iRobot's Q3 Earnings Surpass Estimates, Revenues Increase Y/Y

Core Insights - iRobot Corporation (IRBT) reported a narrower adjusted loss of 3 cents per share for Q3 2024, compared to a loss of $2.82 per share in the same quarter last year, and better than the Zacks Consensus Estimate of a loss of 5 cents per share [1] - Revenue for the quarter was $193.4 million, missing the Zacks Consensus Estimate of $218 million, but reflecting a year-over-year increase of 3.9% due to higher sales of two-in-one products [2] Revenue Details - Sales from premium and mid-tier robots accounted for 79% of total robot revenues, down from 80% in the previous year [2] - Total product units shipped were 732 thousand, a year-over-year increase of 16.8%, while average selling prices decreased by 5.4% [2] - Revenue from solo and other products was $83 million, down 34.1% year over year, with units shipped declining by 35.7% [3] - Revenue from two-in-one products surged 83.3% year over year to $110 million, with units shipped increasing from 181 thousand to 445 thousand [3] - Domestic operations contributed 54.4% of revenues, totaling $105.1 million, a 22.6% increase year over year, while international revenues fell 12.1% to $88.3 million [4] Margin Profile - Cost of revenues decreased by 5.2% year over year to $131.1 million, while adjusted gross profit rose 27% to $62.8 million, leading to an adjusted gross margin increase of 590 basis points to 32.4% [5] - Research and development expenses were reduced by 47.4% to $19.6 million, and selling and marketing expenses decreased by 29.6% to $29.3 million [5] - Adjusted operating income was $15.1 million, a significant improvement from a loss of $40.6 million in the prior year, with an adjusted operating margin of 7.8% compared to (21.8%) previously [6] Balance Sheet and Cash Flow - At the end of Q3, iRobot had cash and cash equivalents of $99.4 million, down from $185.1 million at the end of Q4 2023, while total long-term liabilities decreased to $227.1 million from $250.1 million [7] - In the first nine months of 2024, the company used net cash of $30.5 million from operating activities, a reduction from $113.6 million in the prior year, with capital expenditures for property and equipment declining by 96.2% to $118 million [8] Outlook - For Q4 2024, iRobot expects net sales between $175 million and $200 million, with an adjusted gross margin projected between 24% and 27%, and an adjusted loss per share estimated between $1.2 and $1.5 [9] - For the full year 2024, management forecasts net sales in the range of $685 million to $710 million, down from the previous estimate of $765 million to $800 million, with an adjusted gross margin expected between 25% and 26%, and an adjusted loss per share projected between $4.91 and $4.60, compared to earlier expectations of a loss between $3.31 and $3.77 [10]