. in, have sort

Colin Angle

in and That’s question color a on more we to future. great the giving look something forward

of--as key we program, statistics sort the what the of size the analyst start connected We’ll being We’re is are to our pool. investor rolling our new out to first we direct releasing community, and wanted talking stay implement to existing the about customer - revenue to measure we and as tuned. those. But continue other tools some be great accurately the future communicate in question and required metrics

Mike Latimore

Thank you.

Operator

with line Road Rose of comes Your Ben the next Research. Battle question from

Ben Rose

morning. in Colin point. to the some the curious at with this combination Good Was general its robots your A of terms give for know Roomba about in in regard and could performance if you question color additional quarter thoughts combo. to

Colin Angle

The the where is and available to combines functionality. vacuuming mopping entry makes and way and capabilities an very and committed that level separate mopping fact is clean vacuuming very, sense. iRobot premium Roomba it limited is is we that very markets in combo floor best your robot that to the think tactically to the

two-robot edges most solution. benefits dirt both physics a getting the and process corners, the into--up cleaning the and into is, the pad the of Just to substantially the from where

every before of are tactical a but deciding of whether willing accept price for strategy, customers home level by in little care agreeing it lower mop do two-in-one, where some evidenced and against a lower strong going how find going competing There clean, involvement you useful should people it’s what particularly are or our products more are your parts markets a home, play. play. this. that mission tactical our vision to As performance, anathema from accept we to to where robots willing the that of the are is Braava Again, you’re with at have so our it’s vacuum points, ourselves your to

Ben Rose

just products intrigued to and to Okay, I’m the in guess that benefits participate platform to follow Home progress know, the thoughts the other up, about to by Genius wanted whether platform. the companies’ of you I in opening have strategically, perhaps up and

Colin Angle

so already see We already. companies’ you’re happen starting integrate products, with to other that

to has for to cell home, devices idea many clean of I is customers, a away. finding utilization think with in of the a exciting, our things we’ve with of like is proposition, I’m time compelling challenge the a integrated the the the and real left time clean and home. clean very work phone growth other so and from it’s Particularly good just go while building, that the

think and that is--I that and move going examples we open the to iRobot direction. for opportunities saying, out of to emblematic adopted that’s are beginning driving more a thoughtfully see of that yes. to see This customer, home to way as and long service it. very the you’re in are more guess have do forward, we rolled We of We’re configured automatically the

Ben Rose

Okay. much, that’s Thanks helpful. very

Colin Angle

bet. You

Ben Rose

line Your next question the of Ricchiuti Jim from comes with Needham.

Tyler Bailey

on is strong Hi, this Thanks Bailey. I’m this Tyler demand my quarter. in Jim. for congrats for and the question, taking filling

Just component and freight, wondering, you chain, headwinds supply obviously kind shortages. of transportation, the mentioned various -

be Just able wondering if you might of parse out impact to margins. and each the opine on

Julie Zeiler

I’ll Tyler, is try question. to Julie. answer your this Yes

incremental of a costs start we what looked at of one we’ve them to think it’s year. As all a aggregated and have those together, any us giving certainly way at headwind view rest perhaps best the when we our as individually, like, of for you’d look look through, look to a the but you number we’re things, these

I the ones, of air are so to lion’s of time fourth finally raw the piece the the costs as to some our freight. of make look componentry scarcity over which would named then of are out as and I’d the market, up transportation, four significant, big do the to increased total, the You buys expect spot be a things impact. increased share in the need we our Those and Then normalize. would the material point roughly percent as the same

Tyler Bailey

obviously your recalibrating for that. adjust to mentioned costs. follow-up, expenditures a those of of some just helpful, appreciate I you That’s some Then

Just wondering, more spending? thinking ramp-up are QX we typical those for two, going of or to half, see later the quarter adjustments QX, guess, be we, I in should in

Julie Zeiler

does to happen we it QX, associated holidays so look expect sequential would and if our marketing of promotional fairly quarter. the one have talked and you R&D in we that Sales as both prepared growth planned, is our environment, in the nominal remarks across spending with the second QX things Yes, that at growth we about our G&A. normally substantial do--well, does,

Tyler Bailey

and existing a of I’m hear little handheld. interested from market? one towards thank eating a of curious Then any in the about do there, standpoint question, the you see Okay, but a last obviously it the filling base just launch customer it’s your more into you. bit need to share - an market extension handheld strategic the vacuum current

Colin Angle

few was handheld strategic the Launching a reasons. for

the with our customer flagship we’ve for it’s an to product that the it as so vac. and and hand engine, very about hand direct we a of care consumer plumbing. that revenue. given a that that’s it technology, capability is floor way doing very so a artificial were to out adjacency, a of It’s but high vac, intelligence certainly something of selling enhancing strong talked is a was first first, directly Roomba the that a does. additional the our The It’s example our premium using future quality, It’s logical of something performer a what not customers, existing iRobot testing new also

you out that just be from for product and is can that we anecdotal as launching threw it hand think of category hope I the an a we logical certainly on product product legitimate build additional hand it’s a market path think so competitors, vac and new grow that strong performer time, in introductions. very We Hope will and and the adjacency. this vac against that it’s its that channel we helps. that think product We an that can there. should as other direct the learnings we’re expect the developing competitive offering types pave definitely and for offerings over not

Tyler Bailey

thanks Yes, Thanks that’s great. it. Appreciate Colin, Julie.

