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IROBOT CORP (IRBT)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue of $145.8M declined 24.6% YoY but rose sequentially vs Q2; non-GAAP EPS was ($0.23) and GAAP EPS was ($0.62) .
  • Versus S&P Global consensus, revenue modestly beat ($145.8M vs $136.0M*) and non-GAAP EPS materially beat (($0.23) vs ([$0.65]*)). Coverage was extremely thin (1 estimate), tempering signal strength. Values retrieved from S&P Global.
  • Management cited continuing market headwinds, production delays, and shipping disruptions; liquidity deteriorated with cash at $24.8M and no additional capital sources available to draw, heightening near-term risk .
  • Strategic review continues; formal guidance remains suspended and Q3 communications were limited to the press release (prior quarters explicitly suspended calls/guidance) .

What Went Well and What Went Wrong

What Went Well

  • Sequential improvement: GAAP gross margin reached 31.0% in Q3 vs 30.0% in Q2, reflecting cost actions and mix; non-GAAP gross margin reached 31.2% .
  • Revenue beat thin consensus: $145.8M actual vs $136.0M* consensus; non-GAAP EPS ($0.23) vs ($0.65*) consensus. Values retrieved from S&P Global.
  • Management: “We made meaningful progress on gross margin expansion, tightened control over operating expenses, and improved net losses” (Q2 framing shows margin trajectory), consistent with Q3 margins holding above 31% .

What Went Wrong

  • Top-line underperformance vs internal plans: “Third-quarter revenue fell well below our internal expectations due to continuing market headwinds, ongoing production delays, and unforeseen shipping disruptions,” pressuring profitability and cash .
  • Liquidity strain: Cash and equivalents fell to $24.8M; restricted cash stood at $5.0M; “no sources upon which it can draw for additional capital,” indicating constrained flexibility .
  • Regional softness: U.S. revenue down 33% YoY; EMEA down 13% (14% ex-FX); Japan down 9% YoY, signaling persistent demand/macro headwinds .

Financial Results

Quarterly Results vs Prior Periods

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$101.6 $127.6 $145.8
GAAP Gross Margin %20.0% 30.0% 31.0%
Non-GAAP Gross Margin %22.0% 30.2% 31.2%
GAAP Operating Expenses ($USD Millions)$66.1 $75.0 $62.9
Non-GAAP Operating Expenses ($USD Millions)$53.8 $65.5 $55.4
GAAP Operating (Loss) Income ($USD Millions)($45.8) ($36.7) ($17.7)
Non-GAAP Operating (Loss) Income ($USD Millions)($31.5) ($27.0) ($9.9)
GAAP Diluted EPS ($USD)($2.84) ($0.68) ($0.62)
Non-GAAP Diluted EPS ($USD)($1.95) ($0.27) ($0.23)

Q3 2025 vs Q3 2024 (YoY)

MetricQ3 2024Q3 2025
Revenue ($USD Millions)$193.4 $145.8
GAAP Gross Margin %32.2% 31.0%
Non-GAAP Gross Margin %32.4% 31.2%
GAAP Operating (Loss) Income ($USD Millions)$7.3 ($17.7)
GAAP Diluted EPS ($USD)($0.21) ($0.62)
Non-GAAP Diluted EPS ($USD)$0.03 ($0.23)

Q3 2025 vs S&P Global Consensus

MetricQ3 2025 ActualQ3 2025 Wall St Consensus
Revenue ($USD Millions)$145.8 $136.0*
EPS (Primary/Non-GAAP) ($USD)($0.23) ($0.65)*
Coverage (# of Estimates)—Revenue: 1*; EPS: 1*

Values retrieved from S&P Global.

Segment and Mix

Revenue by Geography ($USD Thousands)Q3 2024Q3 2025
United States$105,137 $70,772
EMEA$45,902 $39,733
Japan$27,718 $25,138
Other$14,678 $10,189
Total$193,435 $145,832
Revenue by Product Category ($USD Millions)Q3 2024Q3 2025
2-in-1$110 $124
Solo and other$83 $22
Total$193 $146
Robot Units and ASPQ3 2024Q3 2025
2-in-1 Units Shipped1,263 498,445
Solo and other Units Shipped218,854 57,287
Total Units Shipped1,481,? 555,732
Average Gross Selling Price ($USD)$313 $330
Mid/Premium Mix (% of robot sales)79% 74%

Note: Robot Units Shipped presented as in source; footnote indicates “in thousands” .

