IRobot 2014 Analyst Day Presentatio

8/20/2019 IRobot 2014 Analyst Day Presentatio

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Forward Looking Statements

Certain statements made in this presentation that are not based on historical information

are forward-looking statements which are made pursuant to the safe harbor provisions of

the Private Securities Litigation Reform Act of 1995. These statements are neither promises nor guarantees, but are subject to a variety of risks

and uncertainties, many of which are beyond our control, which could cause actual results

to differ materially from those contemplated in these forward-looking statements.

Investors are cautioned not to place undue reliance on these forward-looking statements,

which speak only as of the date hereof. iRobot Corporation undertakes no obligation to

update or revise the information contained in this presentation, whether as a result of newinformation, future events or circumstances or otherwise.

This presentation contains various 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, restructuring expenses, net

intellectual property litigation expenses and non-cash stock compensation expense. The

most directly comparable GAAP financial measures and a reconciliation of the differences

between the GAAP financial measures and the non-GAAP financial measures are posted on

the investor relations page of our web site at www.irobot.com.

For additional disclosure regarding these and other risks faced by iRobot Corporation, see

the disclosure contained in our public filings with the Securities

and Exchange Commission.5/7/2014 2


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Agenda• 9:30 – 10:00 Continental Breakfast

• 10:00 – 10:05 Welcome

• 10:05 – 10:20 Colin Angle, Chairman & CEO – iRobot Strategic Initiatives/ Business Unit Reviews

• 10:20 – 10:40 Paolo Pirjanian, PhD, Chief Technology Officer – Technology Strategy

• 10:40 – 10:55 Glen Weinstein, Chief Legal Officer – Intellectual Property

• 10:55 – 11:10 Q&A

• 11:10 – 11:20 Break

• 11:20 – 11:35 Christian Cerda, SVP & General Manager, Home Business Unit

•11:35 – 11:45 Alison Dean, EVP & Chief Financial Officer

• 11:45 – 12:00 Q&A

• 12:00 – 12:15 AVA 500 Demonstration – Youssef Saleh; Home Products – Matt Lloyd

• 12:15 – 2:00 Lunch

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iRobot Strategic InitiativesColin Angle

Chairman & CEO


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The Robot Company

24 Years of Empowering People To Do More

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1. Provide meaningful solutions to

important human needs.

2. Pioneer robotic technology delivering

greater ease and efficiency.

3. Be seen as a positive force for change

in the world.

The Robot Company

OUR MISSION: OUR VISION:

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Global Growth

• $7 billion annual market opportunity for vacuum cleaners, globally•(2013: NPD, GfK, Euromonitor)

• $14 billion annual market opportunity for global home maintenance

•(2013: NPD, GfK, Euromonitor)

• Top selling vacuum in Spain is a Roomba – above $200

•(2013: GfK and internal sales data)

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Cumulative


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A v a i l a b i l i t y

Supply

Creation Stage

Genesis

Commoditization StageScale

Explosion Stage

Brand/Offer

Product Differentiation

Mass Product

Scaling Robot Vacuuming

Roomba - beginning of the explosion stage

2014

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Defense & Security

• Expanding markets and opportunities in public safety and industry

• International revenue more than doubled from 2012 to 2013

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Remote Presence

Navigate & Interact In Complex Real World Environments

Video CollaborationAva 500

TelemedicineRP-VITA

Investing in long-term growth

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Unlocking the Potential

+ Stationary + Mobile + Navigating + Manipulating

Manufacturing

TeleOp Presence

V a l u e

Floor Care

Higher valueMore autonomous

More accessible

Cloud

Autonomous Patrol

Continuous Home Maintenance

Teleporting Remote Presence

Productizing Robot Capabilities

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Technology StrategyPaolo Pirjanian, PhD

EVP & Chief Technology Officer


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Technology Strategy

Navigation – near term focus

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Simultaneous Localization & Mapping (SLAM)

