iRobot Reports Fourth-Quarter and Full-Year 2019 Financial Results

BEDFORD, Mass., Feb. 5, 2020 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in consumer robots, today announced its financial results for the fourth quarter and full year ended December 28, 2019.

"We closed 2019 on a positive note by delivering fourth-quarter revenue, operating income and EPS that exceeded our October plans," said Colin Angle, chairman and chief executive officer of iRobot. "Our financial performance this quarter benefited from the combination of strong revenue growth in the United States and disciplined spending. Throughout 2019, we executed well on all major elements of our strategy while navigating increasingly challenging market conditions in the U.S. and intense price competition in EMEA. As a result, we maintained our Roomba leadership, took important steps to further broaden our product portfolio within and beyond RVCs, advanced our efforts to build out our Smart Home ecosystem, and made tangible progress diversifying our supply chain activities."

"Our newest pricing and promotional tactics played an important role in enabling us to defend our category leadership and hold share in the U.S. despite aggressive price competition," Angle continued. "We believe that consumer demand for RVCs remains fundamentally healthy, although we expect challenging U.S. market conditions to persist into 2020. As we move forward, we are focused on executing against our 2020 strategic priorities in ways that will enable us to drive near-term growth, fortify our leadership and set us up to capitalize on a broad range of exciting longer-term opportunities."

Commenting specifically on the company's 2020 financial outlook, Angle added, "2020 is shaping up to be a year of transition for iRobot. We anticipate 2020 revenue growth in the range of 9% to 11%, although our operating profitability and EPS are expected to be constrained primarily by pricing and promotional activity and tariff costs. While we plan to continue carefully managing our spending this year, it is imperative that we continue funding the investments that we believe will enable us to rebound in 2021 and beyond with accelerated revenue growth, meaningful improvements in operating income and robust operating cash flow generation."

Financial Performance Highlights

    --  Revenue for the fourth quarter of 2019 grew 11% to $426.8 million over
        $384.7 million for the fourth quarter of 2018. Full-year 2019 revenue
        was $1,214.0 million, an increase of 11% over $1,092.6 million in 2018.
    --  Q4 revenue growth of 11% reflected 15% growth in the U.S. and 6%
        international growth. Growth outside of the U.S. was led by 9% growth in
        EMEA, which was partially offset by a slight decline in Japan, as
        expected, and other smaller regions. Full-year 2019 international
        revenue grew 15% driven primarily by Japan at 21% and EMEA at 15%.
        Full-year 2019 revenue growth in the U.S. was 8%.
    --  Q4 and full-year 2019 revenue growth was primarily driven by adoption of
        new products introduced since September 2018. The Roomba s9 Series, the
        Braava jet m6 Series and international sales of the Roomba i7 Series,
        generated 17% of 2019 total revenue. The company achieved its goal of
        surpassing $100 million in revenue for 2019 for the Braava family of
        robot mops.
    --  Fourth-quarter 2019 operating income was $16.6 million, compared with
        $29.8 million in the fourth quarter of 2018. For 2019, operating income
        was $86.6 million versus $105.8 million for the full year 2018. Section
        301 tariff costs significantly lowered fourth-quarter and full-year 2019
        operating income by $21.9 million and $37.9 million, respectively.
    --  Quarterly earnings per share were $0.70 for the fourth quarter of 2019,
        compared with $0.88 in the fourth quarter of 2018. Full-year 2019
        earnings per share were $2.97, compared with $3.07 for full-year 2018.
        Full-year 2019 earnings per share included a $0.23 discrete tax benefit
        related to stock compensation versus a $0.23 discrete tax benefit
        related to stock compensation in 2018.
    --  As of December 28, 2019, the company's cash, cash equivalents and
        short-term investments were $256.4 million, up from $91.1 million as of
        September 28, 2019, and $162.0 million as of December 29, 2018.

Q419 and Recent Business Highlights

    --  In a separate announcement today, the company has appointed Julie
        Zeiler, vice president of finance, as its next executive vice president
        and chief financial officer, effective May 4, 2020. She will succeed
        Alison Dean, the company's CFO since 2013, who will be stepping down to
        spend more time with her family before pursuing other personal and
        professional interests.
    --  Surpassed the 30 million robots sold milestone, which includes over nine
        million connected robots.
    --  Delivered innovative, new digital features, such as Keep Out Zones and
        Smart Charge and Resume, for the Roomba s9 Series and i7 Series and the
        Braava jet m6 Series that leverage the spatial awareness of these robots
        to deliver more effective, efficient performance. In addition,
        Imprint(TM) Link compatibility was extended to the Roomba 900 Series,
        which enables these robots to pair with the Braava jet m6 robot and
        automatically trigger a mopping session to commence immediately after a
        900 series Roomba robot completes its vacuuming mission.
    --  Commenced Roomba production in Malaysia in late November, ahead of
        schedule.
    --  Announced a partnership with IFTTT that is aimed at eventually enabling
        customers to more easily integrate devices and services, like smart
        thermostats, lighting and home security, directly within the iRobot HOME
        App.
    --  Roomba s9+ was a 2020 CES Innovation Award honoree in the robotics
        category for its suite of groundbreaking technology built into a
        brand-new design. This award caps a highly productive year of
        award-winning innovation at iRobot.

