One of the robotics industry’s household brands continues to struggle. iRobot, maker of the popular Roomba robot vacuum, is laying off another 105 employees as part of its restructuring plans. The number of employees being let go represents 16% of iRobot’s global workforce as of September 28, 2024. Since the start of 2024, iRobot has reduced its global workforce by nearly 50%.
There are several reasons iRobot, which has sold more than 50 million robots worldwide, is struggling. One of the main reasons is the failed acquisition from Amazon, which was called off earlier in 2024. Amazon wanted to acquire iRobot for $1.7 billion, but the deal was ultimately called off because regulators said the deal would restrict competition. Amazon paid iRobot $94 million to terminate the deal.
Competition is another major reason for iRobot’s current situation. In the last decade-plus, a host of strong competitors have popped up around the world with robot vacuums that are often cheaper than the Roomba and offer similar performance.
Another reason is the failure to find the next robotics innovation beyond the robot vacuum. iRobot launched the Roomba in 2002, but has since shelved robots for lawn mowing, pool cleaning, gutter cleaning, and more. iRobot released a handheld vacuum in 2021 but already discontinued it. The air purifiers iRobot acquired in the $72 million purchase of Aeris Cleantec AG in 2021 have also been discontinued. iRobot sold off its military division in 2016 for $45 million.
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iRobot Q3 2024 earnings
Gary Cohen, named CEO of iRobot in May 2024, talked about the layoffs during iRobot’s third quarter earnings call today. He said iRobot has reduced operating expenses by $95.2 million in the first 9 months of 2024.
“These moves, while challenging, have fundamentally changed the way we work with our partners to efficiently develop and build our robots,” Cohen said. “Our new operating model is able to deliver a significant increase in new product introductions with less than half the internal resources and approximately one-third the cost.”
He pointed to iRobot’s Q3 Non-GAAP operating expenses of $47.7 million, which is down from $90.1 million in Q3 2023. “For the first three quarters of the year, we have cut our operating losses in half as compared to the year before,” Cohen said. “However, our overall results did not meet the expectations we set in August as persistent market segment and competitive headwinds impacted our sell through performance.”
iRobot’s revenue mix in Q3 2024. | Credit: iRobot
iRobot made $193.4 million in revenue during Q3 2024, up from $186.2 million in Q3 of 2023. During Q2 2024, iRobot’s revenue increased 23% in the U.S., declined 20% in Japan, and declined 11% in EMEA. iRobot said its performance in Japan reflected “continued weakness in the yen against the dollar.”
iRobot said it expects revenue between $175 million to $200 million in Q4 2024 and gross margin in the range of 24% to 27%, up from 18.9% in Q4 2023. Operating loss is expected to be in the range of $31 million to $22 million.
The company now expects total 2024 revenue to be in the range of $685 million to $710 million and gross margin in the range of 25% to 26%. It is targeting full-year operating expenses in the range of $274 million to $276 million or approximately 39% to 40% of revenue. You can view iRobot’s third quarter financial presentation here.
iRobot made a record $1.56 billion in 2021.
Julie Zeiler, iRobot’s chief financial officer, said the company is cautious about the macroeconomic environment. She added that iRobot expects “to return to year-over-year top-line growth for the full-year of 2025 and we believe the second half of 2025 will be stronger than the first half as our product lineup ramps up.”
“As we begin this new chapter in iRobot’s history, one thing is abundantly clear,” Cohen said during the earnings call. “We have a powerful brand that will serve as the foundation for the turnaround of this company. Which should come as no surprise that in my conversations with stakeholders, it is the power of our iconic brand that comes up again and again. That brand power is at the heart of our turnaround strategy, iRobot Elevate.
“In executing iRobot Elevate, we are focused on providing our iconic brand with an improved platform to return to profitable growth. We are making operational and organizational changes and bringing new innovative products to market. While this work is ongoing, we are already realizing benefits and our improved financial performance.”
iRobot needs to be more innovative. My car drives me to work, while I feel like a passenger. In the same day, my Roomba will get stuck under my lazy boy. I don’t get why they haven’t completely overhauled the software to make it powered by their own AI, if they don’t have one, MANY are open source.
Did your Roomba cost as much as your car?