Financial Data and Key Metrics Changes - Fourth quarter revenue reached $427 million, an 11% increase year-over-year, driven by strong performance in the U.S. and EMEA [8][9] - Full year 2019 revenue grew 11% to over $1.2 billion, with an operating profit margin of 7% and EPS of $2.97 [9][28] - The operating profit margin would have been 3 percentage points higher without nearly $38 million in Section 301 tariffs [9][10] - Q4 gross margin dropped 9 percentage points to 40%, primarily due to pricing changes and tariff costs of nearly $22 million [25][27] - Full year 2019 gross margin was 45%, a decline of 6 percentage points from the previous year [28] Business Line Data and Key Metrics Changes - International revenue grew 15% in 2019, with Japan showing a 21% increase and EMEA also increasing by 15% [11][28] - U.S. revenue grew 8% for the full year, with a notable 15% growth in Q4 [11][27] - Sales from new products, including the Roomba s9 and Braava jet m6, contributed 17% to total revenue in 2019 [11][12] Market Data and Key Metrics Changes - The U.S. segment maintained its market share despite aggressive competition, while Japan gained meaningful share [12] - EMEA market share declined due to growth at the low end of the category [12] - The company expects competition to remain intense in major markets, with tariffs continuing to impact profitability [15][19] Company Strategy and Development Direction - The company aims to mitigate tariff impacts by increasing production in Malaysia, expecting this to represent up to one-third of U.S. units sold in 2020 [16] - Continued innovation and diversification of the product portfolio are top priorities, with plans to introduce a new Roomba model in 2020 [17] - The company is focused on building a direct-to-consumer sales pipeline and establishing new recurring revenue streams [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in executing strategic priorities to drive revenue growth and improve profitability despite challenges in 2020 [10][21] - The company anticipates revenue growth of 9% to 11% for 2020, with international growth expected to outpace the U.S. [20][30] - Management acknowledged that high tariffs and aggressive price competition would pressure gross margins and EPS in 2020 [20][31] Other Important Information - A CFO transition was announced, with Julie Zeiler set to succeed Alison Dean in May [22] - The company ended Q4 with $256 million in cash, a year-over-year increase of $94 million [29] Q&A Session Summary Question: Impact of coronavirus on manufacturing and supply chain - Management reported no current impact from the coronavirus, with production ahead of the Chinese New Year [39] Question: Clarification on tariff impact exclusion - Management clarified that tariffs are called out as an item but not excluded from financials [41] Question: Gross margin benefit from moving production to Malaysia - Management indicated that while moving to Malaysia offsets U.S. tariffs, it incurs higher production costs [42] Question: Direct-to-consumer sales strategy - Management noted that direct-to-consumer sales generated over $20 million in Q4, indicating a growing strategy [47] Question: Cash balance and share repurchase plans - Management is assessing share repurchase options and considers M&A as part of future plans [49] Question: U.S. market dynamics and pricing strategy - Management observed strong performance in premium products while facing competition in lower price segments [70]

Financial Data and Key Metrics Changes - Revenue for Q3 2019 was $289 million, representing a 9% increase year-over-year, driven by strong international growth and a large shipment to Amazon [7][24] - Gross margin for Q3 was 47%, down 400 basis points year-over-year due to pricing and promotional activities, as well as tariff impacts [25][26] - Operating income for Q3 was $43 million, with an operating margin of 15%, up from 14% in the same quarter last year [26] - EPS for Q3 was $1.24, compared to $1.12 in the same quarter last year [26] Business Line Data and Key Metrics Changes - International revenue grew by 25%, with EMEA increasing by 27% and Japan by 40%, while U.S. revenue declined by 7% [9][24] - The Braava category is expected to surpass $100 million in annual revenue with at least 20% year-over-year growth [12] - The launch of the Roomba s9/s9+ and Braava jet m6 in EMEA contributed to the company's differentiation in the premium segment [10] Market Data and Key Metrics Changes - U.S. category growth has been subdued, with a 7% decline attributed to rising tariffs on Chinese imports [9][16] - The Asia-Pacific region, particularly Japan, experienced low double-digit revenue growth, driven by strong sell-through activity [11] - The company anticipates high single-digit growth in the U.S. and internationally for Q4 2019 [28] Company Strategy and Development Direction - The company is focusing on maintaining prices at pre-tariff levels to drive U.S. segment growth and protect market share [33] - iRobot is investing in software to differentiate its products and enhance user experience, aiming to make robots integral to smart home ecosystems [15][33] - The company is diversifying manufacturing outside of China, with plans to produce entry-level products in Malaysia starting in 2020 [19][35] Management's Comments on Operating Environment and Future Outlook - Management noted that U.S. market conditions remain challenging due to tariffs, but international growth dynamics are robust [22][32] - The company expects to deliver revenue and operating income at the lower end of revised 2019 financial targets, with EPS near the midpoint [22] - Management expressed optimism about future growth, citing strong demand and effective marketing strategies [58] Other Important Information - iRobot is actively pursuing an exemption from List 3 tariffs and has submitted an application for review [18] - The company has taken legal action against competitors for patent infringement to protect its innovations [20][21] - iRobot's inventory levels are expected to decline significantly by year-end, following a build-up in anticipation of the holiday season [27] Q&A Session Summary Question: Thoughts on producing more products outside of China and impact of tariffs - Management has a multilayer plan to mitigate tariff impacts, including pursuing exemptions and diversifying manufacturing to Malaysia [40][41] Question: U.S. market growth and inventory comfort - U.S. segment growth is expected to be in the low teens for the second half of the year, with inventory levels anticipated to normalize by year-end [45][46] Question: Consumer expectations and competitive positioning - Management believes there is significant opportunity to improve robot functionality and enhance consumer experience through reliable technology [47] Question: Resistance to higher prices and market share gains - iRobot gained market share in North America despite higher prices due to continued innovation and marketing efforts [50][51] Question: International growth expectations and macroeconomic concerns - Management remains confident in international growth, with EMEA conditions solid despite Brexit-related anxieties [54] Question: Update on Amazon seasonality and litigation impact - The company expects a similar sales pattern to previous years, with 70% of business done in Q3 [68][70]

