iRobot Corporation (IRBT) on Q2 2021 Results - Earnings Call Transcript

Operator: Good day, ladies and gentlemen and thank you for standing by. Welcome to the Second Quarter 2021 iRobot Corporation Earnings Conference Call. At this time, I would like to turn the conference over to your host today, Mr. Andrew Kramer. Thank you. Sir, please begin. Andrew Kramer: Thank you, Howard and good morning everybody. Joining me on today’s call are iRobot Chairman and CEO, Colin Angle and Executive Vice President and CFO, Julie Zeiler. Before I set the agenda for today’s call, I would like to 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. These forward-looking statements are subject to risks and uncertainties and involve many factors that could cause actual results to differ materially from those expressed or implied by such statements. Additional information on these risks and uncertainties can be found in our public filings with the Securities and Exchange Commission. iRobot undertakes no obligation to update or revise these forward-looking statements whether as a result of new information or circumstances. Colin Angle: 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 fill $17 million in order at the end of the quarter. We converted our top line performance into an 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 United States, 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. Julie Zeiler: Thank you, Colin. As Andy mentioned earlier, my review of our financial results and outlook will be done on a non-GAAP basis. So unless stated otherwise, each mention of gross margin, operating expense, operating income and operating profit margin, effective tax rate and net income per share will mean the corresponding non-GAAP metric. All quarterly comparisons are against the second quarter of 2020, unless otherwise noted. We reported a solid Q2 performance. Total second quarter revenue grew 31% to $366 million due primarily to strong retail and distributor orders in the U.S. and EMEA. A COVID-related shutdown of the shipping ports in Southern China in late June prevented us from fulfilling $17 million in orders. Most of those orders have since shipped and we expect to complete this activity over the next couple of weeks. Colin Angle: Thank you, Julie. On our most recent quarterly conference calls, we detailed our strategy to build a more defensible, profitable enterprise with a compelling value proposition that resonates across a growing global base of loyal connected customers. By innovating to differentiate the iRobot experience, we will plan to continue winning more customers and keep them delighted at every turn to the point that they will buy more products and services directly from us over the lifetime of their ownership. We are optimistic that executing on our planes will drive substantial value creation over the long-term. We’ve also shared our preliminary view that further progress on this path in 2021 would support continued top line expansion that we can convert into substantially improved operating profitability and EPS expansion in 2022. Although the impact of constrained supply will make it more challenging to achieve our preliminary 2022 target of returning the business to our 2020 operating profit margin levels, we are confident that we can make considerable progress next year. In terms of our 2022 top line assumptions, we anticipate more modest revenue growth in the first half of the year as we take proactive steps to increase our active – our access to semiconductor componentry amid fundamentally healthy demand signals from retailers and consumers. Assuming our suppliers steadily ramped their production, as expected, we will look forward to accelerating revenue during the second half of 2022, anchored by substantial restocking orders from retailers who will carry very lean inventory over the next several quarters. In addition to executing on our product road maps and leveraging our unique home understanding, we are also excited about the potential of our iRobot select service. which we expect will begin to scale later this year as a growing recurring revenue stream. We also look forward to seeing the impact of our DTC infrastructure investments on growing existing customer revenue as we further personalize the online buying experience on our website and Home app and focus on delivering the right promotions to the right customers at the right time. As we plan for next year, we anticipate that other transitory costs that have spiked in 2021, namely raw materials, oceanic transport and air freight should eventually revert back to more normalized levels at some point in 2022. These potential tailwinds, combined with expected tariff release, Malaysia manufacturing at scale and our ongoing efforts to our ongoing efforts to optimize our production and fulfillment costs will leave us well positioned to drive gross margin improvement next year. By remaining very disciplined with our spending, we believe that we’ll convert our top line expansion into strong operating profit gains and significant EPS growth next year. As we move forward, we believe there’s a lot of opportunity in front of us. Household penetration remains low, we have an expansive and growing global connect