IROBOT CORP (IRBT)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 was a transition quarter: revenue fell 32% year over year to $101.6M as iRobot cleared legacy inventory ahead of the largest new product launch in company history; non-GAAP gross margin improved sequentially to 22.0% from 12.8% in Q4 2024, but remained below prior-year levels (24.6%) .
• Results missed thin Wall Street consensus: revenue of $101.6M vs $125.0M estimate and non-GAAP EPS of -$1.95 vs -$1.27 estimate; the company did not provide 2025 guidance and did not host an earnings call due to an ongoing strategic alternatives review (one estimate in coverage) . Values retrieved from S&P Global.*
• Strategic developments: extended covenant waiver on the term loan to June 6, 2025 and highlighted lower cost structure from transformed R&D and supply chain model; cash and restricted cash were $112.3M at quarter end, inventory reduced to $69.0M .
• Product catalysts: broad new Roomba portfolio introduced in March–April with subsequent Roomba Max 705 availability; management expects sales traction later in 2025, gross-margin expansion, and improved operating cash flow as new products scale .

What Went Well and What Went Wrong

• What Went Well

  • Sequential margin improvement: GAAP gross margin rose to 20.0% in Q1 from 9.5% in Q4; non-GAAP gross margin rose to 22.0% from 12.8%, supported by cost reductions and the Elevate restructuring .
  • Inventory, cost, and opex discipline: inventory fell to $69.0M from $76.0M in Q4; non-GAAP operating expenses dropped to $53.8M (from $66.8M in Q4), reflecting headcount reductions (>50%) and operating model changes .
  • Strategic confidence in product cycle: “We initiated the largest new product launch in iRobot’s history… expect to see an uptick in sales later in the year” — Gary Cohen, CEO .

• What Went Wrong

  • Demand and mix pressure: revenue declined 39.9% in the U.S., 26.9% in EMEA, and 20.8% in Japan YoY, driven by promotional spending to clear legacy products and competitive headwinds; ASP fell to $296 from $346 YoY .
  • Earnings and estimate miss: non-GAAP EPS of -$1.95 missed the -$1.27 consensus; GAAP EPS -$2.84 impacted by debt fair value remeasurement and issuance costs . Values retrieved from S&P Global.*
  • Elevated financing overhang: covenant waiver extension to June 6 underscores lender negotiations; prior disclosures noted substantial doubt about going concern in FY 2024 filings .

Financial Results

Segment/Geography

Product Mix and KPIs

Estimates vs Actuals (Q1 2025)

Values retrieved from S&P Global.*

Guidance Changes

Management reiterated expectations for year-over-year revenue growth in 2025, gross-margin expansion, and improved cash flow from operations, but provided no quantified ranges .

Earnings Call Themes & Trends

Note: The company did not host a Q1 2025 earnings call due to the strategic review . Themes tracked using Q3 2024, Q4 2024, and Q1 2025 disclosures.

Management Commentary

• “We continued to make meaningful progress on our iRobot Elevate turnaround strategy in the first quarter and initiated the largest new product launch in iRobot’s history… expect to see an uptick in sales later in the year…” — Gary Cohen, CEO .
• “The majority of the Company’s U.S. imports come from Vietnam and are currently subject to a 10% tariff rate.” .
• “We expect… year-over-year revenue growth in 2025, and we remain on track to deliver gross-margin expansion and improved cash flow from operations this year.” .
• Shareholder letter emphasized headcount reduction (>50%), inventory and cash outflow reductions, and cost structure benefits from contract manufacturing partnerships .

Q&A Highlights

• The company did not host a Q1 2025 earnings conference call or webcast; therefore, no Q&A was available .

Estimates Context

• Consensus context: Single-analyst coverage for Q1 2025; revenue consensus $125.0M* vs actual $101.6M and EPS consensus -$1.27* vs actual non-GAAP EPS -$1.95; both were material misses. Values retrieved from S&P Global.*
• Implications: Given a thin consensus and the withdrawal of formal 2025 guidance amid strategic review, near-term estimate dispersion and caution are likely; management’s margin-expansion and cash-flow objectives hinge on new product traction and sustained cost discipline .

Key Takeaways for Investors

• Near-term print was weak vs consensus as promotional activity and competitive pressures weighed on revenue; sequential margin improvement suggests Elevate restructuring is taking hold, but top-line recovery remains the critical variable . Values retrieved from S&P Global.*
• Strategic review and covenant waiver extension keep financing risk in focus; monitor term loan developments and any transaction outcomes as stock catalysts .
• Product cycle is the principal positive: March–April launches and Roomba Max 705 expand premium features; execution quality and retailer uptake into H2 will drive narrative and model revisions .
• Mix and ASP trends indicate ongoing promotional pressure; watch for normalization as legacy clearance wanes and premium products scale .
• Liquidity and inventory trends improved (cash + restricted cash $112.3M; inventory $69.0M), but with no guidance and prior going concern disclosure, risk management remains paramount .
• Regional demand remains volatile; sequential improvements vs Q4 are encouraging, but sustained recovery across US/EMEA/Japan is needed for 2025 growth aspirations .
• Trading lens: In the absence of guidance and a call, headlines around strategic alternatives and lender updates can dominate; upside hinges on visible sell-through of the new lineup and continued margin expansion.