Q3 2021 Earnings Call Script

Q321 Results Conference Call Prepared Remarks

iRobot Q321 Financial Results Conference Call

Prepared Remarks

October 28, 2021

1	October 28, 2021

Q321 Results Conference Call Prepared Remarks

iRobot Third-Quarter 2021 Financial Results Conference Call

Operator:

Good day everyone and welcome to the iRobot third-quarter 2021 financial results conference call. This call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Andrew Kramer of iRobot Investor Relations. Please go ahead.

Andrew:

Thank you operator, and good morning everybody. Joining me on today's call are iRobot Chairman & CEO Colin Angle and Executive Vice President and CFO Julie Zeiler.

Before I set the agenda for today's call, I will note that statements made on today's call that are not based on historical information are forward-looking statements made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.

This conference call may contain expressed or implied forward-looking statements relating to the company's financial results, operations and performance, including; expectations regarding market conditions; the introduction of new products or new capabilities and features to our products; our expectations regarding profitability; our expectations regarding revenue, non-GAAP EPS, non-GAAP gross margin, non-GAAP operating profit, income and margin, non-GAAP operating expenses, sales & marketing expenses, general & administrative expenses, inventory and DII, non-GAAP tax rate, other expenses, capital expenditures, diluted share count and cash flow; expectations regarding the growth of our direct-to-consumer channel; tariff costs; our expectations regarding the continued application of tariffs on goods imported into the United States from China and expected impact thereof; our expectations regarding the likelihood and timing of tariff exclusions, including related to the current proposal under consideration,; the impact of supply chain limitations; our efforts to preserve supply chain resiliency and

2	October 28, 2021

Q321 Results Conference Call Prepared Remarks

potential impacts thereof; our expectations regarding costs for raw materials and semiconductor chips, air and ocean freight and transportation and the impact thereof; the impact of our investments; the impact of our new CRM and related digital marketing tools and technology; the impact of our Genius platform; our plans and ability to minimize the impact of higher costs; our strategy and the impact thereof; our subscription offerings and annualized recurring revenue derived therefrom; our market opportunity; and business conditions.

These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in the forward-looking statements. In particular, the risks and uncertainties include those contained in our public filings with the Securities and Exchange Commission. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. iRobot undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or circumstances or otherwise.

Related to our financial disclosures during this conference call, we will reference certain non-GAAP financial measures as defined by SEC Regulation G, including non-GAAP gross margin, non-GAAP operating expense, non-GAAP operating income, profit and margin, non-GAAP effective tax rate, and non-GAAP net income per share. We believe that our non-GAAP financial results help provide additional transparency into iRobot's underlying operating performance and potential. Our definitions of these non-GAAP financial measures, and reconciliations of each of these non-GAAP financial measures to the most directly comparable GAAP measure, are provided at the end of these prepared remarks and in the financial tables at the end of the third-quarter 2021 financial results press release we issued last evening, which is available on our website at www.irobot.com. Also, unless stated otherwise, our third-quarter 2021 financial metrics, as well as financial metrics provided in our outlook, that will be discussed on

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Q321 Results Conference Call Prepared Remarks

today's conference call will be on a non-GAAP basis only and all historical comparisons are with the third quarter of 2020.

As a reminder, a live audio broadcast of this conference call is also available on the Investor Relations page of our website and an archived version of the broadcast will be available on the same Web page following the call. In addition, replay of the telephone conference call will be available through November 4, and can be accessed by dialing 404-537-3406, passcode 7455266.

For today's call, our agenda will be as follows. Colin will briefly cover the company's quarterly financial results, review important strategic milestones and outline our expectations for the remainder of 2021. Julie will review our third-quarter financial results in detail, and offer additional insight into our 2021 guidance. Colin will conclude our commentary with some closing remarks. After that, we'll open the call for questions.

At this point, I'll turn the call over to Colin Angle.

4	October 28, 2021

Q321 Results Conference Call Prepared Remarks

Colin:

Good morning and thank you for joining us. We enjoyed a strong third-quarter performance while executing on our plans and navigating a stressed and fragile supply chain environment. We generated third-quarter revenue of $441 million, an increase of 7% over the prior year and ahead of our plans entering the quarter. Our revenue performance benefited from the timing of orders that shifted from Q4 into Q3. The combination of higher-than-anticipated revenue, modestly better gross margin and prudent spending enabled us to deliver third-quarter operating profitability of $48 million and EPS of $1.67.

We've been pleased to see that demand for Roomba has remained heathy.

• Revenue grew in each of our major geographies, led by 15% expansion in EMEA, 5% in the U.S. and 2% in Japan.
• Roomba robots occupied 8 of the top 10 best-selling RVC models in the U.S., 6 of the top 10 in EMEA and 7 of the top 10 in Japan.
• The excellent reception from retailers and consumers to our newest robots underpinned solid 14% growth from the mid and premium1 tiers of our portfolio.
• Direct-to-Consumer(DTC) revenue grew 13%.
• We are seeing existing connected customer revenue trend very favorably, both in absolute dollars and as a percentage of our total revenue.
• Overall, gross robot ASPs grew 3% versus the same period last year while units shipped were relatively unchanged.
• We finished Q3 with over 12.5 million connected customers, an increase of 60% from the same period last year.

Over the past several months, we made important progress executing on our strategy to drive innovation and differentiate our products, build stronger relationships with our customers around the world and nurture value with them.

1 iRobot defines mid-tier robots as priced at retail between $300 and $500 with premium robots priced at retail at over $500.

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