Financial Expectations
Consistent with ongoing efforts to provide additional clarity into iRobot's operating performance and potential, iRobot is providing both GAAP and non-GAAP financial expectations for the fiscal year ending January 2, 2021. A detailed reconciliation between the company's GAAP and non-GAAP expectations is included in the attached financial tables.

Fiscal Year 2020:


                   Metric                      GAAP    
        
           Adjustments                    Non-GAAP

    ---

        Revenue           
          $1.32 - $1.35 billion                          
          $1.32 - $1.35 billion


        Gross
         Profit             
          $507 - $520 million   
        ~$3 million         
          $510 - $523 million


        Operating
         Income               
          $15 - $35 million   
        ~$40 million          
          $55 - $75 million


        Earnings
         Per Share              
            $0.55 - $1.15     
         ~$1.15               
            $1.70 - $2.30

Fourth-Quarter and Full-Year 2019 Conference Call
iRobot will host a conference call tomorrow at 8:30 a.m. ET to discuss its financial results for the fourth fiscal quarter 2019, major business developments and its outlook for fiscal year 2020 financial performance. Pertinent conference call details include:



              Date:                             Thursday, February 6



              Time:                  
              8:30 a.m. ET



              Call-In Number:        
              213-358-0894



              Conference ID:                                 1873658

A live webcast of the conference call, along with the conference call prepared remarks, will be accessible on the event section of the company's website at https://investor.irobot.com/events/event-details/q4-2019-irobot-corp-earnings-conference-call. An archived version of the broadcast will be available on the same website shortly after the conclusion of the live event. A replay of the telephone conference call will be available through February 13, and can be accessed by dialing 404-537-3406, passcode 1873658.

About iRobot Corp.
iRobot®, the leading global consumer robot company, designs and builds robots that empower people to do more both inside and outside of the home. iRobot created the home robot cleaning category with the introduction of its Roomba® Robot Vacuum in 2002. Today, iRobot is a global enterprise that has sold more than 30 million robots worldwide. iRobot's product line, including the Roomba and the Braava® family of mopping robots, feature proprietary technologies and advanced concepts in cleaning, mapping and navigation. iRobot engineers are building an ecosystem of robots and technologies to enable the smart home. For more information about iRobot, please visit www.irobot.com.

For iRobot Investors
Certain statements made in this press release that are not based on historical information are forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This press release contains express or implied forward-looking statements relating to, among other things, iRobot Corp.'s expectations regarding: future financial performance; future operating performance; growth and investment strategy; future expenditures; future market conditions; and anticipated revenue, gross profit, operating income, earnings per share and Section 301 tariff costs (and the financial impact thereof) for the fiscal year ending January 2, 2021. 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 these forward-looking statements. In particular, the risks and uncertainties include, among other things: our ability to operate in an emerging market; the financial strength of our customers and retailers; the impact of tariffs on goods imported into the United States; general economic conditions; market acceptance of and adoption of our products; and competition. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. iRobot Corp. undertakes no obligation to update or revise the information contained in this press release, whether as a result of new information, future events or circumstances or otherwise. For additional disclosure regarding these and other risks faced by iRobot Corp., see the disclosure contained in our public filings with the Securities and Exchange Commission.


                                                                              
              iRobot Corporation


                                                                       
              Consolidated Statements of Income


                                                                     
            (in thousands, except per share amounts)


                                                                                  
              (unaudited)






                                                                            For the three months ended                                      
            For the twelve months ended


                                                          December 28,                                  December 29,           December 28,                                  December 29,
                                                                  2019                                           2018                    2019                                    2018

                                                                                                                                                                               ---


     Revenue                                                          $
              426,778                                                    $
             384,665                          $
          1,214,010  $
          1,092,584



     Cost of revenue:



       Cost of product revenue                                254,970                                                 193,645                                       658,362                         518,612



       Amortization of acquired intangible assets               2,438                                                   4,509                                        11,721                          18,544



     Total cost of revenue                                    257,408                                                 198,154                                       670,083                         537,156




     Gross profit                                             169,370                                                 186,511                                       543,927                         555,428



     Operating expenses:



       Research and development                                37,287                                                  37,451                                       141,607                         140,629



       Selling and marketing                                   94,046                                                  94,142                                       231,548                         210,411



       General and administrative                              21,232                                                  24,871                                        83,103                          97,501



       Amortization of acquired intangible assets                 255                                                     260                                         1,051                           1,065




