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iRobot Corporation (IRBT)
Q2 2011 Earnings Call
July 27, 2011 08:30 AM ET
Elise Caffrey – IR
Colin Angle – Chairman and CEO
John Leahy – CFO
Jim McIlree – Merriman
Alex Hamilton – Early Bird Capital
Josephine Millward – Benchmark Capital
Adam Fleck – Morningstar
Jim Ricchiuti – Needham & Company
Brian Ruttenbur – Morgan, Keegan
Previous Statements by IRBT
» iRobot's CEO Discusses Q1 2011 - Earnings Call Transcript
» iRobot CEO Discusses Q4 2010 Results - Earnings Call Transcript
» iRobot CEO discusses Q3 2010 Results - Earnings Call Transcript
» iRobot Corporation Q2 2010 Earnings Call Transcript
Thank you and good morning. Before I introduce the iRobot management team, I would like to note that statements made on today’s call that are not based on historical information are forward-looking statements made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties and involve a number factors that could cause actual results to differ materially from those expressed or implied by such statements. Additional information on these risks and uncertainties can be found in our public filings with the Securities and Exchange Commission. iRobot undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information or circumstances or otherwise.
During this conference call, we will also discuss non-GAAP financial measures as defined by SEC Regulation G, including adjusted EBITDA, which we define as Earnings Before Interest, Taxes, Depreciation, Amortization, merger and acquisition expenses and non-cash stock compensation expense. A reconciliation of GAAP and non-GAAP metrics can be found in the financial tables at the end of Q2 2011 earnings press release issued last evening, which is available on our website.
On today’s call, iRobot Chairman & CEO Colin Angle will provide a review of the company’s operations and achievements for the second quarter 2011 as well as our outlook for the business for the rest of 2011; and John Leahy, Chief Financial Officer, will review our financial results for the second quarter and provide our outlook for financial expectations for the third quarter ending October 1, 2011. Then we’ll open the call for questions.
At this point I’ll turn the call over to Colin Angle.
Good morning, and thank you for joining us. Our second quarter results exceeded our expectations for both divisions and reflect a positive trend in domestic consumer spending for our home robot products. Revenue was $108 million for the quarter, up 11% from Q2 2010; EPS of $0.29 was up $0.09 year over year, and adjusted EBITDA of $16 million, or 15% of revenue, grew 30% from Q2 last year.
Following strong performance by both divisions in the second quarter and our expectations for continuing profitable growth, we are increasing our full year 2011 expectations. We expect full year 2011 revenue of between $460 million and $470 million, an increase of roughly 16% over 2010; EPS in the range of $1.04 to $1.10; and adjusted EBITDA of $62 million to $64 million, an improvement of almost 30% year over year.
Home robot’s revenue increase was driven by higher sales in our domestic business, both retail and web-based, as well as growth internationally, particularly in Asian markets. Our Government & Industrial division’s revenue exceeded our expectations for the quarter in part because we received some orders during the quarter which we had anticipated in Q3. Overall G&I revenue was down slightly from last year due to delayed approval of the government’s DoD budget.
On the home front, domestic revenues increased 30% in Q2 year over year following a 12% year-over-year increase in Q1. These back to back quarterly increases are a positive indication that the U.S. consumer is beginning to spend again. However, we remain cautious about expectations for the holiday season given the uncertain economic environment.
In 2010 we executed a strategy focused on creating the right mix of products and channels in the domestic market which would enable us to improve our margins. We are now positioned to take advantage of improving domestic consumer demand and will continue to generate profitable growth.
We have been a technology company since our founding 21 years ago, but as the markets for our products mature, customer demand for increasingly sophisticated product features enabled by more advanced technology has grown significantly, which in turn makes our technology more valuable.
At this year’s Analyst Day in May we talked about our mission, to lead the world in providing remote presence and automated home maintenance solutions supported by technical leadership in three areas; autonomy, manipulation and platforms. To extend our leadership position, we’ve leveraged the mobile computing industry and gaming industry’s advances and become much more focused on the key robot specific technologies – autonomy, manipulation, and platforms, where we can be sustained world leaders. That has been a very significant shift and positive move for the company, improving our competitive positioning, long term value creation and better meeting the needs of our customers.
In early May, I was out at Google, attending its developer conference, where I had the privilege of addressing 2,500 Android developers and informing them that as Android developers, they were now also robot developers. Using our prototype Ava robot, we demonstrated our technology showing how our platforms can support a tablet running Android. Our AWARE 2 software houses the autonomy, navigation, and motor control, and makes it possible to integrate third-party developed technology onto iRobot platforms.