A month has gone by since the last earnings report for iRobot (IRBT). Shares have added about 24.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is iRobot due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
iRobot reported third-quarter 2024 adjusted earnings of 3 cents per share, surpassing the Zacks Consensus Estimate of a loss of 5 cents per share. The reported figure compares favorably with the year-ago quarter’s net loss of $2.82 per share.
iRobot generated revenues of $193.4 million, which missed the Zacks Consensus Estimate of $218 million. On a year-over-year basis, revenues increased 3.9% due to an increase in sales of two-in-one products.
Sales derived from premium and mid-tier robots accounted for 79% of IRBT’s total robot revenues, lower than 80% in the year-ago quarter.
Total product units of 732 thousand were shipped, reflecting a year-over-year increase of 16.8%, while average selling prices declined 5.4%.
For solo and other products, revenues of $83 million reflected a decline of 34.1% year over year. Units shipped were 287 thousand, down 35.7% year over year.
Revenues from two-in-one products increased 83.3% year over year to $110 million. Units shipped were 445 thousand, up from 181 thousand in the year-ago quarter.
On a regional basis, iRobot sourced 54.4% of revenues from domestic operations, while the rest came from the international arena. Domestic revenues totaled $105.1 million, reflecting a 22.6% increase on a year-over-year basis. International revenues decreased 12.1% year over year to $88.3 million.
The cost of revenues decreased 5.2% year over year to $131.1 million. Adjusted gross profit was $62.8 million, up 27% year over year, while the adjusted gross margin increased 590 basis points to 32.4%.
Research and development expenses were $19.6 million, down 47.4% year over year. Selling and marketing expenses declined 29.6% on a year-over-year basis to $29.3 million.
IRBT recorded an adjusted operating income of $15.1 million against $40.6 million loss in the year-ago period. The adjusted operating margin was 7.8 % against (21.8%) in the year-ago quarter.
While exiting the third quarter, iRobot had cash and cash equivalents of $99.4 million compared with $185.1 million at the end of fourth-quarter 2023. Total long-term liabilities were $227.1 million compared with $250.1 million at fourth-quarter 2023-end.
In the first nine months of 2024, the company used net cash of $30.5 million from operating activities compared with $113.6 million in the prior-year period. Capital used for purchasing property and equipment declined 96.2% on a year-over-year basis to $118 million.
For the fourth quarter, the company expects net sales to be in the range of $175–$200 million.
The adjusted gross margin is estimated to be in the band of 24–27%. Management projects adjusted loss per share to be in the band of $1.2-$1.5 per share.
For 2024, management forecasts net sales to be in the range of $685–$710 million compared with $765-$800 million predicted earlier.
The adjusted gross margin is envisioned to be in the band of 25-26%. Management projects adjusted loss per share to be in the band of $4.91–$4.60 compared with a loss of $3.31–$3.77 per share expected earlier.
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -659.09% due to these changes.
Currently, iRobot has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise iRobot has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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