IRBT - Earnings call transcript Q3 2021

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Operator

Thank you for standing by and welcome to the Third Quarter 2021, iRobot Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. To ask a question, [Operator Instructions]. Please be advised that today's conference is being recorded.

further [Operator's any require you assistance, Instructions]. please If hand over to would now speaker conference to like I your the today, Mr. President Andrew Vice of Relations. Kramer, Investor Thank you. ahead, go Sir. Please

Andrew Kramer

Thank morning, you Operator. everybody. very much, Good

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

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

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

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

call, offer as briefly the of remainder Julie Company's be guidance. follows. important our review our results the agenda review today's for additional financial will our milestones, into For results, will will and insight XXXX quarter detail cover our Colin and quarterly strategic in third expectations outline XXXX.

commentary open At conclude we'll Angle. After this questions. Following, our the the over call we'll with point, closing some I'll call for turn Colin that, remarks. to

Colin Angle

Good while morning. for and third our quarter plans revenue entering a fragile us. supply performance navigating And stressed executing third of an $XXX year, million, quarter. ahead over X% on of the We increase joining thank strong prior the a quarter and enjoyed We chain environment. our plans and generated you of

robots Overall pleased in geographies major EMEA, to quarter for led operating of in premium gross a grew XX%. margins, in as healthy. Our absolute X% same modestly the $XX as the percentage trend $X.XX. total grew Roomba EMEA, by The revenue very XX% The each expansion growth to versus reception in ASPs dollars favorably, see RVC spending a customer seeing of X in top been demand Revenue occupied robots the our of robot from deliver X retailers XX of We're U.S. higher Top of and EPS excellent grew of has Japan. Direct-to-consumer solid revenue. profitability our We've revenue of QX. X% connected XX in our XX Roomba X% the Japan. in and and XX% mid top and remained year. and into newest revenue, tiers of shifted and prudent portfolio. that consumers the the enabled both QX third from benefited anticipated and period than from performance of revenue best-selling the better of U.S., from it timing combination X the us gross models of in existing million last underpin orders our

relatively finished were of shipped same units While million QX from unchanged. last an XX.X with over customers, year. the XX% increase We connected period

up enjoying minute. relationships designed select iRobot inception. we to months, U.S., with strong this several the JX and iRobot customers on In around our past the Roomba from October, service Intelligence Flex innovation first upgrade our Home now progress to Roomba products, with strategy milestone Plus. the spend the our build the the while Over with counterparts a we important differentiate In them. in drive our ended cleaning This value to robot accessories of high expanded executing which we along from world, subscription Overall, we platform, is these and to year. time latest made Genius provide hundreds scaling JX with Plan alongside to week nurture expand for sell also stronger on I'll the Genius quickly with ongoing X nearly iRobot Japan, hard our with to customers growth. our Since and September, new include the introduced Smart we Bona the more per the the per customers in the iRobot U.S. our is from week jet Plus, our of hardwood with accelerated their highlights a months subscribers, launching commitment in and dozens announced accessory a relationship per global with MX QX select partnership week, over further opportunity underscores XX,XXX Last value sales our pace year mop. Braava have a ago, are robot past first thousand customers approximately XX% XX% to of adding new week. surface we to the solution subscribers overall floor

and technology digital into production. progress tools We CRM marketing make good also and continued to moving new our in related

productivity in turn customer which of we increasing With is systems the for call-center to us effectiveness, overall customer enabling raise implementation costs and our new are optimize and care satisfaction. teams,

the our driver Looking worldwide. the Braava the similar top competitive and with to extend is anchored to and cell spend ability becomes will primary our to X.X This our personal like four path consumer Accordingly, a our following proposition ahead, to plus ultimately behavior. consumers moment leadership cleaning within success globe, robots marketplace. computers which see phone, I'd a ability value differentiate to elevate outlining in critical and to and our remain Roomba is in robots these the a JX that the buying customers products further robotics innovation consumer why and Genius critical. technology our around powers -- long-term of be the that around so ensure within software We

owners our takes understand we've taken in we to future. preferences, your the remember Genius and leap apply of to to the With and Genius, It's a fail pet robots pet cords of how see learning newest emerge promise. key and and Roomba replace technology a our avoid Roomba vision Plus will is starting how machine time rules, pet learning as AI to navigation waste. differentiator JX by that up react the forward the live in feedback, that solid in waste, Powered platform, exciting our precision major your so understanding. We recognizes our the Plus and respond and version that to marketplace. official any to It cleaning to strongly home for we cleaning avoid superior to JX ask even identify in believe intelligence

