iRobot Corporation ( IRBT Quick Quote IRBT - Free Report) reported impressive results for the fourth quarter of 2020, with earnings beating estimates by 320%. Also, the company’s sales exceeded estimates by 12.3%. Its adjusted earnings were 84 cents per share in the quarter, surpassing the Zacks Consensus Estimate of 20 cents. Also, the bottom line increased 21.7% from the year-ago figure of 69 cents, driven by healthy sales growth. Lower margin ailed in the quarter. For 2020, the company’s adjusted earnings were $4.14 per share, surpassing the Zacks Consensus Estimate of $3.51. Also, its bottom line increased 14.4% from the year-ago figure of $3.62. Revenue Details
The company generated revenues of $544.8 million in the quarter, surpassing the Zacks Consensus Estimate of $485 million. On a year-over-year basis, quarterly revenues increased 27.7%, driven by healthy demand for products.
Sales generated from the e-commerce platform (representing 60% of the quarter’s revenues) increased 70% year over year. Notably, the e-commerce platform includes online sources of retailers, the company’s app and website, and e-commerce websites. In addition, direct sales to consumers expanded 117% year over year and represented 12.5% of the quarter’s revenues. Revenues derived from premium robots — products having $500 or more as list price — expanded 55% year over year in the quarter. Total product units of 2,193 thousand shipped in the quarter reflected a year-over-year increase of 14.9%, while average selling prices grew by 3.2%. For vacuum products, revenues of $484 million reflected growth of 24.7% from the year-ago quarter. Units shipped were 1,952 thousand, up 12.8% from the year-ago quarter. Further, revenues from mopping products increased 56.4% to $39 million. Units shipped were 241 thousand, up from 179 thousand recorded in the fourth quarter of 2019. On a geographical basis, the company sourced 58.1% of revenues from domestic operations, the rest came from the international arena. Domestic revenues totaled $316.3 million, reflecting a 28% increase from the year-ago quarter. International revenues grew 27.2% to $228.6 million. International operations gained from a 39% revenue increase in Japan and a 26% rise in EMEA sales. For 2020, the company’s revenues totaled $1.43 billion, increasing 17.8% from the previous year. Also, the top line surpassed the Zacks Consensus Estimate of $1.37 billion. Margin Profile
In the quarter under review, iRobot’s non-GAAP costs of revenues increased 27.8% year over year to $325.3 million, representing 59.7% of revenues compared with 59.7% in the year-ago quarter. Non-GAAP gross profit in the quarter grew 27.5% year over year to $219.5 million, while adjusted gross margin remained flat year over year at 40.3%.
Research and development expenses were $44.7 million, up 20% year over year. This accounted for 8.2% of revenues compared with 8.7% in the year-ago quarter. Selling and marketing expenses increased 37.5% to $129.3 million. As a percentage of revenues, it reflected 23.7% in the quarter compared with 22% in the prior-year quarter. General and administrative expenses were $25.9 million, up 21.8% year over year. The figure mirrored 4.7% of the total revenue base compared with 5% in the year-earlier quarter. In the quarter, the company recorded adjusted operating earnings of $30.4 million, reflecting an increase of 12.8% from the year-ago quarter. Adjusted operating margin was 5.6%, lower than 6.3% in the year-ago quarter. Balance Sheet and Cash Flow
Exiting fourth-quarter 2020, iRobot had cash and cash equivalents of $432.6 million, increasing 45.6% from $297.2 million recorded at the end of fourth-quarter 2019. Total long-term liabilities were $77.7 million, up 11.2% sequentially from $69.9 million.
In 2020, the company generated net cash of $232.1 million from its operating activities, higher than $130.1 million recorded in 2019. Capital used for purchasing property and equipment totaled $31.6 million in 2020, down 10.6% year over year. In 2020, the company repurchased 0.7 million shares for $25 million consideration. Notably, no shares were repurchased in the second, third and fourth quarters of this year. Outlook
iRobot anticipates revenues of $1.635-$1.675 billion for 2021, suggesting a year-over-year increase of 14-17%.
Non-GAAP gross profit is expected to be $665-$695 million and non-GAAP operating income is expected to be $110-$120 million. Tariff-related headwinds are expected to be $41-$43 million, while sales and marketing spending are predicted to increase $20 million. Non-GAAP earnings per share are likely to be $3.00-$3.25 per share.