           Total operating expenses                           152,820                                                 156,724                                       457,309                         449,606




     Operating income                                          16,550                                                  29,787                                        86,618                         105,822



     Other income, net                                          8,502                                                     437                                        12,215                           2,800




     Income before income taxes                                25,052                                                  30,224                                        98,833                         108,622



     Income tax expense                                         5,011                                                   5,033                                        13,533                          20,630




     Net income                                                        $
              20,041                                                     $
             25,191                             $
          85,300     $
          87,992






     Net income per share:



        Basic                                                            $
              0.71                                                       $
             0.91                               $
          3.04       $
          3.18



        Diluted                                                          $
              0.70                                                       $
             0.88                               $
          2.97       $
          3.07





     Number of shares used in per share calculations:



        Basic                                                  28,300                                                  27,714                                        28,097                          27,692



        Diluted                                                28,563                                                  28,579                                        28,735                          28,640







     Stock-based compensation included in above figures:



             Cost of revenue                                              $
              366                                                        $
             372                              $
          1,486      $
          1,407



             Research and development                           2,557                                                   2,101                                         9,186                           7,494



             Selling and marketing                                857                                                     810                                         3,323                           2,842



             General and administrative                         1,221                                                   3,552                                         9,749                          14,061




                 Total                                                  $
              5,001                                                      $
             6,835                             $
          23,744     $
          25,804


                                                     
              iRobot Corporation


                                                 
         Condensed Consolidated Balance Sheets


                                                   
             (unaudited, in thousands)






                                                                                December 28, 2019            December 29, 2018

                                                                                                                ---


      Assets



      Cash and cash equivalents                                                                  $
     239,392                   $
     130,373



      Short term investments                                                              17,032               31,605



      Accounts receivable, net                                                           146,161              162,166



      Inventory                                                                          157,347              164,633



      Other current assets                                                                34,285               25,660




     Total current assets                                                                594,217              514,437



      Property and equipment, net                                                         75,988               57,026



      Operating lease right-of-use assets                                                 47,478



      Deferred tax assets                                                                 41,791               36,979



      Goodwill                                                                           118,732              118,896



      Intangible assets, net                                                              12,352               24,273



      Other assets                                                                        30,195               15,350




     Total assets                                                                                $
     920,753                   $
     766,961






      Liabilities and stockholders' equity



      Accounts payable                                                                           $
     116,185                   $
     136,742



      Accrued expenses                                                                    81,768               71,259



      Deferred revenue and customer advances                                               4,549                5,756




     Total current liabilities                                                           202,502              213,757



      Operating lease liabilities                                                         54,928



      Deferred tax liabilities                                                               912                4,005



      Other long-term liabilities                                                         10,342               13,877



     Total long-term liabilities                                                          66,182               17,882




     Total liabilities                                                                   268,684              231,639



      Stockholders' equity                                                               652,069              535,322



     Total liabilities and stockholders' equity                                                  $
     920,753                   $
     766,961


                                                                                                     
               iRobot Corporation


                                                                                                 
         Consolidated Statements of Cash Flows


                                                                                                   
             (unaudited, in thousands)






                                                                                                                                                 
              For the twelve months ended


                                                                                                                                             December 28, 2019                          December 29, 2018

                                                                                                                                                                                             ---


              
                Cash flows from operating activities:



              Net income                                                                                                                                         $
              85,300                       $
      87,992



              Adjustments to reconcile net income to net cash provided by operating activities,
    net of the effects of acquisition:



              Depreciation and amortization                                                                                                            37,159                               36,574



              Gain on sale of equity investment                                                                                                       (8,439)



              Stock-based compensation                                                                                                                 23,744                               25,804



              Deferred income taxes, net                                                                                                             (11,118)                            (10,848)



              Other                                                                                                                                     7,267                                1,837



              Changes in operating assets and liabilities - (use) source



              Accounts receivable                                                                                                                      13,064                             (23,920)



              Inventory                                                                                                                                 7,307                             (58,546)



              Other current assets                                                                                                                    (3,310)                             (8,533)



              Accounts payable                                                                                                                       (20,536)                              22,470



              Accrued expenses and other liabilities                                                                                                    (386)                             (1,145)



              Net cash provided by operating activities                                                                                               130,052                               71,685






              
                Cash flows from investing activities:



              Additions of property and equipment                                                                                                    (35,337)                            (32,422)



              Change in other assets                                                                                                                  (5,436)                             (2,363)



              Proceeds from sale of equity investment                                                                                                   9,787                                  856



              Cash paid for business acquisition, net of cash acquired                                                                                (2,817)



              Purchases of investments                                                                                                                      -                             (6,438)



              Sales and maturities of investments                                                                                                      12,880                               14,000



              Net cash used in investing activities                                                                                                  (20,923)                            (26,367)






              
                Cash flows from financing activities:



              Proceeds from employee stock plans                                                                                                        7,147                               10,366