Julie Zeiler

welcome. You’re

Operator

like to then line you star, number Citigroup. please Again is your Merchant Again, would ladies Asiya keypad. on with ask question press that if the of follow-up a from do one question, telephone star a and the gentlemen, one. have We

Asiya Merchant

Great, again. thank you

across about the specific pricing benign companies shortages a but Given talked to that less not some the more just are of environment, component the industry, have iRobot promo pricing.

Just because pricing components, etc., you’re perhaps this than peers, given your you on market seeing share? retail these gross the of the your strong share we balance a promotional sheet iRobot and your level better some can ability think how about limited see and Should get margin guide at year? about of expect on should dynamics, what talk gain we for to to

Colin Angle

we to of slightly observed they I when our In think it’s XXXX pricing and under leave some using came behavior where margin that are to promotional predict they operate look leading different our communicated and we and that today. as chips all manufacturers, year competitors. we traditionally competitors and done, tariffs assuming their different were we react and their difficult in the of our and prices remain our optimistic have, to structure. and have aggressive than have markets, were a go in, competitors would our would we China-based built continue content We major the competitors are have

think the I it. way ways find it that’s planning storm, view don’t marketplace. we’re but and as in for of advantage to tell, safe of Time we the that viewing this a will weathering think competition today I strategic

Julie Zeiler

the proposition ability we underscore look fit to is seamlessly compelling their thing other our of believe a the guess consumers. we and I have very to as our value at products into lifestyle to that continue we

overall think energy that we’re will out customer to to the our promotional improving and and that our base. win explaining in way We long focus that activities to that’s user effort on term. experience continue effectively ensuring our We

Asiya Merchant

enough. Fair

you. thank Okay,

Operator

line have follow-up America. of John with a Babcock of do Bank We from question the

John Babcock

thanks for Hi, follow-ons here. my taking

launching where so can might if occur. innovation thought provide I you can’t you’re thinking I too you you products, about us rough just some handheld was new product be launches able around recognizing to but you talking quickly, might that you this wondering about the also for were have vacuum, remind maybe other some how year. be color, Just if specific, Obviously just

Colin Angle

Sure. guess on mitigate all communicated per and coming, we’ll haven’t It’s anecdotally we’ve specified to to about, are. robots impact tell this there year, have products But I those what’s the about to would We’ve could that. supply have at any and plan. these are able see what on excited as the you new details we launches. two that say track come I’m chain so but it leave I unaffected I that talked been to challenges product by we very they’re

John Babcock

spending also beyond more we Okay. consumers you as from wondering how and about then some at Then get was what talk here thinking traditional next to about and able you’re I about reopening if about pandemic. be hopefully you’re they’re thinking might people adjust point and the how question, hearing retailers it, just vaccinated the how might

Colin Angle

in the XXXX. - XXXX, channels we up We split. definitely of had significantly coming of continuing huge from saw and online to from XX/XX XX% a about ecommerce through quarter Well, a shift something XX% when XXXX closer ecommerce in talked revenue first and to we our that’s

back that XXXX think we people expect as digit come see single to would to could get I a levels, move bit, we back not more brick retail of certainly time over and retail. mortar but retreat a a

very, substantially channel. and business, as very and that consumers dimension of which direct-to-consumer excited investing in margin whether with agnostic access pretty via we’re improved our selling We’re online we’re gross exception enjoying strong in our the to to retail, about or we’re that the growth continued

John Babcock

may just there was today, be I just Okay, here, last then if there the Shark. updates any litigation not my suspect are question and on but with I for much wondering

Colin Angle

at time. Not this

John Babcock

Got you. All right, well thanks again.

Operator

are no for questions turn any I remarks. Kramer to the there in will queue. At back further now over this time, closing currently call Mr.

Andrew Kramer

questions, Thanks you future We at and to forward we’ll and in, you in Relations. Thank participating ring be that very our various Tiffany. analysts Investor conferences so shareholders to much. with much, May for if engagement, you days you look Thank and and speaking joining Look the free us. do weeks to and feel have June. everybody coming forward over seeing

Operator

Ladies and thank concludes conference participating. call. This gentlemen, today’s you for

disconnect. now may You

iRobot (IRBT) 4 May 212021 Q1 Earnings call transcript