IRobot : Q1 2021 Earnings Call Script

Q121 Results Conference Call Prepared Remarks

iRobot Q121 Financial Results Conference Call

Prepared Remarks

May 4, 2021

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Q121 Results Conference Call Prepared Remarks

iRobot First-Quarter 2021 Conference Call

Operator:

Good day everyone and welcome to the iRobot first-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 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 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 and margin, non-GAAP operating expenses, non-GAAP operating income, 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; our expectations regarding the amount and impact of tariffs on goods imported into the United States from China, the potential impact of supply chain limitations due to the global semiconductor chip shortage, and our potential to expand access to semiconductor componentry; our expectations regarding costs for raw materials, air freight and transportation; the impact of our investments; our manufacturing, fulfillment and supply chain diversification and efficiency efforts and the

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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 first-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 first-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 first 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

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available on the same Web page following the call. In addition, a replay of the telephone conference call will be available for one week through May 11, and can be accessed by dialing 404-537-3406 and using passcode 1792768.

In terms of the agenda for today's call, Colin will briefly review the company's quarterly financial results, discuss major strategic accomplishments and related progress, and share his perspective on our outlook into 2021. Julie will detail our first-quarter financial results, and offer 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.

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Colin:

Good morning and thank you for joining us. 2021 is off to a very good start. Our first- quarter revenue of $303 million grew 58%, which we converted into operating income of $15 million, an operating profit margin of 5%, and EPS of $0.41. We believe that our first-quarter revenue growth demonstrates that our value proposition is still resonating with consumers around the world. We generated strong top-line growth in each major geographic region as we benefited from stronger-than-expected demand from our distribution partners in EMEA and vibrant retail orders in North America, including certain orders that were previously anticipated for the second quarter. These dynamics were complemented by another quarter of triple-digit growth in our direct-to-consumer (DTC) channel1.

Based on our strong Q1 performance and favorable consumer demand tailwinds, we see continued growth ahead and we have raised our full-year revenue outlook. We also reaffirmed our 2021 profitability and EPS expectations as we have adjusted our spending plans to offset expected gross margin pressure from transitory supply chain challenges. As we move forward, we are optimistic about our potential to deliver upside to our updated 2021 targets.

Strategic Progress: Q121 and Recent Accomplishments and Highlights

I'll discuss our outlook in more detail shortly, but first I'd like to highlight our progress in executing each element of our strategy. As a reminder, our strategy remains focused on driving greater customer engagement in ways that lead to more customers transacting directly with us more often.

Differentiate the iRobot Experience

The first element of our strategy is to differentiate the iRobot experience for consumers. In a competitive market like robotic floor care, this means continued investment in AI, home understanding and machine vision technologies so that our floor cleaning robots

1 Refers to transactions made on irobot.com, the iRobot Home App and on certain third-party websites outside the U.S. in which iRobot is directly involved in order management and fulfilment.

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