to care support Many iRobot at out are our that our explicitly into extends enabling aimed the new clean, robotic continue will cleaning because deliver integrating robots forward, our are plan that a vision enhancing a products is ways As long will marketplace, over robot to Genius platform. remain our we expect that and entering ecosystem a it refer very We build than loyal and to to satisfying larger the term. unique And features we that more precisely experience to likelihood time, that ability in home adjacent increase is we system. the It categories. we when, Over our move for seamlessly their care. enabling the smartphone us thereby Genius by robot of floor Genius intelligence Genius newest floor will direct our customers and while beyond believe intelligence where, how way within lifestyles. functionality to a in iRobot customers

anticipated developments. and second our shortage a we conduct Before financial at a the for unable half of adjusted anticipated performance. range navigating we our call, us [Indiscernible] outlook specifically, out wide XXXX remember level collectively XXXX, discuss called our accordingly. to the left it important outlook the top-line QX is we More fulfill orders in been of the following significant of we've on had they our time the impact to challenges and of chip

complementary of necessary through scaling implementing July, to actions manage to with the higher in our challenges. approximately at top-line also we than a of our continued component end back addition integrated materials, cost sourcing of have In surety and call procuring ambitions, availability QX associated expected began componentry costs, raw our range products. produce our to circuit, robots, shipping $XX to Since we and mitigate million

shipping orders. longer issues ability that to time-frames, with logistical fulfill shipping, anticipated contending threaten are also other further QX in related We expeditiously our delays and

be from FY'XX range, X.XX dynamics, refined to have these to Given our we revenue outlook billion. billion X.XXX

in We're late second in EPS and and since $XX our these have half had July. meaningfully to thoughtfully and beyond costs our the by in and plan early impact have a other we income of what call operating approximately continuing million. for second-half escalated expectations by Beginning and spending. of steps July limit year discretionary adjusting FY'XX for oceanic the working QX changed media, limiting to activities, channel taking hiring September, our Our airfreight costs transport August, further higher refining contemplated the optimizing

granted duties, by half year. U.S. factors to exclusion The the the In passed that were our year. XXX retroactive Up were U.S. tariff earlier the in activities on during was tariff for implemented that we exclusions June of and we be at pleased incrementally developments addition that of this year. unlikely be bipartisan process current Trade relief exclusion calendar tariff we restore tariff the in this month, any a front. recently costs, before is extend including Senate view shipping reinstate until legislation some it. end XXXX, recent the But outlook the finalized to Section process restarted for tariff processes, to Representative optimistic paid XXX Section targeted second this tariffs based to point and will updated the higher They this refund on

actively we engaged would paid in tariffs refund remain the any our than since have under October current the advance while only Additionally, XXXX, case to making from position. with compelling our granted have of we XXth, exclusion exclusion rather stakeholders reinstated, believe to key XXXX. a start Washington rule We

For exclusion cost longer the into year adds likely the million structure. $XX tariffs no outlook our to for $XX back full-year our

now XX-XX As expect income. we XXXX, with EPS a operating ranging million, to range the $X.XX. of from in $X.XX result,

EPS granted higher $X.XX the to $X.XX As July. being year exclusion of and within the set January for retroactive performance at tariff end would've been to we Xst, this our expectations

Although XXXX share We taking execute advancing this some XXXX, at believe will Julie turn over will call point, about ambition excited move and and very the any long-term just successfully earnings and strategy substantially focused cost I additional to material review. additional out that for lie ahead, also financial coming minutes. derail on opportunities while the closing depresses plans our ability beyond. for her impair a the few to on value perspective over that we our further But this drive creation. quarters I development We're to our in XXXX, would XXXX, performance, on our forward activities our reduction

Julie Zeiler

Thank you, Colin.