              Income tax withholding payment associated with restricted stock vesting                                                                 (7,277)                             (3,532)



              Stock repurchases                                                                                                                             -                            (50,000)



              Net cash used in financing activities                                                                                                     (130)                            (43,166)






              Effect of exchange rate changes on cash and cash equivalents                                                                                 20                                (414)



              Net increase in cash and cash equivalents                                                                                               109,019                                1,738



              Cash and cash equivalents, at beginning of period                                                                                       130,373                              128,635



              Cash and cash equivalents, at end of period                                                                                                       $
              239,392                      $
      130,373


                                                                                                                                   
               iRobot Corporation


                                                                                                                                 
              Supplemental Information


                                                                                                                                       
              (unaudited)






                                                                                                    
            For the three months ended                                                             For the twelve
                                                                                                                                                                                                     months ended



                                                                          March 30,                June 29,                        September 28,                        December 28,    December 28,
                                                                               2019                     2019                                  2019                                 2019             2019

                                                                                                                                                                                                 ---


              Revenue by Geography *



                  Domestic                                                         $
         114,065                                                  $
              124,472                                        $
         117,929                 $
         247,152   $
           603,618



                  International                                            123,596                            135,700                                                         171,470                                 179,626        610,392




                   Total                                                           $
         237,661                                                  $
              260,172                                        $
         289,399                 $
         426,778 $
           1,214,010






              Units shipped*



                    Vacuum                                                     764                                935                                                             975                                   1,730          4,403



                    Mopping                                                    112                                139                                                             156                                     179            586




                   Total                                                       876                              1,074                                                           1,131                                   1,909          4,989






              Revenue by Product Category**



                    Vacuum***                                                          $
         221                                                      $
              237                                            $
         257                     $
         388     $
           1,103



                    Mopping***                                                  17                                 23                                                              32                                      39            111




                   Total                                                               $
         238                                                      $
              260                                            $
         289                     $
         427     $
           1,214






              Average gross selling prices for robot units                             $
         321                                                      $
              296                                            $
         305                     $
         317       $
           310





              Section 301 tariff costs *                                             $
         3,518                                                    $
              4,982                                          $
         7,466                  $
         21,896    $
           37,862



              Section 301 tariff impact on gross and                         (1.5)                             (1.9)                                                          (2.6)                                  (5.1)
                                                                                  %                                 %                                                              %                                      %    (3.1)
       %
    operating margin





              Days sales outstanding                                            21                                 32                                                              53                                      31





              Days in inventory                                                140                                123                                                             149                                      56





              Headcount                                                      1,072                              1,120                                                           1,132                                   1,128





              * in thousands



              ** in millions



              *** includes accessory revenue



              
                Certain numbers may not total due to rounding


                                                                                                                                      
               iRobot Corporation


                                                                                                                                    
              Supplemental Information


                                                                                                                                          
              (unaudited)






                                                                                                       
           For the three months ended                                                              For the twelve
                                                                                                                                                                                                        months ended



                                                                            March 31,                June 30,                       September 29,                        December 29,      December 29,
                                                                                 2018                     2018                                 2018                                 2018               2018

                                                                                                                                                                                                    ---


              Revenue by Geography *



                  Domestic                                                           $
         106,862                                                 $
              111,526                                          $
         127,240                  $
         215,368         $
           560,995



                  International                                              110,206                           114,791                                                         137,294                                   169,297        531,589




                   Total                                                             $
         217,068                                                 $
              226,317                                          $
         264,534                  $
         384,665       $
           1,092,584






              Units shipped*



                    Vacuum                                                       712                               819                                                             942                                     1,520          3,993



                    Mopping                                                      103                               134                                                             145                                       162            544




                   Total                                                         815                               953                                                           1,087                                     1,682          4,537






              Revenue by Product Category**



                    Vacuum***                                                           $
          201                                                     $
              204                                              $
         242                     $
          361           $
           1,008



                    Mopping***                                                    16                                22                                                              23                                        24             85




                   Total                                                                $
          217                                                     $
              226                                              $
         265                     $
          385           $
           1,093






              Average gross selling prices for robot units                              $
          309                                                     $
              285                                              $
         276                     $
          304             $
           294





              Section 301 tariff costs *                                 
             $                                                
              $                                          
              $                                          $
         2,155    2,155



              Section 301 tariff impact on gross and                               -       %                                       %                                                    %                               (0.6)
                                                                                                                                                                                                                             %    (0.2)
       %
    operating margin





              Days sales outstanding                                              29                                30                                                              38                                        38





              Days in inventory                                                  101                                97                                                             113                                        76





              Headcount                                                          954                               982                                                           1,003                                     1,032





              * in thousands



              ** in millions



              *** includes accessory revenue



              
                Certain numbers may not total due to rounding

iRobot Corporation
Explanation of Non-GAAP Measures

In addition to disclosing financial results in accordance with U.S. GAAP, this earnings release contains references to the non-GAAP financial measures described below. We use non-GAAP measures to internally evaluate and analyze financial results. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and enable comparison of our financial results with other public companies, many of which present similar non-GAAP financial measures.