customer base and their exciting new growth initiatives now underway or in planning stages. As a result, we believe that our exit trajectory for the second half of 2022, in combination with continued strategic progress, will set the stage for sustaining solid annual top line expansion that can be converted into improving double-digit operating profit margins, substantial EPS growth and robust operating cash flow generation. Our confidence in our strategic direction and our ability to achieve our ambitions over the next several years is underscored by our upcoming plans to execute a $100 million Accelerated Share Repurchase Agreement. We will share greater insight into our business later this year when we host a virtual Investor Day event. In addition to highlighting our vision and strategy, our leadership team plans to share greater insight into many exciting initiatives that will underpin an updated set of long-term financial targets. Stay tuned for more details on this event. That concludes our comments. Operator, we will take questions now. Operator: Thank you. Our first question or comment comes from the line of Ben Rose from Battle Road Research. Your line is open. Ben Rose: Good morning. First question for Colin, I know that you – excuse me, reiterated your plans to introduce two new Roomba models later on this year. Can you talk about how you plan to do that in light of the chip shortage that you mentioned? Is it a question of simply prioritizing the chips that are available or are there other factors at play that give you this confidence? Colin Angle: It’s really about prioritizing the chips for these exciting new products. So that – There’s a lot of shared componentry across robots, and making sure that we are able to execute aggressively on these new product launches is something that we have taken on, so that we have great confidence that the chip shortage will not impact those plans. Ben Rose: Okay. And with regard to the sales and marketing expenditures in Q2, I understand that, that is very strong quarter in terms of seasonal promotion, but were there any additional one-time charge costs in there and how do you, I know that Julie you provided some commentary on the expectation for sales and marketing, but could you maybe give a little bit more color on the extent to which those can decline as a percentage of sales over the course of the rest of the year? Julie Zeiler: Sure. As we think and as we’ve gone through this year, Ben, we’ve been talking about the investments that we’re making in our direct-to-consumer capability, both in terms of systems and then in the talent to enable those systems. What you’ve seen this year are those thoughtful investments that we have been doing. And again, in Q2, we made some of those investments. What we’ve also been saying and continues to be true, as we look forward, a lot of those are foundational elements that will not scale as revenue scales. And so as we head into the back half of the year, there are two things that work here. One is the normal fluctuation in our working marketing aligned with promotional periods; and then the other is the – those investments starting to become fully in place, and we’re excited about the results that we should see there. Ben Rose: Okay, thanks very much. Appreciate it. Julie Zeiler: Sure. Operator: Thank you. Our next question or comment comes from the line of Asiya Merchant from Citigroup. Your line is open. Asiya Merchant: Great. Thank you for the opportunity. A couple of quick questions. Can you guys give us any commentary on sell-through versus sell-in into the quarter across your different regions? And then just given the dynamics with chip shortages and promo activity, etcetera, if you have any color on competitive dynamics, were you experiencing any share loss because of the unfulfilled orders? Were the unfulfilled orders largely domestic or were the international? Or is that more a global phenomenon? And then lastly, on inventory, obviously, you guys have the chip shortage situation but the inventory spike was pretty significant. Is that all components or planning ahead of the new Roombas that you plan to introduce here in the second half? Thank you. Colin Angle: Okay. So the – three questions. The first question was on share – sorry, on sell-through, the – and inventory levels. So we definitely have been seeing an impact that in Q2 that will – that is increasing as we go through the rest of the year where demand from our retailers exceeds our ability to supply. That will drive down the retailer inventory levels. There is some impact in Q2, and that impact should be seen as growing significantly in Q3 and Q4. So as we exit the year, the inventory levels with our retailers will be unusually low relative to normal. The second question you asked was, do these chip shortages impact our competition equally and what is the impact on share? The – our competition tends to use a greater percentage of Chinese local componentry, which has slightly different availability dynamics. But it only takes one component to stop you from building a robot. And even our competitors’ designs require componentry, which will be hard to come by. So it’s difficult for us to truly model what – the extent to which they’re