IRobot : Q2 2021 Earnings Call Script

Q221 Results Conference Call Prepared Remarks

iRobot Q221 Financial Results Conference Call

Prepared Remarks

July 29, 2021

1

7/29/21

Q221 Results Conference Call Prepared Remarks

iRobot Second-Quarter 2021 Financial Results Conference Call

Operator:

Good day everyone and welcome to the iRobot second-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 income and margin, non-GAAP operating expenses, sales & marketing expenses, inventory, 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 expected relief from tariffs on goods imported into the United States from China and expected impact thereof, the impact of supply chain limitations due to the global semiconductor chip shortage, and our efforts to expand access to semiconductor componentry; our efforts to preserve supply chain resiliency and potential impacts thereof; our expectations regarding costs for raw

2

7/29/21

Q221 Results Conference Call Prepared Remarks

materials, air and ocean freight and transportation; the impact of our investments; our manufacturing, fulfillment and supply chain diversification and efficiency efforts and the impact of the costs thereof; our plans regarding stock repurchases; our plans to minimize the impact of higher costs; our strategy and the impact thereof; 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 second-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 second-quarter 2021 financial metrics, as well as financial metrics provided in our outlook, that will be discussed on today's conference call will be on a non-GAAP basis only and all historical comparisons are with the second quarter of 2020.

3

7/29/21

Q221 Results Conference Call Prepared Remarks

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 August 5, and can be accessed by dialing 404- 537-3406, passcode 1444896.

For today's call, our agenda will be as follows. Colin will briefly cover the company's quarterly financial results and then share his perspective on the primary issues shaping our revised outlook for 2021. Julie will review our second-quarter financial results, and offer additional insight into our expectations going forward. 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

7/29/21

Q221 Results Conference Call Prepared Remarks

Colin:

Good morning and thank you for joining us. We delivered solid second-quarter results that were generally in line with the targets that we outlined for you in early May as we navigated an increasingly challenging supply chain environment. We generated second- quarter revenue of $366 million, an increase of 31% over the prior year. Our revenue growth was primarily driven by healthy demand from retailers in North America and from our retail and distribution partners in EMEA. We were pleased with this performance considering a COVID-related disruption to shipping activities in Southern China left us unable to fulfill $17 million in orders at the end of the quarter. We converted our top-line performance into operating income of $9 million, an operating profit margin of 2%, and EPS of $0.27.

Our first-half performance tells a very positive story particularly as it relates to strong consumer demand for our products as well as increased customer engagement.

• Roomba robots occupied 8 of the top 10 best-selling RVC models in the U.S., 6 of the top 10 in EMEA and 9 of the top 10 in Japan.
• For the seventh straight year, we participated in Amazon's Prime Day event. Once again, Amazon cited Roomba as one of its best-selling items.
• We generated solid 42% growth from the mid and premium tiers of our portfolio, which we believe demonstrates the appeal of our floor-cleaning robots that provide their owners with personalized control over when, where and how the robot cleans. We also continued to expand our direct-to-consumer sales as reopening activities in the U.S. and rising online advertising costs moderated this growth.
• Overall, we saw solid growth in the number of robots shipped and ASP in our second quarter versus the same period last year.
• We finished Q2 with over 11.6 million connected customers, an increase of 67% from the same period last year.
• Customers are increasingly using our newest features like directed room cleaning. They are also increasingly using our AI-powered recommendations to

5

7/29/21