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

income, approximately X% perspective, So e-commerce unless of quarterly metric. that mortar which of robots XX% quarter product effective Net quarter from are and grew XX% will operating and per robots X% each All Income mention grew brick of retailers. and share, We comprises revenue represented revenue EMEA million, e-commerce, estimate Braava margin, profit better accessory margin, reported own and unless third sales. mean as revenue from online gross revenue total plans we Japan the tax than websites, mix the respectively accessory against XXXX, rate, comparisons start of U.S. operating increased stated expense, revenue, non-GAAP with otherwise, corresponding third XX% that remainder against operating due to QX and the at arms X% to Geographically, our our internationally, generally the and We with timing noted. expected quarter. website and the QX Total app, the of third being were of Roomba X% had performance and traditional quarter XXX the strong of the otherwise our largely a came dedicated orders. results the and in

Our modest decline $XX of X% revenue. DXC revenue grew a growth than to U.S.. or in total offset million Japan, and EMEA Strong in XX% DXC more the

headwinds. will XX% than air approximately DXC XXXX, total QX, better due in now We sales year costs pricing promotional $XX chain will last expect expense, remainder product in our More leverage rates. between changes timing with percentage impact and channel mix of revenue than promotional quarter, year's third higher of The was fixed represent of favorable XX% to of margin points XX% decrease by of tariff costs unfavorable our full-year points. in activity, to return XX% margin expected primarily shifts. and the in Our that XXX split and million gross lower was on XX Compared full basis QX and supply by gross was certain declined to freight costs due activity, warranty

operating costs million $XXX XXXX, of represented and quarter XX% increased of revenue. X% Third

actions, fund to spending remain initiatives, the personnel-related adjusted moderated disciplined as new spending. continue discretionary and we we hires and key timing of our media, working manage we carefully with While other

$XX QX income or of was million revenue. Our XXXX, operating XX%

approximately tax full-year quarter associated tax rate X%, income. was reflects operating with our lower third changes in rate Our primarily assumptions which full-year expected

million million million cash this that in inventory. short-term from with $X.XX. investments, with It's of and net other cash in repurchase the in noting primarily our QX. cash investments Company $XXX Our in the XXX decline GAAP decrease receivable share our resulted was event Matterport, and a summer. reflects publicly Matterport third notably our program $XXX ended associated a and income end traded a per of accelerated share sequential a capital, third income position the on short-term This Income statement. most and We accounts million is The in gain changes became quarter outflows $XX and which $XX include in quarter investment worth reflected million working

short-term as lockup be until they a until subject will value each investment Our early Matterport sold. is remain month, those The next classified were shares the provision marked-to-market year. investment to and of a shares

slightly but shifts period XXXX. The were toward half Third among a XX year or or million, global the our ago, quarter less quarter orders, as the DSOs of against $XXX retail days, than elevated same higher compared across days, modes one remained times reflects was which primarily time XX the timing supply $XXX third increase the day all of quarter third of of but back at reflects partners. and quarter, in inventory the in with shift transportation. QX increase last year the primary extend inventory As a expected, ending mixed shipping days, XXX XX chain million, same in inventory transit issues the

fourth more normalized back will revert We historical expect quarter. to levels and DII inventory in the

full-year outlook. With complete, move let's fourth our and quarter on XXXX review the to quarterly

a noted, through been have and impacted Colin that have we of range As revenue issues expectations. profitability our managing

of the X% of result outlook top-line, XXXX terms due to expect In billion component We would shipping-related the billion range, growth in XXXX to dollars, we our $X.XXX our and the revenue annual revenue of prior combination in which refined range have $X.XX of XX%. issues. to availability within now

the Our $XXX range million. outlook of quarter $XXX updated revenue implies revenue to full-year fourth in million

exchange our minus roughly contemplate and X%. As in rates Yen line revenue with current plus a reminder, expectations Euro rates or

outlined earlier our on margin. of gross further call, pressure transportation headwinds terms gross will tariff Colin the that incremental margin, and the In profit

view now $XX For year, XXXX reflects the we and between costs tariff XX%. million. $XX This anticipated updated of margin approximately gross expect full

first, year would the been margin As and approximately this have applied 'XX retroactively XX%. been to exclusion's tariff granted January full-year our gross

'XX a chain and XXXX, and of followed We between changes tariff year XX%, by expect tariffs, quarter fourth half and million. by and includes the be anticipated around mix. last, product higher costs to a our this shifts pricing decline QX versus gross gross driven channel XX the QX $XX XX in margin margin in will in between anticipated Approximately of which of costs, supply

of our marketing around general of our million full-year full-year XXXX holiday research meaningful sales to our that a QX on we and of Based of media full or XX% approximately costs, and fourth XXX sales Within operating quarter purchasing. in drive operating targeting still we XX% XX%, XXXX marketing year total revenue. we the terms will at cost costs, high expense and of and costs working and spending In and with our in we as approximately expect season X%. planned increase range invest $XXX anticipate XX% and range, of million sequential to are targeted between development total revenue, spend, administrative XX costs

