iRobot(IRBT) - 2022 Q4 - Annual Report

Revenue Performance - Total revenue for fiscal 2022 was $1,183.4 million, a decline of 24.4% from $1,565.0 million in fiscal 2021[78] - Domestic revenue decreased by $139.1 million, or 18.4%, while international revenue declined by $242.5 million, or 29.9%[79] - Revenue for fiscal 2022 decreased 24.4% to $1,183.4 million from $1,565.0 million in fiscal 2021, primarily due to a 25.3% decrease in total robots shipped and macroeconomic trends affecting consumer spending[98] - The company experienced a revenue decline of 24% in fiscal 2022 compared to fiscal 2021, primarily due to lower orders from retailers and distributors in the U.S. and EMEA[125] Profitability and Margins - Gross profit for fiscal 2022 was $350.1 million, down from $550.3 million in fiscal 2021[83] - Non-GAAP gross margin for fiscal 2022 was 29.4%, compared to 35.3% in fiscal 2021[84] - GAAP gross profit for the same period was $350,093 thousand, resulting in a gross margin of 29.4%, down from 35.3% the previous year[94] - Gross profit decreased by $200.2 million, or 36.4%, to $350.1 million in fiscal 2022, with a gross margin of 29.6%, down from 35.1% in fiscal 2021[103] - The gross margin decreased by 5.5 percentage points in fiscal 2022, largely due to pricing changes and higher promotional activity[103] Operating Loss and Expenses - Non-GAAP operating loss for fiscal 2022 was $(240.4) million, compared to $(1.1) million in fiscal 2021[83] - Total operating expenses increased to $590,476 thousand, up from $551,399 thousand in the prior year, driven by higher research and development costs[94] - Operating loss increased to (20.3)% of revenue in fiscal 2022, compared to (0.1)% in fiscal 2021, indicating a significant deterioration in operational performance[98] - Total operating expenses rose to 49.9% of revenue in fiscal 2022, up from 35.2% in fiscal 2021, driven by increased research and development and marketing expenses[98] Research and Development - Research and development expenses increased to 14.1% of revenue in fiscal 2022, up from 10.3% in fiscal 2021, reflecting ongoing investment in software and hardware development[98] - Research and development expenses increased by $5.2 million, or 3.2%, to $166.5 million, representing 14.1% of revenue in fiscal 2022[106] - Research and development expenses in fiscal 2021 were $161.3 million, which was 10.3% of revenue[106] Workforce and Restructuring - The company reduced its workforce by approximately 185 employees, representing about 15% of its workforce, as part of restructuring efforts[125] - The company has reduced its workforce by 203 employees since the end of fiscal 2021 and anticipates net cost savings of approximately $42.0 million in 2023 from restructuring actions[126] Cash Flow and Liquidity - As of December 31, 2022, the company reported cash and cash equivalents of $117.9 million, down from $234.5 million as of January 1, 2022, reflecting a decline of 50%[125] - The company has a $150.0 million secured revolving line of credit, with no outstanding borrowings as of December 31, 2022[123] - The company is managing liquidity by reducing discretionary spending and optimizing production volumes with contract manufacturers[126] Future Outlook - Future outlook includes a focus on enhancing product offerings and expanding market presence through strategic initiatives[88] - The company anticipates a slight increase in research and development expenses in absolute dollars and as a percentage of revenue for fiscal 2023[105] - Selling and marketing expenses are expected to decrease in fiscal 2023 due to planned reductions in working media and headcount[107] Merger and Acquisition - The merger agreement with Amazon will result in each share of common stock being converted into $61.00 in cash[80] - The company entered into a Merger Agreement with Amazon for the acquisition of iRobot, with various operational covenants in place[118] Inventory and Purchase Orders - As of December 31, 2022, the inventory balance was $285.3 million, a reduction of $133.8 million from the third quarter of fiscal 2022, equating to 95 days of inventory[126] - The company has outstanding purchase orders totaling approximately $151.5 million, with $18.5 million being non-cancellable without penalty, a decrease of $23.4 million from the prior year[128]