KPIs and Balance Sheet

KPIQ1 2025Q2 2025Q3 2025
Cash & Equivalents ($USD Thousands)$69,922 $40,568 $24,828
Restricted Cash ($USD Thousands)$40,003 $36,000 $5,000
Inventory ($USD Thousands)$68,968 $88,236 $140,910
Accounts Payable ($USD Thousands)$97,298 $166,785 $197,047
Days Sales Outstanding (days)28 40 36
GAAP Days in Inventory (days)77 90 128
Headcount530 509 492

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY/Q3 2025Guidance suspended amid strategic review None provided in Q3 release Maintained (no guidance)
Gross MarginFY/Q3 2025Guidance suspended None provided Maintained
OpExFY/Q3 2025Guidance suspended None provided Maintained
EPSFY/Q3 2025Guidance suspended None provided Maintained
Tax RateFY/Q3 2025Guidance suspended None provided Maintained
Capital/Liquidity NoteQ3 2025Ongoing lender discussions/covenant waivers “No sources upon which it can draw for additional capital” Deteriorated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
AI/Technology initiativesLargest new product rollout; Roomba Max 705 Combo introduced; strong Prime Day presence No new launch noted; mix still mid/premium; ASP up to $330 Launch cadence moderated; focus on commercial execution
Supply chain/productionDelays in scaling production; manufacturing transition impacts prior-year margins “Ongoing production delays” and “shipping disruptions” cited as drivers of miss Persistent operational friction
Tariffs/MacroMajority of U.S. imports from Vietnam at ~10% tariff; dynamic macro cited Continued market headwinds; regional demand softness Macro/tariff burden and demand headwinds continue
Product performance/mixMid/premium 73% of sales in Q2; ASP $301 Mid/premium 74%; ASP $330; Solo category revenue down sharply YoY Mix remains premium; solo softness
Regional trendsQ2: U.S. down 33%, EMEA down 17%, Japan up 6% YoY Q3: U.S. down 33%, EMEA down 13% (14% ex-FX), Japan down 9% YoY Broad-based softness; FX a factor in EMEA
R&D/model transformationReinvented R&D/supply chain model to lower cost; focus on innovation Opex progress noted (non-GAAP OpEx $55.4M) despite G&A volatility Cost discipline ongoing
Regulatory/legal/financeStrategic review; covenant waivers extended to 9/19/25; suspended calls/guidance Strategic review ongoing; no capital sources available to draw Heightened financing risk

Management Commentary

  • “Our third-quarter revenue fell well below our internal expectations due to continuing market headwinds, ongoing production delays, and unforeseen shipping disruptions… This shortfall increased cash usage and pressured profitability” — Gary Cohen, CEO (Q3 press release) .
  • “While we made meaningful progress on gross margin expansion, tightened control over operating expenses, and improved net losses, our cash position continued to decline…” — Gary Cohen (Q2 press release) .
  • “We continued to make meaningful progress on our iRobot Elevate turnaround strategy and initiated the largest new product launch in iRobot’s history” — Gary Cohen (Q1 press release) .

Q&A Highlights

  • No formal earnings call or webcast was held in prior quarters due to the strategic review; Q3 communications were limited to the press release (company previously suspended calls/guidance) .
  • Liquidity clarification: Cash was $24.8M; restricted cash $5.0M; “no sources upon which it can draw for additional capital,” underscoring the need for strategic alternatives or refinancing .
  • Geography/mix: Management highlighted U.S. down 33%, EMEA down 13% (14% ex-FX), Japan down 9% YoY; mid/premium robots were 74% of sales .

Estimates Context

  • Q3 revenue beat S&P Global consensus ($145.8M vs $136.0M*), and non-GAAP EPS beat (($0.23) vs ($0.65*)). Coverage was very limited (1 estimate each), reducing confidence in the degree of “beat.” Values retrieved from S&P Global.
  • Given liquidity strain and operational issues (production/shipping delays), near-term estimate revisions may focus on lower revenue trajectories in U.S./EMEA and higher cash burn, partially offset by sustained gross margin improvements and premium mix .

Key Takeaways for Investors

  • Near-term risk elevated: Cash at $24.8M and no additional capital sources available to draw increases refinancing/strategic transaction urgency .
  • Operational friction persists: Production and shipping issues contributed to an internal miss, despite a thin-consensus revenue/EPS beat; watch supply chain normalization .
  • Margin resilience: GAAP gross margin held at 31.0% and non-GAAP at 31.2%; continued cost discipline supports margin base even amid demand softness .
  • Mix remains premium: Mid/premium made up 74% of robot sales; ASP rose to $330, but solo category revenue declined sharply YoY, implying price/mix strategy focus .
  • Regional weakness: U.S. down 33% YoY; EMEA down 13% (14% ex-FX); Japan down 9% YoY; FX remains a factor in EMEA .
  • Inventory build: Inventory rose to $140.9M and GAAP days in inventory reached 128, highlighting working capital pressure into peak season .
  • Catalysts: Outcomes from the strategic review and any lender waivers/refinancing steps are the primary stock reaction drivers near term .