XXXX we a These operating As range QX expectations which implies million. profit $XX operating loss million, between expect an a X to the between result, XX-XX operating X%. margin $XX profit of in imply a and

terms other expect In other assumptions for around we modeling of expense $X major XXXX, million. of

an now X%, operating anticipating reflects are We rate between lower and which effective X% primarily income. tax

result, loss on of XX% higher on would have negative an rate been negative per a Had the retroactively first, in As of to we share to $X.XX diluted range been between count quarter XX higher, anticipate anticipate full-year tax tariff $X.XX fourth income. We EPS branded after-tax net a EPS in shares. an that of January basis, we exclusion assumption our anticipated higher the a operating $X.XX $X.XX, share range the and XXXX a estimate from $X.XX using of with a approximately million fourth-quarter to $X.XX.

we will summary, our And anticipate begin We echo $XX enable unexpected comments, XXXX of rebuilding to position. earlier Colin's the of in which XXXX In to with QX, generation strong expect of presented some cash continue us a in a number us cash range. challenges. to capital quarter low million spending

this rising to solid collaboration will final and growth, impact turn the another long-term costs we to of achieving strategy and component across outstanding of for call our to of and position supply XXXX would as Colin While excellent our like the advance fall execution revenue limit thoughts. prosperity. I'd some back we to short as year, constraints, for the targets year frame organization,

Colin Angle

Thank Julie. you,

expect expanding delight they we happy understandably product the direction the shareholder will essentially continued the very believe greater base. begin innovation and customer We potential us to moment purchase success We more using about to advancing lifetime those experience, in value. buy from create to directly intend and and differentiate the them. strategic are customer excited We increasingly the we our ownership. see from over By our connected customers of their that iRobot services iRobot products

term. Our highest enable execution simple are us We're continued around marketing, create strategy. expand confident that operations initiatives, business to value significant the geared priority, long and overarching commercial over R&D, will supporting this our and

to move in for supply we As improve planning half we to will help that refine chain work currently of beyond actions the second next our product XXXX, our supply constraints resiliency year. our expect us

a supply improved half next as XXXX, growth will year. translate of in performance we than anticipate We in much rate expect in top-line second 'XX revenue higher into stronger the a

our a We to efforts are in will existing new tools moving an CRM or important play forward role growth look trajectory this customer that of and these customer to existing revenue. the production capabilities pleased revenues next quarter over further two. with accelerate of connected year, the with a of We believe new our range into

increase new us competition. We are offerings also customer existing price-sensitive appealing customers and of represent the outside from robot offerings US. the These potential otherwise subscription expensive the other a about might our service for while to of iRobot similar opt for revenue, to ways who bullish less Select

wildcard. through quarter, transportation major exit a subscribers as of which headwind quarters we adding higher continue we we to new recurring of three next of -- be cost remain addressing As next A with base year the thousands first 'XX we Tariffs year. continue will expect expect annualized a growing remain each revenue. elevated will costs,

our remains believe an seen granted. be meaningfully from is how next to tariff likely, costs can be While we If decline year, 'XX remains tariffs we levels. in will it XXXX it expect place that exclusion quickly

that there's to achieve the connected and value by for more efforts initiative profitable production plans in will on Malaysia our us our believe more into with across to proposition, We product growing loyal do road although major a finalize customers. to Our transform a year. year point production XXXX compelling work a enterprise iRobot remains for of as base global maps next scale with represent a defensible, in we that our schedule, turning end resonates the of

our of value to on we disciplined and plan with grow remain iRobot expand execute base the each expanding. As our plans customer, our we lifetime to

be better our result, year our an and assumptions meaningfully revenue, a that first-half. the for include expectation performance operating As half next than profit, second EPS will

about Company areas Operator, We concludes what's a financial and XXXX. business questions our December hold look our now. Investor We Day deeper store on to That model, shareholders. are our our forward comments. take of Xth,, offering key we for our in we will dive long-term and excited when into our reintroducing Thursday,