Our non-GAAP financial measures reflect adjustments based on the following items. We also provide a non-GAAP financial measure of Adjusted EBITDA, as described below. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated.

Amortization of acquired intangible assets: Amortization of acquired intangible assets consists of amortization of intangible assets including completed technology, customer relationships, and reacquired distribution rights acquired in connection with business combinations. Amortization charges for our acquisition-related intangible assets are inconsistent in size and are significantly impacted by the timing and valuation of our acquisitions. We exclude these charges from our non-GAAP measures to facilitate an evaluation of our current operating performance and comparisons to our past operating performance.

Net Merger, Acquisition and Divestiture (Income) Expense: Net merger, acquisition and divestiture (income) expense primarily consists of transaction fees, professional fees, and transition and integration costs directly associated with mergers, acquisitions and divestitures. It also includes business combination adjustments including adjustments after the measurement period has ended. The occurrence and amount of these costs will vary depending on the timing and size of these transactions. We exclude these charges from our non-GAAP measures to facilitate an evaluation of our current operating performance and comparisons to our past operating performance.

Stock-Based Compensation: Stock-based compensation is a non-cash charge relating to stock-based awards. We exclude this expense as it is a non-cash expense, and we assess our internal operations excluding this expense and believe it facilitates comparisons to the performance of other companies.

IP Litigation Expense, Net: IP litigation expense, net relates to legal costs incurred to litigate patent, trademark, copyright and false advertising infringements, or to oppose or defend against interparty actions related to intellectual property. Any settlement payment or proceeds resulting from these infringements are included or netted against the costs. We exclude these costs from our non-GAAP measures as we do not believe these costs have a direct correlation to the operations of our business and may vary in size depending on the timing and results of such litigations and settlements.

Gain/Loss on Strategic Investments: Gain/loss on strategic investments includes fair value adjustments, realized gains and losses on the sales of these investments and losses on the impairment of these investments. We exclude these items from our non-GAAP measures because we do not believe they correlate to the performance of our core business and may vary in size based on market conditions and events. We believe that the exclusion of these gains or losses provides investors with a supplemental view of our operational performance.

Income tax adjustments: Income tax adjustments include the tax effect of the non-GAAP adjustments, calculated using the appropriate statutory tax rate for each adjustment. We reassess the need for any valuation allowance recorded based on the non-GAAP profitability and have eliminated the effect of the valuation allowance recorded in the U.S. jurisdiction. We also exclude certain tax items that are not reflective of income tax expense incurred as a result of current period earnings. These certain tax items include, among other non-recurring tax items, impacts from the Tax Cuts and Jobs Act of 2017 and stock-based compensation windfalls/shortfalls. We believe disclosure of the income tax provision before the effect of such tax items is important to permit investors' consistent earnings comparison between periods.

Adjusted EBITDA: We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, net merger, acquisition and divestiture expense, gain on business acquisition, net intellectual property litigation expense, and restructuring expense. Management believes this non-GAAP measure is frequently used by securities analysts, investors and other interested parties as a measure of financial performance.


                                                                                                                        
              iRobot Corporation


                                                                                                
              Supplemental Reconciliation of GAAP Net Income to Adjusted EBITDA


                                                                                                                    
               (unaudited, in thousands)






                                                                               
            For the three months ended                                                               
              For the twelve months ended


                                                                           December 28,                                 December 29,                                         December 28,                               December 29,
                                                                                   2019                                          2018                                                  2019                                        2018

                                                                                                                                                                                                                                 ---


            GAAP Net Income                                                            $
              20,041                                                                                   $
              25,191                          $
        85,300   $
      87,992





            Interest income, net                                                 (459)                                                                   (248)                                                              (2,546)          (944)



            Income tax expense                                                   5,011                                                                    5,033                                                                13,533          20,630



            Depreciation                                                         6,722                                                                    4,805                                                                24,387          16,965



            Amortization of acquired intangible assets                           2,693                                                                    4,769                                                                12,772          19,609






            EBITDA                                                              34,008                                                                   39,550                                                               133,446         144,252





            Stock-based compensation                                             5,001                                                                    6,835                                                                23,744          25,804



            Net merger, acquisition and divestiture (income)                       138                                                                      115                                                                   466             138
    expense



            IP litigation expense, net                                           2,582                                                                       39                                                                 2,218           3,556






            Adjusted EBITDA                                                            $
              41,729                                                                                   $
              46,539                         $
        159,874  $
      173,750




           
                
                   Adjusted EBITDA as a % of revenue          9.8

                                                                                                                                                     
            %                                                           
            %        
         %
                                                                                      %                                                                    12.1                                                                  13.2            15.9