State of the art, high-end navigation today

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Visual SLAM (vSLAM)

• Next Generation Navigation: Camera-basedmapping yields both 3D key-points and

environmental layout

• Enables autonomous navigation: Uses

efficient algorithms for path planning, self-

docking, way-point navigation and efficientcoverage algorithms

• Consumer-grade pricing: World’s lowest cost

implementation use QVGA cameras, running

on an low-end video processor

• Scalable solution: Can scale to 3D dense

maps, large environments, outdoor areas and

more

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Visual SLAM

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From 2D Maps…

Connecting maps, users, and the Internet of Things

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Using Our Strengths in Navigation and Vision

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Combined with Low-cost Depth Sensors

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To Produce High Definition, 3D Maps

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IP Strategy and Patent PortfolioGlen Weinstein

EVP & Chief Legal Officer


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IP Strategy

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Sword

Encourage or force competitors todesign products that avoid

iRobot’s technology

and brand identity

Shield

Ensure freedom to operate

Openness

Embrace open source andinteroperability where

appropriate

Enforcement

Stress test patent assets whilepursuing business goals


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Patent Portfolio — Roomba

Reliability

& UX, 7

Platforms &

Cleaning, 18

Other, 5Navigation,

68

Tier 4

Tier 1

Tier 2

98 U.S. PatentsCovering Roomba Technology

188 International PatentsCovering Roomba Technology

Tier 3

58

29

28

61

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iRobot’s portfolio includes the

earliest filed patents on visual

SLAM (“vSLAM”), especially single

camera SLAM.

Cases descended from these early

matters are still being processed,

and iRobot continues to observe

the industry and tailor new “sword” and “shield” patents based on the market.

Additional patents and patent applications

cover improvements and innovations through

the intervening years to the present day.

We are of course adding new patents

and patent applications based on the

state of the art as it is developed.

Patent Portfolio – SLAM Navigation

6

vSLAM

15

Features &Landmarks

6

Non-ContactODOA

8

SIFT1

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f id i


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• Median litigation costs for a moderate-sized U.S. patent infringement suitis $2.5 million; median cost for a large suit is $5.0 million

• Source: AIPLA Report of the Economic Survey 2011Cost

• Depositions, document searches, etc.

• Median time to trial was 2.5 years in 2012

• Source: PWC 2013 Patent Litigation StudyDistraction

• Overall success rates for practicing entities is 34% ; overall consumer

product success rate is 35%• Source: PWC 2013 Patent Litigation Study (data from 1995-2012)Litigation Success Rate(Strength of Case)

• Can defendant add a counterclaim for infringement of its own patent?

• Might defendant be able to otherwise disrupt our business?Counterclaims

• Injunction? Damages/Royalties? Halo effect of strengthened portfolio?Initiation of business discussion? Force design change?

Achievable BusinessGoals

Patent Enforcement Considerations

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Patent Enforcement: 2013

Speed Cost

ExpertiseAvailability of

Injunctions

Injunctions &Damages

Available in theSame Court

Influence ofDecisions

No Stay of Ruling

Pending ValidityDetermination

Cost Recovery

(Loser Pays)

Source: Managing Intellectual Property (Sept. 2010)

• Brought two patent enforcement actionsin Germany in the second half of 2013.

• Infringement of 5 patents against a

reseller of Chinese goods.

• Infringement of 4 patents against

manufacturer of imported robots.

• Received a preliminary injunction against

Chinese manufacturer in August 2013 on

all four patents from court in Dusseldorf,

Germany.

• Additional Customs enforcement in

Germany, Netherlands & Spain.