going to be impacted beyond. We know they will be impacted to some degree. So there’s a little bit of a wait and see as it relates to what a transitory impact in Q4 around share will be. If they’re impacted similar to we are, we don’t expect share to change from where it is significantly. If they have some additional availability, they might pick up a bit of share until we can reassert our in-stock capabilities. So there’s a little bit of TBD and transitory impact to share numbers that we’ll have to work through in Q4 and then move into next year as things start to normalize. Julie Zeiler: And then your final question, Asiya, was around the iRobot inventory, which we ended our – with our own inventory at $277 million at the end of Q2. And we tried to lay out some of the factors year-on-year as we looked at that increase. Second half – our efforts to support our second half volume requirements, that inventory is tariffed as compared to a year ago. And then also those units that we were – those orders that we were unable to ship for the end of the quarter remained in our inventory. As we look forward, we expect our inventory will fluctuate as we go through the rest of this year as we navigate through these rather challenging environments. Asiya Merchant: Okay, thank you. Colin Angle: Yes. Operator: Thank you. Our next question or comment comes from the line of John Babcock from Bank of America. Your line is open. John Babcock: Hey, good morning. Thanks for taking my questions. I guess the first one, I was just wondering if you could talk about the iRobot Select service, how that’s progressing so far? And also what you’ve learned from the first few months that this has been available. Colin Angle: Sure, I’m happy to. So we are in the preliminary stage of rolling out that service. I would say that we’re very optimistic with both the Net Promoter, the customer favorability of the service as we’ve rolled it out. We’ve seen very favorable low levels of churn. And that has led us to gain the confidence required to begin real scaling of iRobot Select, which we talked in the call about being increasingly visible through the balance of the year, and exiting the year at a rate that we believe in 2022, it’s going to be a material contributor that we will be able to talk about and starts to build our recurring revenue backlog. So all things – all systems green on iRobot Select thus far. It’s definitely one of the exciting tests that we began last year and now we’re at a point of scaling. John Babcock: Got it. That’s helpful. And then next question, just – are there any signs that the semiconductor chip shortage is getting better lately? I mean, obviously, it sounds like it’s perhaps more challenging now than 1Q. But I mean, has that, at least so far in 3Q, shown any signs of lessening or does it seem like we are still kind of on the downward slope here? Colin Angle: I think that it is certainly more well understood at this moment in time by both the suppliers themselves and the manufacturers who rely on the componentry. So we went from a situation of not really understanding how bad it was going to be to, okay, we think we understand it now. And the suppliers are working to try to make sure that the components they’re able to produce are going efficiently to the manufacturers that they are choosing to support. And so that’s kind of an intermediate step while investments are being made to bring more production capacity online as the suppliers recognize the bump in demand is not transitory and capital investments in increased manufacturing capability are good business decisions for them. So I won’t say we’re out of the woods, but we’re at a period of fewer surprises and concrete action to improve. John Babcock: Okay. And then you also talked about considering price increases. Obviously, you considered this back in 2019 and did take price increases on some of your products back then. Do you believe the market is sufficiently different now versus back then that the price increases might be better received? Colin Angle: I think that price increases, we mentioned it because it is one of the tools that we are considering. I think we learned a lot from last time we did it. And should we decide to execute and take action with that tool that will be done in a way that captures those learning. So it might be more tactical and strategic or certainly being done in a way that we have more confidence in its success. So – but it is only one of the tools we have in our cadre to ensure continued financial performance. And I would iterate that the backdrop against applying these different tools is a conviction that the supply chain and raw material cost disruptions we’re currently facing are transitory. John Babcock: Okay. And then just last question before I turn it over. I was just wondering if you might be able to provide some more detail on the different factors impacting gross margins relative to the 2020 levels? Ideally, I mean, it would be nice if you provide some color on how much is from raw materials, how much of the lower guidance is from raw materials, transportation, tariffs and price mix, recognizing you might not want to get too specific. Any color you can provide would be useful? Julie Zeiler: Sure. And