It has been about a month since the last earnings report for iRobot (IRBT Quick QuoteIRBT - Free Report) . Shares have added about 2.4% 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 the most recent earnings report in order to get a better handle on the important drivers.

iRobot Beats on Q1 Earnings, Ups Revenue Projection

iRobot reported better-than-expected results for first-quarter 2021. Its earnings surpassed estimates by 583.33%, whereas sales beat the same by 15.94%.

Its adjusted earnings were 41 cents per share in the quarter, surpassing the Zacks Consensus Estimate of 6 cents. Also, the bottom line improved from a loss of 32 cents recorded in the year-ago quarter on the back of healthy sales generation and improvement in operating margin.

Revenue Details

The company generated revenues of $303.3 million in the quarter, surpassing the Zacks Consensus Estimate of $262 million. On a year-over-year basis, quarterly revenues increased 57.5%, driven by healthy demand for products.

Sales generated from the e-commerce platform (representing 56% of the quarter’s revenues) increased 90% 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 146% year over year to $35 million and represented 11.5% of the quarter’s revenues.

Total product units of 1,088 thousand shipped in the quarter reflected a year-over-year increase of 50.9%, while average selling prices grew 1.3%. For vacuum products, revenues of $270 million reflected growth of 58.8% from the year-ago quarter. Units shipped were 971 thousand, up 55.4% from the year-ago quarter. Further, revenues from mopping products increased 43.5% to $33 million. Units shipped were 117 thousand, up from 96 thousand recorded in the first quarter of 2020.

On a geographical basis, the company sourced 37.8% of revenues from domestic operations, the rest came from the international arena. Domestic revenues totaled $114.8 million, reflecting a 40% increase from the year-ago quarter. International revenues grew 70.5% to $188.5 million. International operations gained from a 53% revenue increase in Japan and a 74% rise in EMEA sales.

Margin Profile

In the quarter under review, iRobot’s non-GAAP costs of revenues increased 58% year over year to $179.7 million, representing 59.3% of revenues compared with 59.1% in the year-ago quarter. Non-GAAP gross profit in the quarter grew 56.8% year over year to $123.5 million, while adjusted gross margin decreased 20 basis points to 40.7%.

Research and development expenses were $41.9 million, up 14% year over year. This accounted for 13.8% of revenues compared with 19.1% in the year-ago quarter. Selling and marketing expenses increased 39.3% to $51 million. As a percentage of revenues, it reflected 16.8% in the quarter compared with 19% in the prior-year quarter. General and administrative expenses were $23.4 million, down 4.6% year over year. The figure mirrored 7.7% of the total revenue base compared with 12.8% in the year-earlier quarter.

In the quarter, the company recorded adjusted operating earnings of $15 million as compared with an operating loss of $14.4 million in the year-ago quarter. Adjusted operating margin was 4.6%, higher than (7.5%) in the year-ago quarter.

Notably, tariff costs related to Section 301 totaled $3.4 million in the quarter, down from $6.6 million in the year-ago quarter. Its impact on gross and operating margin was an adverse 1.1% versus 3.4% in the year-ago quarter.

Balance Sheet and Cash Flow

Exiting first-quarter 2021, iRobot had cash and cash equivalents of $500.8 million, increasing 15.7% from $432.6 million recorded at the end of first-quarter 2020. Total long-term liabilities were $70 million, down 9.9% sequentially.

In the reported quarter, the company generated net cash of $28.7 million from its operating activities, down 29.6% from the year-ago quarter. Capital used for purchasing property and equipment totaled $11.3 million, increasing 54.2% year over year.

In the quarter under review, the company refrained from repurchasing its shares.

Outlook

For 2021, iRobot increased its revenues expectation to $1.67-$1.71 billion from $1.635-$1.675 billion mentioned earlier.

Non-GAAP gross profit is expected to be $645-$675 million (versus $665-$695 million stated previously) and non-GAAP operating income is expected to be $110-$120 million (maintained). The company expects freight, raw material and transportation costs to inflate in the year. Costs related to the tighter availability of semiconductors will also add to the concerns.

The company reiterated its non-GAAP earnings projection at $3.00-$3.25 per share.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 90.48% due to these changes.

VGM Scores

Currently, iRobot has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, iRobot has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.