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Why Is iRobot (IRBT) Down 4.7% Since Last Earnings Report?

A month has gone by since the last earnings report for iRobot (IRBT). Shares have lost about 4.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is iRobot due for a breakout? 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 catalysts.

iRobot Reports Q2 Net Loss, Revenues Down 7.4% Y/Y

iRobot reported second-quarter 2023 adjusted loss of $1.42 per share. The quarterly loss compares unfavorably with the year-ago quarter’s number.

Revenue Details

iRobot generated revenues of $236.6 million in the reported quarter, beating the Zacks Consensus Estimate of $224 million. On a year-over-year basis, revenues decreased 7.4% due to lower orders and increased pricing competition.

Sales derived from premium and mid-tier robots accounted for 84% of IRBT’s total robot revenues, higher than 83% in the year-ago quarter.

Sales generated from the e-commerce platform (representing 71% of the reported quarter’s revenues) increased 6% year over year. The e-commerce platform includes online sources of retailers, IRBT’s app and website, as well as e-commerce websites. Direct sales to consumers were up 1% year over year to $40 million.

Total product units of 831 thousand shipped in the quarter reflected a year-over-year decrease of 3.9%, while average selling prices increased 4.8%. For vacuum products, revenues of $222 million reflected a decline of 1.3% from the year-ago quarter. Units shipped were 776 thousand, up 1.3% from the prior-year quarter. Revenues from mopping products decreased 50% to $15 million. Units shipped were 55 thousand, down from 99 thousand recorded in the year-ago quarter.

On a regional basis, iRobot sourced 55.4% of revenues from domestic operations and the rest came from the international arena. Domestic revenues totaled $131 million, reflecting a 6% decline from the year-ago quarter. International revenues declined 8.9% to $105.6 million.

Margin Profile

In the quarter under review, iRobot’s cost of revenues increased 5% to $183.1 million. Adjusted gross profit was $54.9 million, down 33.8% year over year, while the adjusted gross margin decreased 930 basis points to 23.2%.

Research and development expenses were $38 million, down 9.5% year over year. Selling and marketing expenses decreased 27% to $55.5 million. General and administrative expenses were $31 million, up 17.2% year over year.

In the second quarter, iRobot recorded an adjusted operating loss of $50.5 million, compared with the adjusted operating loss of $53.3 million in the year-ago period. The adjusted operating margin was (21.3%) versus (20.9%) in the year-ago quarter.

Balance Sheet and Cash Flow

While exiting second-quarter 2023, iRobot had cash and cash equivalents of $58 million, compared with $117.9 million recorded at the end of fourth-quarter 2022. Total long-term liabilities were $52 million, compared with $63.5 million recorded at the end of fourth-quarter 2022.

In the first six months of 2023, iRobot used net cash of $58.1 million for operating activities, compared with net cash of $186.5 million used in the prior-year period. Capital used for purchasing property and equipment totaled $2.5 million, decreasing 48.6%.

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How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

Currently, iRobot has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

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

Outlook

iRobot has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

iRobot belongs to the Zacks Industrial Automation and Robotics industry. Another stock from the same industry, Rockwell Automation (ROK), has gained 2.2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.

Rockwell Automation reported revenues of $2.24 billion in the last reported quarter, representing a year-over-year change of +13.7%. EPS of $3.01 for the same period compares with $2.66 a year ago.

For the current quarter, Rockwell Automation is expected to post earnings of $3.49 per share, indicating a change of +14.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +1% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Rockwell Automation. Also, the stock has a VGM Score of F.

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iRobot Corporation (IRBT) : Free Stock Analysis Report

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