IROBOT CORP (IRBT)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 underperformed company guidance across revenue, margins, operating loss and EPS due to higher-than-anticipated promotions and an $8.2M manufacturing transition charge; revenue was $172.0M vs prior guidance of $175–$200M, non-GAAP GM 12.8% vs 24–27%, non-GAAP operating loss ($44.8)M vs ($31)–($22)M, and non-GAAP EPS ($2.06) vs ($1.50)–($1.20) .
• Management launched the largest product refresh in company history (margin-accretive vs legacy portfolio) and initiated a strategic alternatives review; the Q4 earnings call was canceled, and 2025 outlook was not provided. The 10-K will include a going concern disclosure reflecting uncertainties around new product success, macro, competition and tariffs .
• Operational restructuring reduced headcount ~51% YoY and lowered operating expenses materially; cash and equivalents increased to $134.3M at year-end aided by a $40M restricted cash draw for inventory .
• Regional sell-through was weak with YoY revenue declines of 47% (U.S.), 34% (Japan), and 44% (EMEA) driven by promotions, order timing pulled into Q3, and competitive pressures; mid-tier and premium robots comprised 83% of Q4 robot sales .

What Went Well and What Went Wrong

What Went Well

• Largest product launch in company history with new Roomba lines (DustCompactor, AutoWash dock, ClearView Lidar, PrecisionVision AI) positioned as margin-accretive vs legacy products; “expected to be margin-accretive… and should begin to support year-over-year revenue growth in 2025” .
• Cost actions: headcount reduced ~51%, operating expenses lowered; “meaningfully reduced operating losses, improved gross margins and optimized cash flow” through restructuring, contract manufacturing and R&D transformation .
• Working capital improvements: year-end inventory reduced to $76.0M from $152.5M YoY; cash and equivalents at $134.3M (including $40M restricted cash draw) .

What Went Wrong

• Q4 results missed guidance across all key metrics (revenue, GM, operating loss, EPS) due to promotions, order timing and an $8.2M transition charge that reduced GM by 4.8pp and EPS by $0.27 .
• Significant regional weakness: revenue decreased 47% (U.S.), 34% (Japan; 31% ex-FX), and 44% (EMEA; 42% ex-FX) YoY, reflecting competitive headwinds and sell-through challenges .
• Going concern uncertainty disclosed: “substantial doubt about the Company’s ability to continue as a going concern for at least 12 months” tied to product launch success, macro, competition, tariffs; 2025 outlook withdrawn and Q4 call canceled .

Financial Results

Consolidated P&L Comparison (GAAP and Non-GAAP)

Notes: Q4’24 margins and EPS were reduced by the $8.2M manufacturing transition charge (–4.8pp GM, –$0.27 EPS) .

Segment and KPI Detail

Balance Sheet Highlights (Year-End)

Guidance Changes

Drivers of change: elevated promotions, holiday order timing pulled into Q3, competitive pressures, and $8.2M manufacturing transition charge impacting margins/EPS .

Earnings Call Themes & Trends

Management Commentary

• “2024 was a transformational year… We’ve meaningfully reduced operating losses, improved gross margins and optimized cash flow… we will continue to take decisive action to reclaim our position as the industry leader” — Gary Cohen, CEO .
• “Strong pipeline of breakthrough new products is expected to be margin-accretive… should begin to support year-over-year revenue growth in 2025” — Gary Cohen .
• “Board of Directors has… initiated a formal strategic review… including refinancing the Company’s debt and exploring a potential sale or strategic transaction” .
• “There is substantial doubt about the Company’s ability to continue as a going concern… given uncertainties around new product launches, competition, macroeconomic conditions, and tariff policies” .

Q&A Highlights

• No Q4 earnings call or Q&A; the event was canceled amid strategic review and going concern disclosure .
• Prior quarter context: Analysts focused on margin trajectory and 2025 growth expectations; management indicated full-year 2025 Y/Y top-line growth with stronger H2 and margin accretive new products .

Estimates Context

• Wall Street consensus estimates from S&P Global (EPS, revenue, gross margin) were unavailable at time of query due to SPGI request limits; therefore, beats/misses vs consensus cannot be assessed. The quarter materially missed company-provided guidance across all headline metrics .
• If you want consensus comparisons, we can re-run S&P Global once access resumes and update this section accordingly.

Key Takeaways for Investors

• Q4 miss vs guidance across revenue, margins, operating loss and EPS driven by promotions, order timing and a manufacturing transition charge; this is a negative near-term datapoint despite structural cost progress .
• The largest product refresh is margin-accretive and positions IRBT to compete in premium multifunction docks and advanced navigation; execution and consumer adoption are the critical swing factors for 2H25 trajectory .
• Liquidity tighter: equity down to $61.2M, term loan ~$200.6M; cash $134.3M aided by restricted cash draw. Strategic alternatives and debt amendments underscore financing constraints and going concern risk .
• Regional demand weak in Q4 (U.S -47%, Japan -34%, EMEA -44% YoY), but mix remains mid/premium (83% of robot sales); watch retailer resets and promotional cadence in Q1/Q2 .
• Near-term trading implication: elevated event risk from strategic review outcomes and 10-K going concern disclosure; lack of 2025 outlook reduces visibility and may sustain volatility .
• Medium-term thesis hinges on successful 2025 launches, margin expansion via contract manufacturing, and re-acceleration of sell-through at key retailers; monitor ASPs, mix, and competitive responses .
• Governance update: Board addition (Neal Goldman) with turnaround expertise could accelerate strategic and financing decisions during review period .