I will be speaking both in 2020 and in 2021 in an assumption of a tariff-free comparison. And so if you’re looking in 2020, we were at approximately 45% gross margin. And our outlook for 2021, assuming tariffs exemption, is 39% to 40%. Certainly the headwinds, and you have named a number of them, are significant in terms of increasing costs for ocean transportation, sourcing materials on the open market, increased raw material costs, as well as increased air freight to make sure that we can get our products to our customers when they need them. That’s a significant factor as – along with year-on-year pricing and promotional reductions, which we have been talking about, that then are partially offset by the good work that our supply chain teams continue to do to take product cost out of our products. And so it’s the net of all of that, that gives you the walk between last year and this year. John Babcock: Okay, that’s great. Thanks. I will pass it over. Operator: Our next question or comment comes from the line of Derek Soderberg from Colliers Securities. Your line is open. Derek Soderberg: Hi everyone. Thanks for taking my question. Just want to get a bit more color on your view around tariffs, Colin. I guess I am wondering what’s changed in the Biden administration on trade policy. My understanding is that the U.S. trade representative, Katherine Tai, is more or less enforcing existing trade policy. Has the office under Biden picked up the pace of exemptions, I guess, since January or is this the first time they are considering them? I just want to get a bit more color on what you are hearing and what’s informing your view? Thanks. Colin Angle: So, what’s informing our view is the fact that the Senate passed a legislation that called for the reinstatement of exemptions for companies that had previously received exemptions for all of ‘22 and all of ‘21. That bill is being taken up by the House, and there is strong support for exemption language in the House as well. We just can’t guarantee when that legislation is going to be taken up. And the USTR is – could also up to act unilaterally independent of this legislation. And so that in general, there is broad-based support, though the timing is uncertain. So, we are kind of in a little bit of a wait-and-see, but we felt like it was – it behooved us to include an assumption of an exemption based on our analysis that it was more likely than not, and that would convey the most accurate view on our financial performance. Derek Soderberg: Got it. And then is the exemption, is that part of a larger bill with other stuff that could potentially muddy the waters in terms of bipartisan support or is that more of a standalone bill? Colin Angle: Yes. It would be part of a larger legislative package, which would contain other things. That is correct. Derek Soderberg: Okay. Got it. Thanks. Colin Angle: You bet. Operator: We have a follow-up question from Mr. John Babcock from Bank of America. Your line is open. John Babcock: Hi guys. Just figured I would jump since there aren’t any other questions, I guess. Just first of all, what drove the higher warranty expense in the quarter? Julie Zeiler: So, our warranty expense is a look at the trended amounts that we are paying as we see those costs come back. The – some of the issues that we have been talking about in terms of higher costs and logistics costs are things that would impact our warranty expense. So, it’s a number of factors. Colin Angle: Just to give you a little bit of a feeling for pain, there are some situations where we previously could affect or repair with – by sending a part. And because of supply chain challenges, we actually have to send a robot. So, it’s a multi-factor issue, but again, something we feel good about driving back to more historical levels. John Babcock: Got it. And then just relative back when you reported 1Q earnings, has inflation situation changed that positively or negatively for raw materials and transportation? Colin Angle: Raw materials have grown dramatically in cost, particularly resins. And we expect those raw material prices to maintain elevated for the balance of the year. And we expect them to normalize at some point next year. But definitely, that’s a headwind. John Babcock: Okay. And transportation, no big changes there, I guess? Colin Angle: And transportation as well. Very similar. John Babcock: Sorry, I don’t mean to interrupt. Yes. And then I guess, just my last question. I mean it sounds like demand from retailers is going to exceed your ability to supply it in the back half of the year. Are you able to charge more to help offset that? So in other words, while not raising the price of robots, perhaps increase that spread with the retailers to help deal with that demand? I don’t know if that’s an option or not, but just kind of curious on that front. Colin Angle: We did mention price as one of the levers that we are looking at as we try to optimize the back half of the year. There may be some situations where that could work. But we have – we are predicting very – 8% to 13% growth. There is still a tremendous amount of robots to move. And it’s a complex year. But that’s one of the reasons why we wanted to mention price as being on the table, that’s