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Q&A


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Christian Cerda SVP & GM Home Business Unit

Home Business Unit


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HBU Strategy

Robot Performance

Brand Strength

• THE Robot Company

• Premium position

• 360 to consumer

• Core performance• Automation of task

• User experience & connectivity

• Quality

Brand Preference

Product Leadership

Portfolio

Expansion

Supported by a winning team and effective go-to-market strategy

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HBU Product Introductions

2011 2012 2013 2014

Roomba

700 Series

Roomba

800 Series

Roomba

600 Series

Mirra 530

Scooba 450

Looj 330

Braava 300 series

Scooba 390

Mint 4200/5200

Scooba 230

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Aeroforce extractors improve cleaning by

up to 50% with virtually no maintenance

needed

Exceeding expectations on those selected

retail outlets where launched

R880 top selling SKU in its category on

Amazon NA with~ 5 star rating

#1 SKU – iRobot eCommerce, since launch

Rolling out progressively at retail in NA,

EMEA, Japan

Roomba 800 Launch Success

“The rubber rollers on the bottom have beenthe biggest difference. Our old vacuum had thebristled roller on the bottom and wouldn't even

rotate it was so tangled in hair. Now, hair isn't aproblem.”

“I had a Roomba many years ago when they firstcame out. That Roomba was a novelty. ThisRoomba is a masterpiece.”

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Scooba 450 Launch Success

New 3 cycle cleaning process removes up to

99.3% of common household bacteria

Much improved product robustness, quality and

usability

Scooba available on e-commerce sites as well as

being rolled-out on select retailers across NA

and EMEA

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Huge Addressable Markets


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Huge Addressable Markets

Source: Vacuum Cleaners >$200 USD, 2013 retail prices (based on NPD, GfK, Euromonitor, iRobot internal data)

14% 6%

80%

EMEA - $2.5 billion

iRobot

Other Robots

12%

4%

84%

APAC - $2.2 billion

iRobot

Other Robots

14%

4%

82%

North America - $2.2 billion

iRobot

Other Robots

$7 billion annual market opportunity

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14.6%15.7% 18.1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012 2013

Robotic Vacuum $ as % of

total $ Vacuum Market**

Robotic Vacuum Market

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

2011 2012 2013

M i l l i o n s

Robotic Vacuum $ Spent*

Source: *GfK, NPD, iRobot data –2013

**Vacuum cleaners >$200/robotic vacuum revenues

Strong growth continues in robotic vacuum cleaning market

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Robotic Vacuum Global $ Market Share

Source: 2013 NPD, GfK, iRobot internal data, Robotic Vacuum Cleaners >$200 retail prices

83%

12%

6%

North America

iRobot

Neato

Others

62%16%

8%

2% 13%

EMEA

iRobot

Samsung

LG

Neato

Others

67%

15%

5%

4%

1% 1%

7%

APAC

iRobot

Sharp

Ecovacs

Toshiba

LG

Philips

Others

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Competitors with Steady Cadence of Launches


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Competitors with Steady Cadence of Launches

2011 2012 2013 2014

Samsung Navibot S

LG Home-Bot Square

Neato Signature Pro

Sharp Cocorobo V90

Roomba

700 Series

Ecovacs Deepoo 900 (not yet shipping)

Roomba

800 Series

Maintaining global market leadership position

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China Go-To-Market Strategy

• Entered Chinese market in 2011; will exit 2014 with 500 POS

• Only market where robotic vacuum cleaners were being sold pre-iRobot; category

familiarization

• 2013 revenues < $10 million; expected to grow materially in 2014

• Annual robotic vacuum cleaner market in China grew 33% in 2013 to ~ $100

million*

• China could become iRobot’s largest non-U.S. market

* GfK 2013

Controlled growth strategy in large and growing market

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Takeaways

• Robust product pipeline will support market-leading position in the face of

increasing global competition

• Successfully integrating consumer-driven technology innovation around

cleaning efficacy and ease of use; premium branded products

• Focused on profitable growth through new products, controlled retail

expansion, and prudent investment in the brand and consumer touch

points

• Optimistic about capturing our slice of the growing global robotic vacuum

cleaner market

Home Robots will drive iRobot growth and profitability – next couple of years

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CFO PerspectiveAlison Dean

EVP & Chief Financial Officer

A year of significant progress


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A year of significant progressContinued Cash GenerationFinancial Growth