Operator

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

question. Your open. ask Please line is your

Asiya Merchant

I'm Good morning. the bunch growth 'XX and through I revenue unprecedented sense Clearly, a If you ask -- we've of for you the of all have Thank these that challenges just parse from to being a makes several that trying in are given track. which unfulfilled higher opportunity we fill. to to on may heard comments companies question. the orders

can you these we loaded, very be a the looking cost help XXXX, have down at even could loaded you of see on -- more about. -- highlighting. you're in to well, that are normal investors be you're parse offset talking be the or transportation have to 'XX, analysts, in clearly mitigation elevated Malaysia can margins and Is comments offset then assume margins the a I is as will transportation guide relative and you. will I'm it mean help Malaysia to reasonable Thank question just costs 'XX. than to to tariffs [Indiscernible] that into through return up some back-end that [Indiscernible] if offset 'XX, but I for from mitigation trying get then significantly they If can back-end

Colin Angle

Well, of we absorb, I'll are need robots it circumstances. that all that in in market build getting of We revenue of the a half next the all jump impacting, on the to but there's first few year, that things question. the see chips challenge the the working year. a from chip would stop will be certain us one the we're of still of something through half robot only takes And in the to first building

And that we that creating so be in think will a will first-half, second-half, loading challenges larger back-end largely we'll chain first of availability the challenges that have half about when because half. parts cause be think And of behind those -- end revenue those parts first the would supply lower it working through otherwise. to than us effect availability the have the put by we impact

Julie Zeiler

that would -- as facing if that I believe time. through start talk gross with these we with, over we're margins. about then thinking this on a year, And I'll continue they to number add challenges to that will And normalize see I if of we

if going complementary an move granted be through we've will forward. we as forward, we tariffs, targets been in think whether that for play scaling talking of still have visibility and working we is the that limited as so you our Malaysia products factors about, the XXXX. not some think exclusion in and the out, through And and our look a will about of or we're and how certainly But benefit

do stabilizing, the and and of go course, normalizing, think you channel then, optimizing then year strategy. to that headwinds as about through work in continue the we will If we the our

'XX, share with All which together a for to our financial color -- analyst on model, additional out Day of part will targets of at building expect those our in Xth. come will be things our and December we at Investor long-term

Asiya Merchant

slack if -- margin these would understand But mean, -- you've margins put that expectation will is, be question into that I together. an I may, think things improvement from just given they'll I the there see I was in -- 'XX, overarching Okay. all

Colin Angle

Margins certainly, execute will 'XX, see -- 'XX. moderating the as our we're are we to will headwinds the be The And in year model in environment improved the in next improving to and margins. are energy making business tailwinds an rolls on. changes

absolutely, So yes.

Asiya Merchant

Thank Great. clarification. for you Okay. the

Colin Angle

no Yup, worries.

Operator

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

open, is your please line Your ask question.

John Babcock

Hey, good taking morning my for questions. and thanks

improved, margin quickly just that tag there, XQ mentioned when that levels relative be margins you full-year along is to are levels? XQ, the Just on will to that XXXX comment last

Julie Zeiler

need think you in to think it I term. about full-year

John Babcock

That'd that'll Okay. be be gross or margins? margins operating

Colin Angle

Both.

John Babcock

challenging what you, Thank regards investments that to program. that it adding scales back as the to might made and service? about subscription And out then build you've talk you to to that, service, be out this just up? select could what Then Okay. barriers investments the with iRobot further make your will also for needed competitive appears this exist build a similar

Colin Angle

There's favorable are of on, with service questions just to with accessories turn much resource offered lot real their high had program. sent customer. dedicated Having to It's more rental see the is customer automatically service iRobot very have that a to resulted in white satisfaction glove turn able service churn [Indiscernible] robot. Turn around any the customers select them. getting to they the churn uniquely -- that we've that able select experience, investment the definitely and giving very rates is services far. a handle managed, been service, robots, which subscription payments, to has if out we've and off that a be is that sure to than investments involuntary the involuntary roll So makes a iRobot

amazing services cleaning are home. frankly in we to So a for this product resonates and to think a used paying with an consumers sell as way is they who I well think that go

So the of about end it's question benefit. I'm a of to that cover poetic very way descriptions. type The [Indiscernible] paying question. easy act I for couldn't to happy and more familiar your your this

John Babcock

mean, Yes, maybe guess is -- guess I competitive around barrier. just you probably it, but the I I that of answered no part the was also question

Colin Angle

barriers. Yes, competitive

John Babcock

Yes.