                                                                                                                                                                                          
              iRobot Corporation


                                                                                                                                                                
             Supplemental Reconciliation of 2019 GAAP Actuals to 2019 Non-GAAP Actuals


                                                                                                                                                                               
              (in thousands, except per share amounts)


                                                                                                                                                                                              
              (unaudited)






                                                                                                                                                              
             For the three months ended                                                                            For the twelve
                                                                                                                                                                                                                                                                               months ended



                                                                                                                           March 30,                       June 29,                              September 28,                                    December 28,    December 28,
                                                                                                                                2019                            2019                                        2019                                             2019             2019

                                                                                                                                                                                                                                                                           ---


               GAAP Revenue                                                                                                           $
              237,661                                                        $
              260,172                                                    $
             289,399                       $
          426,778  $
           1,214,010





               GAAP Gross Profit                                                                                                      $
              119,546                                                        $
              118,170                                                    $
             136,841                       $
          169,370    $
           543,927



              Amortization of acquired intangible assets                                                                      3,077                                           3,111                                                                       3,095                                       2,438              11,721



              Stock-based compensation                                                                                          378                                             405                                                                         337                                         366               1,486




               Non-GAAP Gross Profit                                                                                                  $
              123,001                                                        $
              121,686                                                    $
             140,273                       $
          172,174    $
           557,134




               Non-GAAP Gross Margin                                                                                 51.8
            %                                 46.8
            %                                                             48.5
            %                              40.3
           %     45.9
            %





               GAAP Operating Income                                                                                                   $
              22,263                                                          $
              5,250                                                     $
             42,555                        $
          16,550     $
           86,618



              Amortization of acquired intangible assets                                                                      3,348                                           3,380                                                                       3,351                                       2,693              12,772



              Stock-based compensation                                                                                        6,864                                           7,594                                                                       4,284                                       5,001              23,744



              Net merger, acquisition and divestiture                                                                           152                                             143                                                                          32                                         138                 466
    (income) expense



              IP litigation expense, net                                                                                        469                                           (676)                                                                      (157)                                      2,582               2,218




               Non-GAAP Operating Income                                                                                               $
              33,096                                                         $
              15,691                                                     $
             50,065                        $
          26,964    $
           125,818




               Non-GAAP Operating Income Margin                                                                      13.9
            %                                  6.0
            %                                                             17.3
            %                               6.3
           %     10.4
            %





               GAAP Income Tax (Benefit) Expense                                                                                        $
              1,023                                                          $
              (424)                                                     $
             7,923                         $
          5,011     $
           13,533



              Tax effect of non-GAAP adjustments                                                                              1,824                                           1,797                                                                       (132)                                      1,159               4,648



              Other tax adjustments                                                                                           4,067                                           1,461                                                                         133                                       1,267               6,928




               Non-GAAP Income Tax Expense                                                                                              $
              6,914                                                          $
              2,834                                                      $
             7,924                         $
          7,437     $
           25,109






               GAAP Net Income                                                                                                         $
              22,520                                                          $
              7,207                                                     $
             35,532                        $
          20,041     $
           85,300



              Amortization of acquired intangible assets                                                                      3,348                                           3,380                                                                       3,351                                       2,693              12,772



              Stock-based compensation                                                                                        6,864                                           7,594                                                                       4,284                                       5,001              23,744



              Net merger, acquisition and divestiture                                                                           152                                             143                                                                          32                                         138                 466
    (income) expense



              IP litigation expense, net                                                                                        469                                           (676)                                                                      (157)                                      2,582               2,218



              (Gain)/loss on strategic investments                                                                               57                                           (629)                                                                                                               (8,332)            (8,904)



              Income tax effect                                                                                             (5,891)                                        (3,258)                                                                        (1)                                    (2,426)           (11,576)



               Non-GAAP Net Income                                                                                                     $
              27,519                                                         $
              13,761                                                     $
             43,041                        $
          19,697    $
           104,020









                                                                                                                                                                                          
              iRobot Corporation


                                                                                                                                                           
             Supplemental Reconciliation of 2019 GAAP Actuals to 2019 Non-GAAP Actuals continued


                                                                                                                                                                               
              (in thousands, except per share amounts)


                                                                                                                                                                                              
              (unaudited)






                                                                                                                                                              
             For the three months ended                                                                            For the twelve
                                                                                                                                                                                                                                                                               months ended



                                                                                                                           March 30,                       June 29,                              September 28,                                    December 28,    December 28,
                                                                                                                                2019                            2019                                        2019                                             2019             2019

                                                                                                                                                                                                                                                                           ---


               GAAP Net Income Per Diluted Share                                                                                         $
              0.78                                                           $
              0.25                                                       $
             1.24                          $
          0.70       $
           2.97



              Amortization of acquired intangible assets                                                                       0.12                                            0.12                                                                        0.12                                        0.09                0.44