something we would consider. John Babcock: Okay. So, it sounds like that basically the price will be driven by the end market price that the consumer is paying instead of a change in the price that the retailers might pay. Colin Angle: Certainly, something we are considering and we will try to thoughtfully use along with other levers to ensure that we are extracting as much profit out of the robots that we sell. John Babcock: Okay. Alright. I appreciate it. Thank you for all the details. Colin Angle: Yes. Operator: Thank you. Our next question or comment comes from the line of Jim Ricchiuti from Needham. Your line is open. Tyler Bailey: Hi everyone. This is Tyler Bailey filling in for Jim today. Julie Zeiler: Hi Tyler. Tyler Bailey: Hi. Thank you, guys for taking questions. One question, I guess, just looking at historicals, did you see sort of, I guess, relatively similar bump from prime days as in past quarters? Colin Angle: The Prime Day – it’s a difficult question to precisely answer, because last year Prime Day happened much later in the year. And the year previously when Prime Day was similarly timed 2 years ago, and the market has – and our – the size of our Prime Day has grown substantially from there. So, I would say that we had a very successful Prime Day and we are called out as one of the top performers on Prime Day. But there is no normal or at least normal is changing every year. So, I am not sure how to give you a good answer there. Tyler Bailey: No, I appreciate that insight, though. And then another question for me, I just wondering how, I guess, maybe you can just provide some additional color on your iRobot as a service model? I know you talked about that last quarter a little bit. Just wondering if you can provide any additional color or customer feedback, it seemed like it had been going well. I just wanted to get an update there? Colin Angle: Sure. What we can say today is that the tests that we have run have been very successful, and we are going to be significantly scaling our Select program in the back half of this year and believe it to be an important part of next year. So, we are not quantifying the numbers yet, something that, again, as it grows, we will be providing more color there. But it’s all systems go, and we are actively scaling the numbers of customers that we are targeting in with our Select program. So, customer satisfaction is good. Churn is low and well within our target ranges. This is a good thing. Tyler Bailey: I appreciate that. Thanks. That’s all for me. Thanks for taking the question guys. Colin Angle: You bet. Operator: Thank you. Our next question or comment comes from the line of Ben Rose from Battle Road Research. Your line is open. Ben Rose: I just wanted to ask one follow-up question for Colin. A number of the competitors over the last number of months have been introducing vacuum robots with some new capabilities, including remote monitoring. I am encouraged to get your thoughts on just at a high level, whether you think features like that are sort of something of a Swiss Army knife approach or whether they make sense to incorporate into a vacuum robot? Colin Angle: It’s a great question with a long answer, because it all has to do with whether or not the features that are being added can be effectively used by the customer, whether the customer would value that feature and – or whether it’s just more unusable complexity. People that put security cameras on robots before with no success. Is it a bad idea. I think we can say it was a bad idea executed as it was executed when it was tried before. So, I think people are wondering what is – what can they do, how can they go and further differentiate their robots. And our competitors like to just add stuff. Our strategy is really around how do we make the experience of owning the robot one where you feel like you are more in control and you are able to get the robot to do what you wanted to do, when you wanted to do it and have it operate the way you wanted to do it intuitively and effectively, so you feel like the robot is your partner in cleaning your home. I would tell you, blindly adding stuff to the robot is going to have a negative impact in people’s interest in the robots. So, you would really have to do it thoughtfully as part of a larger strategy that would bring customers along with you in order to succeed. So again, not a simple answer, but there is a lot of bad ways of just adding stuff to your product. Ben Rose: Okay, that’s helpful. Thank you. Colin Angle: Okay. Operator: Thank you. I am showing no additional questions in the queue at this time. I would like to turn the conference back over to management for any closing remarks. Andrew Kramer: Thank you, Howard. That concludes our second quarter 2021 financial results conference call. We appreciate everybody’s support, your participation today. We certainly look forward to talking with you over the coming weeks and months. Thank you again. Operator: Ladies and gentlemen, thank you for participating in today’s conference. This concludes the phone call. You may now disconnect. Everyone, have a wonderful day.
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iRobot Corporation's Financial Struggles and Strategic Review

