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 | --- | --- | |--------------------------------------------------------------------------------|------------------------------------------| | | | ...