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| Statement |
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| With the operational restructuring plan we announced last month, we anticipate a significant improvement in our cash flow from operations compared with the reported cash outflow from operations of $114.8 million for full year 2023 |
| And as we work through that, we expect to see an improvement in performance, particularly internationally, in the back half of the year |
| We anticipate that our 2024 gross margin will improve significantly to between 32% and 34% |
| We are committed to significant gross margin improvement |
| At our foundation is a product that customers love and an incredible team of builders and innovators who are passionate about the robots we create, and because of this, our potential is great |
| The management team and Board are confident in our ability to build on our legacy of innovation as a standalone company and to navigate this period successfully |
| We anticipate that the Q1 '24 gross margin will show slight improvement from Q1 last year, but we expect sequential improvement every quarter from 2023, with stronger gross margin expansion in the second half as more significant cost savings improvements move through the P&L and we compare against annualized pricing adjustments |
| As Glen mentioned, we expect that the combination of our cost of goods sold productivity initiatives and a reduction in one-time costs related to action taken in 2023 to reduce our elevated inventory level from fiscal 2022 will fuel this margin expansion |
| Why don't I take that? So, as Glen laid out in quite a bit of detail, we have programs well underway to drive solid improvements as we go through 2024 in our gross margin |
| Glen Weinstein On the OpEx, so first of all, what we have explained is our year-over-year improvements and we think our exit rates will be better than just looking at the year-over-year amount |
| We are confident in our ability to build on our legacy of innovation as a standalone company and to navigate this period successfully |
| We expect our gross margin will further benefit from our transformation to a more complete joint development manufacturer model, ongoing D2C expansion, and a relentless effort to achieve greater scale and efficiency across our operations |
| These dynamics underpin our expectation for material improvement in our bottom-line performance and put us on a path toward profitability |
| We expect to see the benefits of these improvements in the P&L, primarily in the second half of the year as the higher-cost products are moved out of inventory, and we benefit from new products released during the year that have lower costs than the products that they will have replaced |
| We anticipate a significant improvement in our 2024 cash flow from operations compared with full year 2023, and anticipate generating modest positive cash flow from operations in both the third and fourth quarter of 2024 |
| As we launch new products that come with a lower cost base and bring those into the market, we expect that we will see improvements in gross margins |
| We had another strong quarter of working capital efficiency |
| We expect that our success in 2024 will create a foundation that will deliver value for our shareholders, our employees, and our customers |
| I am pleased with the progress we have made in managing our key working capital levers throughout 2023 |
| And then, finally, there are things like ongoing cost improvements on existing products, as well as taking advantage as compared to prior year of improved transportation rates that finally will drive the last big piece of those cost improvements |
| This shift, along with competitive bidding of our design packages, is a key component in unlocking an approximately 9.5 and 11.5 percentage point improvement in full year 2024 gross margin |
| As noted, we expect to show slight improvement in Q1 over the same period of prior year, but sequential improvement every quarter as we go through 2024 |
| Additionally, we continue to enhance our go-to-market playbook, which focuses the business on iRobot's most profitable customers, geographies and channels, including our growing direct-to-consumer channel, while rebalancing our spending mix between price promotion and demand generation to optimize returns |
| Coupled with the restructuring actions we announced, we believe our second half 2024 performance will serve as a springboard for our -- driving our future |
| And that underpins as well our outlook in the second half |
| Accessory revenue in the fourth quarter grew 18% over the prior year and represented approximately 7% of total revenue |
| Jeff is fully empowered to make not only these necessary changes, but to scour our cost structure and look for opportunities for savings and efficiency improvements |
| Our immediate priorities in executing this plan are to more closely align our cost structure with near-term revenue expectations, improve liquidity and drive bottom-line improvements |
| Specifically, the plan is structured to: first, achieve gross margin improvements through a focus on design to value and removal of unnecessary costs and more attractive terms with our manufacturing partners; second, reduce R&D expenses by relocating certain non-core engineering functions, including increasing reliance on third-parties to provide those functions and pausing work unrelated to our core floorcare business; third, centralize our global marketing activities to be more efficient in demand generation and provide a meaningful reduction in non-working marketing and agency fees; and fourth, streamline our legal entity and real-estate footprint to fit our current business needs and near-term revenue expectations |
| Excluding the net proceeds from the $94 million breakup fee from Amazon, we expect cash flow from operations in Q1 and Q2, and we expect to generate positive cash flow from operations in both Q3 and Q4 |
| Statement |
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| Our performance was disappointing across all regions, driven by demand gaps and higher promotional and pricing support |
| iRobot's fourth quarter 2023 revenue declined 14% to $308 million |
| Our gross margin of 19% in Q4 declined 5 percentage points from the prior year |
| Our performance continues to be impacted by sluggish consumer spending as well as aggressive competition in all regions |
| Our fourth quarter D2C sales declined 9% versus prior year with flat growth in North America offset by declines in EMEA and Japan |
| The overall market conditions continued to be challenging and we continue to see increased competition in EMEA, Japan, and the U.S |
| International revenue declined by 19%, with EMEA decreasing by 11%, and Japan declining by 21% |
| We anticipate a full year operating margin of approximately negative 5% to negative 7%, with an operating loss in the first half and an operating profit in the second half of 2024 |
| For the full year, revenue declined to $891 million, with an operating loss of 22% and a net loss per share of $7.73 |
| From a full year perspective, 2023 revenue declined 25% to $891 million |
| 2023 gross margin of 22.5% declined 7 percentage points from 2022 |
| Our Q4 operating loss was $45 million |
| In Q4 '23, cash flow from operations was negative $1.2 million |
| We anticipate that over 60% of our full year revenue will come in the second half of the year with an expected first half revenue decline of high teens to low 20%s range |
| Julie, if you could just again walk us through why the first half is weak, I guess, the second half trends that you're seeing in margins and, obviously, all the cost initiatives? But can you walk us through why you think the first half should be so much weaker than the last year? And my understanding was as well, if I'm going back to my notes, that there was orders that had shifted into for prime again into the back half of the year |
| We anticipate 2024 revenue will decline modestly in the range of 3% to 7% to $825 million to $865 million |
| Geographically, in the fourth quarter, EMEA declined 5%, Japan declined 19%, and the U.S |
| Our 2023 operating loss of $199 million was 22% of revenue |
| Overall, our 2024 revenue outlook assumes a modest decline in unit volume for robots and stable robot ASPs |
| We recorded 2023 non-operating expense of $13 million, and a net loss per share of $7.73 |
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