iRobot Reports 23.4% Revenue Decline and Implements Restructuring Plan

iRobot Corporation reported a significant decline in its financial performance for the fiscal year ended December 28, 2024, with total revenue falling to $681.8 million, a decrease of 23.4% from $890.6 million in the previous fiscal year. The decline was attributed to lower orders from retailers and distributors, driven by a decrease in consumer sentiment and spending. Domestic revenue decreased by $95.8 million, or 22.4%, while international revenue fell by $112.9 million, or 24.4%. The company also experienced a reduction in the number of robots shipped, which decreased by 18.8%, and a 5.6% drop in average selling prices, reflecting a shift in product mix as new products were introduced.

In response to these challenges, iRobot implemented a comprehensive operational restructuring plan aimed at aligning its cost structure with revenue expectations. This included a workforce reduction of approximately 440 employees, representing 40% of its global workforce, and a total reduction of $126.4 million in operating expenses compared to the previous year. The company ended the fiscal year with 541 employees, down from 1,113 at the end of fiscal 2023. The restructuring efforts also involved exiting several smaller offices and scaling back marketing expenditures, which contributed to a total operating loss of $103 million, a significant improvement from the $264.1 million loss reported in fiscal 2023.

Strategically, iRobot introduced its "Elevate" turnaround strategy, which focuses on five key elements: financial stability, consumer insights, innovation, cost optimization, and talent development. The company plans to launch a suite of new floor cleaning robots in March 2025, featuring advanced technology and improved design, which it expects will enhance its competitiveness in the market. The new product lineup is anticipated to be margin-accretive, supporting revenue growth and improved profitability moving forward.

As of December 28, 2024, iRobot's cash and cash equivalents totaled $134.3 million, down from $185.1 million a year earlier. The company also reported an outstanding term loan of $200.6 million, which matures on July 24, 2026. In light of its financial challenges, iRobot's board of directors initiated a strategic review process to explore potential sales or refinancing options. The company has expressed substantial doubt about its ability to continue as a going concern, as indicated in its auditor's report, which highlights the need for successful execution of its new product launches and overall business strategy to stabilize its financial position.

Looking ahead, iRobot aims to leverage its new product launches and a streamlined cost structure to drive revenue growth and improve cash flow from operations in fiscal 2025. However, the company acknowledges that its future performance is contingent on various factors, including consumer demand, competitive pressures, and macroeconomic conditions.