Colin Angle

activated their when strategy ability marketplace robots. unique ability object to room. with object control much ability have simply the particular allow is house. the be rolled things intelligence particular an getting over in and differentiation So schedule competitive be to where to where with can you its marketplace of to really stuck, user in iRobot this around the that around ability less we've the room. a our Their robots in in operate. leaving And to room a growing out the unique the cleaned, even It's automatically the iRobot's when could than users in schedule centers clean offer a avoid by

the precision your the that permanently, and the be around a can job. vision you with they're This able -- and personalized with robot that, growing the challenging navigation, it doing a objects so you about to it do finish your and mission, automatically your keep that having our send it tell it Because So there how to left up, habits to ever can cleaning be about schedule, be it's the every you if knowledge the out floors customers. home with that go robot Or lost. -- iRobot, and your of creates about can back home stickiness this job, if knowledge recognize of on call better your go able works a to and would something habits, if robot areas clean a add to back around your idea the you then all just up the to actually new clean it forgot clean go doesn't we zone there. robot to

bearing we're subscription we differentiation to which this intelligence with robot well barrier customer invest very style an type than lowering a the time, basis, intelligence anonymous at a personalized the a base that strategy [Indiscernible] It's larger give strategy, with integrated a sale doesn’t a have outlet. that robot at so and same process. subscription a intelligence dramatically And lifetime by of with of on in value purchase customer capability. a to the subscription, single this retail And has

John Babcock

expected your the Colin. last cost you environment question your on had, increases. around And like Okay. quarter, levels? Thanks you price then I rising for Are margin thinking particularly the that, updates -- that any that there evaluating were in light I and next mentioned guess of potential

Colin Angle

be how demand increase in price to ASP. adjusted continues made then have The very, in material tactically, much and we're in will promotional adjustments. definitely We've in We very It And results some we generation. discounting be. adjusted promotion s. investing changes dynamic. we a how

time. at haven't definitely increased done through commercial in affectively wholesale moment So our strategy. But this we ASPs we anything

John Babcock

that Then to Got looking with the it work are more a have and seem peers I opportunities what I mean, the I for some where to production opportunities want with you. exist and terms of That's helpful. at there partners? that working last turn in out of costs? Can reduce might manufacturing your might they least you're talk kind so you it get What kind favorable there? mean, your before your of kind sense just relationship might just question about at be? how over. of

Colin Angle

not more that this robots our like-for-like take COGS products. confident have very established if look to very year-over-year at materials, and existing on We very, are expensive bills efficiencies for seriously We're aggressive build. targets that you

componentry and include lot of frequently We investment security stuck different the not Our competition better invest parts may a commitments and sensing less to or put silicon to that to the reliability. gets on a into job robot that cleaning. in, can with include robots do robot chooses that do ensure our

created targeted So we products. year for robot opportunities it's about It's experience, we investments goes not substantial this of is one to your every where select explicit as customer existing in on costs, a, -- COGS in into question But make we very products. manufacturing our what a every is equal. have improvements our situation

John Babcock

the for Thanks great. help. Okay,

Colin Angle

Yeah.

Operator

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

line question. open, please your Your ask is

Ben Rose

status To Malaysia. the good manufacturing deeper in into little Yes, of morning. a dive

you would first to next you I Malaysia? be will this year, can of could quarter -- the to anticipate speak question do first what the guess in bound U.S. be, percentage produced out of Looking you Roombas roughly

Colin Angle

year. manufacturing at and there. call, But we are XX% how That I the we on about versus of of that the in be mentioned looking product bit. As so of are our in America. We're Malaysia to into much point, number older at we're at fluctuate North bring product this new a product? for of going constantly plans And market products to XXXX, achieve targeted we track XX% had will the is destined the the that in level beginning that

Ben Rose

componentry Okay. mid-year the around in you've that by chain transportation anticipation and looking what manufacturing you will at Great. in the that outlined costs the And your it the variables notwithstanding terms China? Malaysia to all of supply manufacturing perhaps call. in had costs, Is in Roombas for somewhat be similar

Colin Angle

in be the I going to a somewhat premium, is it's There slight similar think single-digits. be will but fare. the

Ben Rose

digit single a difference? Just

Colin Angle

Correct.

premium be manage is So Malaysia, which there we that think a can nicely. we quite will something single-digit for

Ben Rose

some question. Okay, think great. navigate home differences QX. anticipated the of your the messaging relative in shortcomings in robot in of should around what of of advertising around be a some a if your of really or some then and not in line -a product - the terms may, of And to consumer the inability given fulfilling vis you the some the Do differentiation objects highlighting the to remarks might the perhaps competition, the competitors vis iRobot's of final promise their Colin, I of accomplish?