              Stock-based compensation                                                                                         0.24                                            0.26                                                                        0.15                                        0.18                0.83



              Net merger, acquisition and divestiture                                                                             -                                                                                                                                                                                    0.01
    (income) expense



              IP litigation expense, net                                                                                       0.02                                          (0.02)                                                                     (0.01)                                       0.09                0.08



              (Gain)/loss on strategic investments                                                                                -                                         (0.02)                                                                                                                (0.29)             (0.31)



              Income tax effect                                                                                              (0.20)                                         (0.11)                                                                                                                (0.08)             (0.40)




               Non-GAAP Net Income Per Diluted Share                                                                                     $
              0.96                                                           $
              0.48                                                       $
             1.50                          $
          0.69       $
           3.62






              Number of shares used in diluted per share                                                                     28,763                                          28,763                                                                      28,650                                      28,563              28,735
    calculation





              Section 301 Tariff Costs



              Section 301 tariff costs                                                                                                  $
              3,518                                                          $
              4,982                                                      $
             7,466                        $
          21,896     $
           37,862



              Impact of Section 301 tariff costs to gross and                                                                 (1.5)                                          (1.9)                                                                      (2.6)                                      (5.1)
                                                                                                                                   %                                              %                                                                          %                                          %    (3.1)
            %
    operating margin (GAAP & non-GAAP)



              Impact of Section 301 tariff costs to net                                                                                $
              (0.12)                                                        $
              (0.17)                                                    $
             (0.26)                       $
          (0.77)    $
           (1.32)
    income per diluted share (GAAP & non-
    GAAP)





              
                Certain numbers may not total due to rounding



              
                Net merger, acquisition and divestiture (income) expense and IP litigation, net are classified in General and Administrative


                                                                                                                                                                                           
              iRobot Corporation


                                                                                                                                                                 
             Supplemental Reconciliation of 2018 GAAP Actuals to 2018 Non-GAAP Actuals


                                                                                                                                                                                
              (in thousands, except per share amounts)


                                                                                                                                                                                               
              (unaudited)






                                                                                                                                                                
             For the three months ended                                                                            For the twelve
                                                                                                                                                                                                                                                                                 months ended



                                                                                                                           March 31,                       June 30,                              September 29,                                    December 29,      December 29,
                                                                                                                                2018                            2018                                        2018                                             2018               2018

                                                                                                                                                                                                                                                                             ---


               GAAP Revenue                                                                                                           $
              217,068                                                        $
              226,317                                                      $
             264,534                       $
          384,665  $
           1,092,584





               GAAP Gross Profit                                                                                                      $
              115,785                                                        $
              117,926                                                      $
             135,206                       $
          186,511    $
           555,428



              Amortization of acquired intangible assets                                                                      4,782                                           4,679                                                                       4,574                                         4,509              18,544



              Stock-based compensation                                                                                          341                                             347                                                                         347                                           372               1,407




               Non-GAAP Gross Profit                                                                                                  $
              120,908                                                        $
              122,952                                                      $
             140,127                       $
          191,392    $
           575,379




               Non-GAAP Gross Margin                                                                                 55.7
            %                                 54.3
            %                                                             53.0
            %                                49.8
           %     52.7
            %





               GAAP Operating Income                                                                                                   $
              25,405                                                         $
              13,355                                                       $
             37,275                        $
          29,787    $
           105,822



              Amortization of acquired intangible assets                                                                      5,055                                           4,948                                                                       4,837                                         4,769              19,609



              Stock-based compensation                                                                                        5,946                                           6,431                                                                       6,592                                         6,835              25,804



              Net merger, acquisition and divestiture                                                                         (141)                                            164                                                                                                                      115                 138
    (income) expense



              IP litigation expense, net                                                                                      2,571                                             759                                                                         187                                            39               3,556




               Non-GAAP Operating Income                                                                                               $
              38,836                                                         $
              25,657                                                       $
             48,891                        $
          41,545    $
           154,929




               Non-GAAP Operating Income Margin                                                                      17.9
            %                                 11.3
            %                                                             18.5
            %                                10.8
           %     14.2
            %





               GAAP Income Tax (Benefit) Expense                                                                                        $
              5,523                                                          $
              4,391                                                        $
             5,683                         $
          5,033     $
           20,630



              Tax effect of non-GAAP adjustments                                                                              3,340                                           2,830                                                                       2,835                                         2,849              11,854



              Other tax adjustments                                                                                             712                                         (2,440)                                                                      2,667                                         1,170               2,109




               Non-GAAP Income Tax Expense                                                                                              $
              9,575                                                          $
              4,781                                                       $
             11,185                         $
          9,052     $
           34,593






               GAAP Net Income                                                                                                         $
              20,401                                                         $
              10,471                                                       $
             31,929                        $
          25,191     $
           87,992



