iRobot Crushes Expectations and Makes an Acquisition
iRobot Corporation (NASDAQ: IRBT) announced stellar second-quarter 2017 results on Tuesday after the market closed, driven by strength in both the U.S. and Europe. iRobot also boosted its full-year guidance, and announced a compelling acquisition to increase its international presence.
With shares of the home robotics specialist up more than 20% in after-hours trading as of this writing, let's have a closer look at what iRobot had to say.
iRobot results: The raw numbers
| Metric | Q2 2017 |
Q2 2016 |
Year-Over-Year Growth |
|---|---|---|---|
| Sales |
$183.1 million |
$148.7 million |
23.1% |
| Net income |
$7.9 million |
$4.8 million |
64.2% |
| Earnings per share |
$0.27 |
$0.17 |
58.8% |
What happened with iRobot this quarter?
- These results included a discrete tax benefit of $0.15 per share due to new accounting standards related to stock-based compensation adopted at the beginning of this year. Even excluding that benefit, however, iRobot significantly exceeded investors' expectations for a quarterly loss of $0.28 per share.
- Adjusted earnings before interest, taxes, depreciation, and amortization increased 3.9% year over year to $16.5 million.
- U.S. consumer revenue increased 46.4% year over year, to $97.3 million, helped by Amazon Prime Day volume more than doubling from last year's second quarter. iRobot's Roomba 652 was Amazon's No. 1-ranked floor care product on Prime Day, and stood No. 2 in the overall home and kitchen category.
- International consumer revenue rose 5.2% year over year to $85.8 million.
- iRobot launched its high-end Roomba 900-series robots in China during the quarter, and simultaneously introduced its lower-priced Roomba 890 and Roomba 690 Wi-Fi connected vacuuming robots in the U.S., EMEA, and China.
- Keeping in mind iRobot only just closed on the acquisition of its Japanese distributor last quarter, iRobot announced in a separate release on Wednesday that it has agreed to acquire its largest European distributor, Robopolis, for $141 million in cash. This purchase is expected to close in October 2017, and will extend iRobot's direct presence into Germany, Spain, France, Belgium, Austria, the Netherlands, and Portugal. Robopolis is expected to generate incremental revenue of roughly $25 million to $35 million in 2017 for iRobot, and will be dilutive to 2017 earnings to the tune of $0.45 per share to $0.30 per share. The business should begin to positively contribute to earnings in 2018.
- Robopolis is expected to generate incremental revenue of roughly $25 million to $35 million in 2017 for iRobot, and will be dilutive to 2017 earnings to the tune of $0.45 per share to $0.30 per share. The business should begin to positively contribute to earnings in 2018.
What management had to say
iRobot also increased its full-year guidance with the expectation that revenue in the U.S. and EMEA regions will increase roughly 30% and in the high-teens range, respectively (more on the specific numbers below). In turn, this will allow the company to bolster its research and development efforts and accelerate its new product road map.
iRobot chairman and CEO Colin Angle elaborated:
Looking forward
More specifically, including the aforementioned impact of Robopolis on the top and bottom lines, iRobot now anticipates full-year revenue of $840 million to $860 million (up from previous guidance for $780 million to $790 million) and earnings per share of $1.35 to $1.70 (down from $1.45 to $1.70 previously). Make no mistake: Even excluding the acquisition, iRobot's revenue and earnings guidance both represent significant increases from its prior ranges.
In the end, considering iRobot is taking advantage of its relative outperformance this quarter to further extend its industry leadership and launch new products, there's nothing not to like about this fantastic showing. And it's no surprise that iRobot stock is trading at a fresh all-time high right now.
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Steve Symington owns shares of iRobot. The Motley Fool owns shares of and recommends Amazon and iRobot. The Motley Fool has a disclosure policy.