By Gene Munster and Austin Bohlig of Loup Ventures

• iRobot reported a phenomenal Jun-18 quarter with results exceeding Street expectations across the board. The stock is currently up 15% on the results.
• These results further demonstrate iRobot’s dominance in the home robotics space.
• Following another quarter of higher than expected growth and an improved forward outlook, we continue to believe investors’ competition concerns are overblown.
• We are further convinced iRobot’s momentum will continue as robotics adoption within the home accelerates in the years to come.

Jun-18 quarter summary.

iRobot reported Jun-18 revenues of $226M, which is up 23% y/y. Growth was driven by the company’s Roomba 900 and 600 series, in both international and domestic markets. Specifically, Roomba and Braava revenues were both up 22% y/y. iRobot highlighted growth in Japan and EMEA markets was favorable in the quarter, up 51% and 31%, respectively. Given current demand trends and the modestly improved outlook in EMEA, iRobot increased CY18 revenue and EPS guidance.

Where is the competition?

Following a 6th consecutive quarter of 20%+ y/y growth, we remain convinced investor concerns around competition continue to be overblown, and the company has established an untouched niche in the high-end robovac category. We believe iRobot’s leadership was shown by the company’s results on Amazon Prime Day, which sold out and doubled Prime Day sales volume once again y/y. The Roomba 671 was ranked #1 in robotic vacuum cleaners, #1 in all floor care and #3 in all home & kitchen for the U.S. Prime Day event.

Expect the party to continue!

We continue to believe the domestic robot market is one of the fastest growing robotic categories and see iRobot as a clear leader. With the company expecting to release two new products in the Sep-18 quarter, we see these as additional catalysts to further support the company’s momentum worldwide. That said, we do want to highlight that concerns around future tariffs were discussed on the call, and iRobot’s current outlook does not factor in these costs. If tariffs do go into effect, demand could be impacted near-term, but longer term, our thesis remains intact. Following these results, the company’s current momentum, and management’s consistently above-expectations results, we are increasing our 2018 revenue outlook from $1.07B to $1.09B, as well as increasing EPS from $2.28 to $2.50. Link to model here.

Disclaimer: We actively write about the themes in which we invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

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