By Lisa Chai, Senior Research Analyst, Robo Global
iRobot Paves the Way for Smarter Homes
iRobot is the world’s leading consumer robot company and a bellwether member of the ROBO Global Robotics & Automation Index. Founded in 1990 by MIT roboticists, iRobot pioneered the smart home robot category with the introduction of its Roomba robot vacuum in 2002.
Since then, the company has sold more than 20 million robots—a phenomenal success that drove remarkable shareholder returns. In the ten years prior to 2017, iRobot’s Nasdaq-listed stock returned a total 351% to shareholders, compared with 135% for the S&P 500. In the past two years, it returned a total 126%, compared with 36% for the S&P 500.
ROBO Global attended iRobot’s investor event last month, where Chairman, CEO and Founder Colin Angle and his team spent the day outlining the company’s market potential and near-term strategy with product demos and investor-focused presentations.
We also had the opportunity to learn more about the company’s new marketing initiative and distribution strategy with Jennifer Lichtenheim, iRobot’s Vice President of Sales of Americas, and Christian Cerda, iRobot’s Chief Operating Officer. We returned from the event with greater conviction in iRobot’s technology differentiation, market leadership, and future growth potential.
Technology innovation is driving new revenue
For more than a decade, iRobot has been at the forefront of technology, single-handedly creating the fast-growing category of Robotic Vacuum Cleaners (RVC). At the crossroads of some of the most powerful trends in robotics, automation and AI, the company’s Roombas are used in more than 20 million homes worldwide. And yet global household penetration remains in the single digits.
As consumer sentiment toward RVCs continues to trend positive, iRobot expects to cross the billion-dollar revenue threshold in 2018. Current projections are $1.05 to $1.08 billion in revenue, which is year-over-year growth of 19% to 22%, operating income of $86 to $96 million, and EPS of $2.10 to $2.35.
Much more than a simple vacuum, the Roomba exemplifies the ‘smart home’ in action. In 2016, iRobot made the strategic choice to divest its military business and focus fully on its fast-growing consumer robotics business. As a result, the company was able to significantly increase investments in advanced mapping, UI features, and other proprietary technologies for the connected home. iRobot focuses on behavior-based AI systems developed to meet multiple market segments with its Roomba (vacuum cleaners), Braava (wet floor cleaners) and Mirra (pool care robots) products.
These investments have delivered impressive results. iRobot’s revolutionary patented vSLAM (virtual simultaneous localization and mapping) technology was introduced in 2015. vSLAM allows iRobot’s flagship Roomba vacuums to create real-time maps of the home; sense its surroundings and the amount of dirt on the floor to determine what areas require the most cleaning; learn and dynamically adjust to changes; and even beam up this complex data into the Cloud.
Last year, iRobot made the Roomba even smarter by adding software connectivity to AI assistants such as Google’s Assistant and Amazon’s Alexa. We expect vSlam to be fully implemented across the company’s product suite by 2019. iRobot’s key technology differentiation is its continued investment in software development to deliver product reliability and connectivity, as well as advanced AI capabilities that make Roomba a highly reliable household tool.
Continued growth is rooted in category leadership
In 2018, iRobot achieved record growth while maintaining unambiguous global product and brand leadership in the RVC category. The company’s track record of profitable growth is impressive, with compounded average revenue growth of 15% in the past five years, including 34% growth in 2017.