iRobot Corporation ( IRBT Quick Quote IRBT - Free Report) reported mixed results for second-quarter 2021. Its earnings lagged estimates by 6.9%, while sales beat the same by 2.87%. The company’s adjusted earnings in the reported quarter were 27 cents per share, lagging the Zacks Consensus Estimate of 29 cents. The bottom line declined 74.5% from the year-ago figure of $1.06. The results suffered from supply-chain disruptions, which offset gains derived from top-line growth. Tariff costs related to Section 301 adversely impacted earnings by 40 cents in the quarter as against a positive contribution of 23 cents in the year-ago quarter. Revenue Details
The company generated revenues of $365.6 million in the reported quarter, surpassing the Zacks Consensus Estimate of $355 million. On a year-over-year basis, quarterly revenues increased 30.6%, driven by a healthy product demand.
Sales generated from the e-commerce platform (representing 66% of the reported quarter’s revenues) increased 20% year over year. Notably, the e-commerce platform includes online sources of retailers, the company’s app and website, and e-commerce websites. Direct sales to consumers expanded 36% year over year to $45 million and represented 12.3% of the quarter’s revenues. Total product units of 1,314 thousand shipped in the quarter reflected a year-over-year increase of 25.9%, while average selling prices grew 5.9%. For vacuum products, revenues of $323 million reflected growth of 28.7% from the year-ago quarter. Units shipped were 1,146 thousand, up 23.2% from the year-ago quarter. Revenues from mopping products increased 48.3% to $43 million. Units shipped were 168 thousand, up from 114 thousand recorded in the second quarter of 2020. On a geographical basis, the company sourced 53.8% of revenues from domestic operations, the rest came from the international arena. Domestic revenues totaled $196.8 million, reflecting a 40.4% increase from the year-ago quarter. International revenues grew 20.8% to $168.8 million. International operations gained from a 7% revenue increase in Japan and a 29% rise in EMEA sales. The North America business gained from healthy demand for premium and mid-tier robots for floor cleaning from retailers. The business in EMEA benefited from solid demand from distribution and retail partners. Margin Profile
In the quarter under review, iRobot’s non-GAAP costs of revenues increased 61% year over year to $226.1 million, representing 61.9% of revenues compared with 50.2% in the year-ago quarter. Non-GAAP gross profit of $139.5 million was stable on a year-over-year basis, while adjusted gross margin decreased 1160 basis points to 38.2%.
Research and development expenses were $38.7 million, up 5.8% year over year. This accounted for 10.6% of revenues compared with 13.1% in the year-ago quarter. Selling and marketing expenses increased 56.3% to $76.7 million. As a percentage of revenues, it reflected 21% in the reported quarter compared with 17.5% in the prior-year quarter. General and administrative expenses were $26.5 million, up 21.1% year over year. The figure mirrored 7.2% of the total revenue base compared with 7.8% in the year-earlier quarter. In the quarter under review, the company recorded adjusted operating earnings of $9 million, down 77.9% from the year-ago quarter. Adjusted operating margin was 2.4% versus 14.5% in the year-ago quarter. Tariff costs related to Section 301 totaled $11.6 million in the reported quarter, as against ($6.6) million in the year-ago quarter. Its impact on gross and operating margin was (3.2%) versus 2.4% in the year-ago quarter. Balance Sheet and Cash Flow
Exiting second-quarter 2021, iRobot had cash and cash equivalents of $415.8 million, decreasing 17% from $500.8 million recorded at the end of first-quarter 2021. Total long-term liabilities were $69.8 million, down 0.3% sequentially.
In the first six months of 2021, the company generated net cash of $1.8 million from its operating activities, down 993.6% from the year-ago period. Capital used for purchasing property and equipment totaled $21.9 million, increasing 15.6% year over year. In the first half of the year, the company repurchased shares worth $50 million. Outlook
For 2021, iRobot decreased its revenues expectation to $1.55-$1.62 billion from $1.67-$1.71 billion mentioned earlier. It also noted that revenues in the second half of 2021 will decline 1-8% from the year-ago period. Third-quarter revenues are predicted to increase in low-single digits.
Non-GAAP gross profit is expected to be $612-$645 million, lower than $645-$675 million stated previously. Non-GAAP operating income is expected to be $80-$110 million, down from $110-$120 million mentioned previously. Exclusion from tariff-related costs of Section 301 will be a relief in the second half of the year, while costs related to the tighter availability of semiconductor chips add to the concerns. The company lowered its non-GAAP earnings projection to $2.25-$3.15 per share from the previously mentioned $3.00-$3.25. iRobot plans to repurchase shares worth $100 million under an accelerated share repurchase agreement. The execution of the plan is expected next month.