Colin Angle

JX way. the with in definitely speak see that the in years are for the clear smartest technology, imaging with superior benefit to incredibly of really launch will an talk of making based iRobot starting differentiation we're robots more that marketplace. the investing customer in our to robots. the been of We've its the our a about the demonstrate by sure about front-facing and explicitly obviously, And able increasingly, far on You intelligence number Plus,

a that's not note, JX of Plus. to is and Genius, be going And growing for power just should the story. So the the part I growth the iRobot

the that that the degrees robots earlier That's while our mentioned connected example, robots our in our of that are technology. benefit varying even you're a from for of benefit capability, All on ran. robots personal is started system that what tease a time stopped when there our based [Indiscernible] it in computer buying for PCs can and we based moment hardware operating benefit So buying entry have away. cleaning on connected I level that I our

we're the incredibly important software making is that what's that does where differentiating towards I getting can and a robot run will important think and the the process. part robot that -- point that being of say, while in customers is intelligence factor, the we industry, decision that how such

Ben Rose

was That Okay. helpful very you. insight. Thank

Colin Angle

Yeah.

Operator

line from line open, comes [Indiscernible] is the please Latimore Your Mike ask Your question. your of next from question

Mike Latimore

on any Mike levels enough [Indiscernible] helpful. with channel inventory all-time levels, behalf inventory the on is them? inventories low, color this your partners on inventory at partners, or Latimore. of have channel your how with are the the Hi, are color that be Could So you an does levels give some could

Julie Zeiler

Sure.

the look the As that we levels that declined relatively stand we inventory retail year, partner. year we to the lean Overall, at QX, sequentially QX. in believe think end will rest as retail from of forward inventory with we we our

Mike Latimore

and the the benefited revenue a color from are or you performance, caused to you getting what some on Alright, see orders has that? of have I QX. lot give of to Could QX moved timing revenue

Colin Angle

is that be how just forward. time waiting availability particularly just this about that ability period There's recognized, got QX and into between QX, a ports which nothing It's and from pick where. got inventory precision thought interesting give lot to QX. to adjustment One QX. retailers is sorry, little -- because or unusual a of exiting much -- tremendous see we to amount so call more our of not a we QX, the bit of it's and QX hit line have which guidance And a up QX, between it's have when, challenge factories unloaded some demand, a to the for shift inventory there and of hauling the on material depending or really going of would how pushed, with simply pulled revenue to a of get reasons is creates being accept the ships why in perpetual we the full-year we is challenge when high

only probably So where we this shipping. the the about pessimistic overly time of were year timing

Operator

comes question from Colliers the Derek line next Your Securities. from of Soderberg

question. Your open. your Please line's ask

Derek Soderberg

I'm to Day. the hearing the you. taking Good morning, updated long-term I really model questions, with coming for Colin, Investor everyone. start at wanted forward Thanks to my looking

demand it growth strategy the relates this the maintaining growth if prioritized imagine aggressive and to robot get your having look curious whole, pandemic-driven into points thoughts points. Has guys want price In at just on guys market environment? challenges. this a beyond? all all you faster or some the and your competitors But I high-end the in tougher changed industry, you've share you in than are as rate growing some industry of think been pretty are then vacuums. across growing a Just you you the either is sustainable first market just share that to similar industry maybe as How past, XXXX for price as in bit. And or