iRobot Corporation (NASDAQ:IRBT) Q2 2019 Earnings Conference Call July 24, 2019 8:30 AM ET Company Participants Elise Caffrey - Investor Relations Andy Kramer - Investor Relations Colin Angle - Chairman & Chief Executive Officer Alison Dean - Chief Financial Officer Conference Call Participants Frank Camma - Sidoti Mike Cikos - Needham & Company Troy Jensen - Piper Jaffray Jed Dorsheimer - Canaccord Genuity Charlie Anderson - Dougherty & Company Ben Rose - Battle Road Research Asiya Merchant - Citigroup Mar ...

Financial Data and Key Metrics Changes - First quarter revenue grew 9% year-over-year, reaching $238 million, with operating income of $22 million compared to $25 million in Q1 2018 [12][14] - Full year 2019 revenue is expected to be between $1.28 billion and $1.31 billion, representing a year-over-year growth of 17% to 20% [7][16] - EPS for Q1 was $0.78, up from $0.71 in Q1 2018, with a net discrete tax benefit of $0.14 compared to $0.05 in the prior year [12][13] Performance by Business Line - The Roomba i7/i7+ was successfully launched in EMEA, Japan, and China, contributing to strong customer engagement and brand loyalty [8][9] - The Braava line is expected to maintain about 10% of revenue, with plans for increased investment in its development [46] Performance by Market - U.S. revenue grew 7%, while international revenue increased by 12%, with Japan showing a significant growth of 26% [9][14] - EMEA revenue also grew by 7%, driven by preparations for the Roomba i7/i7+ launch [10] Company Strategy and Industry Competition - The company aims to reinforce its core product leadership in the RVC category, expand its product portfolio, and diversify manufacturing outside of China [21] - The competitive landscape is shifting, with smaller players struggling, leading to consolidation in the market [53][54] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full year expectations, with a strong Q2 anticipated due to traditional promotional activities [32][67] - The company is focused on maintaining a gross margin of approximately 48% for the year, despite challenges from new product introductions and tariffs [14][72] Other Important Information - The company ended Q1 with $200 million in cash, up from $162 million at year-end, and inventory levels were elevated due to product transitions [15] - The launch of the autonomous lawnmower Terra is planned for later in the year, with a controlled rollout strategy [76] Q&A Session Summary Question: Impact of average gross selling prices - The increase in average selling prices was influenced by the mix of premium products like the i7 and tariffs [23][24] Question: Performance of Terra during soft launch - The soft launch of Terra has not yet begun but is on track for later in the year, starting in Germany [25][26] Question: Inventory stockpiling related to tariffs - Retailers had higher inventory levels as they exited 2018, which continued into Q1 [29][30] Question: Contribution from new products in Q2 - The impact from new products in Q2 is expected to be small, with more significant contributions anticipated in the second half of the year [34] Question: General and administrative expenses - There are no unusual expectations for general and administrative expenses for the rest of the year [36] Question: Manufacturing locations for new products - New products will primarily be manufactured in China, with some production moving outside of China for easier-to-build products [38][39] Question: Revenue from new products - Approximately 15% of revenue is expected to come from new products [40][41] Question: Gross margin expectations for new products - New products are expected to have lower margins initially, with improvements anticipated over time [79][80] Question: Timing for Terra's market rollout - The rollout is strategic to ensure proper customer feedback and performance tuning before scaling up distribution [76][77]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 29, 2018 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file no. 001-36414 | --- | --- | |--------------------------------------------------------------------------------|------------------------------------------| | | | ...