              Amortization of acquired intangible assets                                                                      5,055                                           4,948                                                                       4,837                                         4,769              19,609



              Stock-based compensation                                                                                        5,946                                           6,431                                                                       6,592                                         6,835              25,804



              Net merger, acquisition and divestiture                                                                         (141)                                            164                                                                                                                      115                 138
    (income) expense



              IP litigation expense, net                                                                                      2,571                                             759                                                                         187                                            39               3,556



              (Gain)/loss on strategic investments                                                                              281                                           (682)                                                                         26                                          (61)              (436)



              Income tax effect                                                                                             (4,052)                                          (390)                                                                    (5,502)                                      (4,019)           (13,963)




               Non-GAAP Net Income                                                                                                     $
              30,061                                                         $
              21,701                                                       $
             38,069                        $
          32,869    $
           122,700









                                                                                                                                                                                           
              iRobot Corporation


                                                                                                                                                            
             Supplemental Reconciliation of 2018 GAAP Actuals to 2018 Non-GAAP Actuals continued


                                                                                                                                                                                
              (in thousands, except per share amounts)


                                                                                                                                                                                               
              (unaudited)






                                                                                                                                                                
             For the three months ended                                                                            For the twelve
                                                                                                                                                                                                                                                                                 months ended



                                                                                                                           March 31,                       June 30,                              September 29,                                    December 29,      December 29,
                                                                                                                                2018                            2018                                        2018                                             2018               2018

                                                                                                                                                                                                                                                                             ---


               GAAP Net Income Per Diluted Share                                                                                         $
              0.71                                                           $
              0.37                                                         $
             1.12                          $
          0.88       $
           3.07



              Amortization of acquired intangible assets                                                                       0.17                                            0.17                                                                        0.17                                          0.17                0.69



              Stock-based compensation                                                                                         0.20                                            0.23                                                                        0.23                                          0.24                0.90



              Net merger, acquisition and divestiture                                                                             -
    (income) expense



              IP litigation expense, net                                                                                       0.09                                            0.03                                                                        0.01                                                             0.13



              (Gain)/loss on strategic investments                                                                             0.01                                          (0.02)                                                                                                                                     (0.02)



              Income tax effect                                                                                              (0.14)                                         (0.01)                                                                     (0.19)                                       (0.14)             (0.49)




               Non-GAAP Net Income Per Diluted Share                                                                                     $
              1.04                                                           $
              0.77                                                         $
             1.34                          $
          1.15       $
           4.28






              Number of shares used in diluted per share                                                                     28,923                                          28,337                                                                      28,506                                        28,579              28,640
    calculation





              Section 301 Tariff Costs



              Section 301 tariff costs                                                                                 
              $                                                              
              $                                                      
              $                                                   $
          2,155      $
           2,155



              Impact of Section 301 tariff costs to gross and                                                                     -              %                                              %                                                                %                                   (0.6)
                                                                                                                                                                                                                                                                                                          %    (0.2)
            %
    operating margin (GAAP & non-GAAP)



              Impact of Section 301 tariff costs to net                                                                
              $                                                              
              $                                                      
              $                                                  $
          (0.08)    $
           (0.08)
    income per diluted share (GAAP & non-
    GAAP)





              
                Certain numbers may not total due to rounding



              
                Net merger, acquisition and divestiture (income) expense and IP litigation, net are classified in General and Administrative


                  
               iRobot Corporation


          Supplemental Reconciliation of Fiscal Year 2020 GAAP to
                              Non-GAAP Guidance


                      
              (unaudited)






                                                                   FY-20




     GAAP Gross Profit                    
              $507 - $520 million


      Amortization of acquired
       intangible assets                                  ~$2 million


      Stock-based compensation                            ~$1 million




     Total adjustments                                   ~$3 million



     Non-GAAP Gross Profit                
              $510 - $523 million





                                                                   FY-20




     GAAP Operating Income                  
              $15 - $35 million


      Amortization of acquired
       intangible assets                                  ~$2 million


      Stock-based compensation                            ~$31 million


      IP litigation expense, net                          ~$7 million




     Total adjustments                                   ~$40 million


      Non-GAAP Operating Income              
              $55 - $75 million





      Section 301 tariff costs                        ~$47 -~$50 million


      Impact of Section 301 tariff
       costs to gross and operating
       income margin                              
               (~4%)




                                                                   FY-20



      GAAP Net Income Per Diluted Share          
              $0.55 - $1.15


      Amortization of acquired
       intangible assets                          
              ~$0.07


      Stock-based compensation                    
              ~$1.08


      IP litigation expense, net                  
              ~$0.24



     Income tax effect                          
              ~($0.24)



     Total adjustments                           
              ~$1.15



      Non-GAAP Net Income Per Diluted
       Share                                     
              $1.70 - $2.30





      Number of shares used in diluted
       per share calculations                            ~28.8 million

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SOURCE iRobot Corp.