Colin Angle

From percent penetrated, dense, vacuum to Sure. and I which penetrations most XX underpenetrated. where significantly households arena that US, most EMEA the Household are of fully the cleaning ish will those lower. start with is or low. market - are numbers robot Japan, reiterating quite would the be the in

that in these think remains iRobot share opportunity large. the is of before a extremely effects large XXs, the very all commands see any we We the markets. So saturation opportunities marketplace. XXs into the in and

talk maintain you versus question. side, in to I share when leadership smartest difficult world, about, what think focused share? the do at ensuring premium we'll hardware. we and high-performance do It's grow on can a true robots say we delivered we first always we've do the winning make that, So you beautiful, we would think in maintain the

with defending into focused, then points. some price and continued, I we has that that these price of points share down statement is across point lower where want in over customers and their the to robots when iX albeit that such to get iRobot in select this strategy, the of aggressive give value our to talked very our be mid-tier the products, honestly But continue linear out where slow consistently with deliver robot share they that we customers get and home, as implementations the market and act. the tiers, we is to with mid-price every full really could fact reasonable mission, we at the in for robot be winning that's which loose people so investments. earlier it of approach would superior to a all the our really strategy our more Our is the the they the competition set exciting across be price an control that imagine experience about bottom that lower loss -- the not intelligence, call, the and We've robot. complete us our can competitive that, a points in came And to launch made with higher-end expecting, way robot vacuuming at

Derek Soderberg

Got tariff to sort more thing on on XXXX. of detail. specifically And that is into Got one baked None wanted I appreciate the XXXX? tariffs period year, any guidance or unlikely an that the we exclusion. October pretty version just commentary highly the once calendar the of I clarify it. the it. for then likely then is thought that And this for from exit full exempt is that this would calendar new going get you if guys year of before exemption you're XX. passed, it's And to legislation

Colin Angle

currently companies an process, me of for will around as current would this XXth language stays or exclusion grant which Let relief exemption back not as only of finalized. much what The year. been an process written, to to means has to exclusion can. it That that not proposed final what language, as mean, exclusion October that open that received it as comments. the The the I is if registry is currently question answer try

be tariffs or be was silence XX, language be October so would granted. that exclusion refunded. And is would currently paid if would an on how prior long it exclusion for to not lost The

on comment that. So meaningfully can't I

most a the language the the things that in we had the USTR. in year. by recent was the reflected But we [Indiscernible] in liked language earlier presented said senate So language bill would specific not

strong remains think, that's we're very our think but at for in pattern the I on can So optimistic, point. I a being we're all holding this -- and We case excluded comment

Derek Soderberg

Thanks, fair. that's Yeah, guys.

Colin Angle

bet. You

Operator

comes Your Needham. Ranga last of Chris question from from the line

Your ask question. line please is your open,

Chris Grenga

the filling everyone. Jim. in Ranga morning, taking This Good Chris question. Thanks is for for Hi.

On growth XX% anticipate sales what to front, XX% [Indiscernible] driving of and there? is that for the direct-consumer trending

Colin Angle

continues tools for iRobot the to So roll out competent effective and targeting. more

customers we're accessories a finding increasingly, into or going invest back someone in robot continue and direct relationships or robots. to second go upgrade growing and an to a our get franchise. robot who course, already owns the customers has We who than favorable a to targeting previously able with retarget bringing of customer significantly And our and bought economics and new

them as this and of this This gross We've deliver with be have margin is been customer. of with talked efficiently learning very relationship growing their the an able and improve and will in. a on very upgrades product a lifetime robots a we've to of exciting area them strategy value that and long-term for we're where home. with to is them investing the we profitability our relationship we to about So based per very, area our is before, an we tailwind, time, new gross fact think profit back one the dimensions it. because be and create that scale intelligence. the And the At able transact right go

investment of see iRobot excited and we're to expect you that something go-forward is very to in should a focus this So And to strategy it grow. remain a continue basis.

Chris Grenga

detail. very that for you Thank Great. much

prior sorry, Thank very And with QX, you in in for normal be me. activity just there? expect more one years On line or do you that promotional to much. any departure

Colin Angle

you the amounts dollars our will and have investment in that see we to and certainly our of of said ads move, television there That still size need on so strategically. the that product to and social is your amount platforms. robots, investment significant demand iRobot digital plenty trying that very driving -- very we for We're using on keeping of with ambitions for

Chris Grenga

much. very you Thank

Colin Angle

You got it.

Operator

That session. call Kramer. the Mr. I over hand concludes our to Q&A back Andrew will

Andrew Kramer

additional months, regarding Thanks forward weeks. over for over detail Look we I the Obviously, today. appreciate very your you to attention weeks coming investors Great. Investor see our should one next couple you a registration results. Day speaking very with support. and much of for all you the to your thank and busy the know Well, with joining appreciate for and today much. so is --

Operator

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

now may disconnect. You

iRobot (IRBT) 28 Oct 212021 Q3 Earnings call transcript