  • iRobot Corporation (NASDAQ:IRBT) reported an EPS of -$2.52, missing estimates and expressing "substantial doubt" about its future operations.
  • The company's stock plummeted over 35% following the announcement of financial instability and uncertainties surrounding new product launches and market conditions.
  • iRobot's financial metrics reveal significant challenges, with a negative P/E ratio of approximately -0.87 and a low debt-to-equity ratio of 0.08, indicating low debt but ongoing losses.

iRobot Corporation (NASDAQ:IRBT), known for its Roomba robot vacuum, recently reported its earnings, revealing an earnings per share (EPS) of -$2.52, which fell short of the estimated EPS of -$1.45. Despite this, the company generated a revenue of $172.04 million, slightly surpassing the estimated $171 million. However, the company has expressed "substantial doubt" about its ability to continue operating, as highlighted by its recent earnings release.

The announcement of financial instability has led to a significant decline in iRobot's stock, dropping over 35%. The company faces uncertainties with new product launches, consumer demand, competition, macroeconomic conditions, and tariff policies. In response, iRobot's board has initiated a strategic review to explore options like refinancing debt, potential sales, or strategic transactions. This move aims to address the challenges and stabilize the company's future.

iRobot's financial metrics further illustrate its current challenges. The company has a negative price-to-earnings (P/E) ratio of approximately -0.87, indicating ongoing losses. The price-to-sales ratio is 0.18, suggesting the stock is valued at 18 cents for every dollar of sales. Additionally, the enterprise value to sales ratio is 0.019, reflecting a low valuation compared to sales, while the enterprise value to operating cash flow ratio is negative at -0.42, indicating difficulties in generating positive cash flow.

The company's financial difficulties are also evident in its earnings yield, which is negative at -1.16%. Despite these challenges, iRobot maintains a low debt-to-equity ratio of 0.08, indicating a low level of debt relative to equity. The current ratio stands at 1.32, suggesting a reasonable level of liquidity to cover short-term liabilities. These metrics highlight the company's financial struggles and the need for strategic actions to improve its situation.

To navigate this challenging period, iRobot has appointed Neal P. Goldman as an independent director. Goldman's experience as CEO and managing member of SAGE Capital Investments and chairman of the board of Talos Energy is expected to be invaluable. His expertise in guiding organizations through financial and operational transformations will be crucial as iRobot explores strategic options to address its financial instability.

iRobot Corporation (NASDAQ:IRBT) Faces Financial Challenges in Q2 2024

  • iRobot Corporation (NASDAQ:IRBT) reported a significant downturn in Q2 2024, with a wider-than-expected adjusted loss and a sharp decline in revenue.
  • The company's financial strain is highlighted by an adjusted loss of $1.96 per share and a revenue of $166.4 million, both missing Zacks Consensus Estimates.
  • Challenges include a shift in consumer preferences, a decrease in units shipped, and a drop in average selling prices, affecting both domestic and international operations.

iRobot Corporation (NASDAQ:IRBT), known for its robotic vacuum cleaners and other automated home devices, faced a challenging second quarter in 2024, as evidenced by its financial performance. The downturn reflects broader challenges in the consumer electronics sector, where competition is fierce and consumer demand can be volatile. iRobot's performance is particularly noteworthy given its position as a leading player in the home robotics market, competing against both established electronics giants and emerging tech startups.

The company's adjusted loss of $1.96 per share was notably below the Zacks Consensus Estimate, indicating a deeper financial strain than analysts had anticipated. This loss also represented a significant decline from the previous year's figures, underscoring the worsening financial health of iRobot. The revenue figures further painted a grim picture, with iRobot generating $166.4 million, missing the Zacks Consensus Estimate and marking a substantial year-over-year decrease. This decline in revenue was across the board, affecting all product categories, which signals a broad-based slowdown in consumer demand for iRobot's offerings.

A closer look at the sales composition reveals a shift in consumer preferences, with premium and mid-tier robots comprising a smaller portion of total robot revenues compared to the previous year. This shift, coupled with a sharp decrease in total product units shipped and a drop in average selling prices, suggests that iRobot is facing challenges not only in maintaining its sales volume but also in sustaining its pricing power in the market. The significant decrease in revenues from solo and other products, alongside a drop in units shipped, further highlights the difficulties iRobot is encountering in its product mix.

Geographically, the company saw a decline in revenues from both domestic and international operations, with a particularly steep fall in domestic revenues. This geographic breakdown indicates that iRobot's challenges are not confined to a single market but are widespread, affecting its global operations. Despite efforts to manage costs, as seen in the decrease in the cost of revenues and operating expenses, iRobot's financial health deteriorated, with a significant contraction in adjusted gross margin and a decrease in cash and cash equivalents on its balance sheet.

Looking ahead, iRobot's outlook for the third quarter and the full year of 2024 suggests that the company is anticipating some improvement in its financial performance. However, the projected net sales and adjusted loss per share indicate that iRobot still faces a tough road ahead in navigating its current challenges. The company's Zacks Rank #3 (Hold) reflects a neutral stance on its future performance, suggesting that investors are taking a wait-and-see approach to iRobot's ability to turn its fortunes around.