Business Momentum Recognized Technology Leader

* Midpoint of expectations provided April 22, 2014

• Strong OCF; cash near record high levels

• Robotics ecosystem expansion

• Investment/acquisition opportunities increase

• Renewed/doubled share repurchase program

• Braava introduced to international markets

• Successfully executed 2 major product transitions

• Significant technology advancements

• New RPBU platform – AVA 500 – B2B sales model

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• The Economist – Robots offer a unique insight into what people want from technology

• Fast Company– iRobot #1 most innovative in robotics

• Bloomberg Brink – Forefront of Robotics – iRobot’s grand patriarch of robotics scene

• CNN – Make, create, innovate series – iRobot as a pioneer inthe field

$M (except EPS)2013 2014*

Revenue $487 $565

YoY Growth % 11.7% 15.9%

GM% 45.4% 45.0%

Opex % 38.7% 36.0%

Adjusted EBITDA Margin 12.8% 13.5%

EPS $0.94 $1.08

Technology Leaders Peers


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Technology Leaders - Peers• No direct public peers

• Why are peers important?

1. Externally – informs others about iRobot• Investors / Analysts

• Industry Classification Agencies

• Employees

2. Internally – informs us about• Valuation

• Compensation

• Financial Targets

Peer group analysis is important; identifying peers is challenging.

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iRobot’s View of Relevant Peer Characteristics


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iRobot s View of Relevant Peer Characteristics

• Disruptive technologies

• Products with high IP content / wide moat

• Hardware and software solutions

• Global brand

• Market leader• > $250M - $3B in revenue and revenue growth rate of 10 – 25%

• GM: 40 – 50%

Constantly evolving – An art not a science

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A Selection of iRobot Defined Peers


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A Selection of iRobot Defined Peers

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Trimble Navigation Designs and distributes positioning products and applications enabled by GPS tech

3D Systems Corp Manufactures and markets 3D printers and print materials for professionals and consumers

Garmin Portable GPS enables navigation devices for automotive, outdoor, fitness, marine, aviation markets

Polycom Video, voice and content management/sharing

Synaptics Develops human interface touch based solutions for consumer electronics (smartphones, tablets, touchscreen apps, and GPS)

AeroVironment Design and production of unmanned aircraft systems

Stratasys Designs desktop 3D printers for idea and design development

Dolby Labs Content creation and playback technologies for entertainment industry

Hologic Diagnostic, medical imaging systems and surgical products for women

FLIR Systems Designs and manufactures thermal imaging systems for variety of applications worldwide

Investment Framework


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Strategic Alignment

Does the opportunity support or advanceour strategic vision?

How similar is this business to our existing

businesses?

Can we leverage our current resources or

technologies?

Market Attractiveness

Size of addressable market

Estimated growth of market

Profitability of market

Barriers to entry

Competitive Strength

Expertise in relevant technologies

Brand strength in addressable market

Familiarity with customer / channels

Manufacturing / Operational efficiencies?

Investment Timing

Is the opportunity near or long term?

Significant one-time investment or multiple

years of sustained investments?

Timing of cash outflows and inflows

Invest to pursue defined strategy

Investment Framework

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Internal R&D Prioritization Framework


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Cloud

Products – 75-80%

Roomba

Braava

AVA 500 ?

Technologies – 20-25%

Core Emerging FutureNavigation Manipulation

Internal R&D Prioritization Framework

RP-VITAPackBot

FirstLook

Scooba

Other

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iRobot

R&D

Focused investment

2014 Results and Expectations


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Q1 exceeded expectations; Reaffirmed 2014 expectations

2014 Results and Expectations

* Expectations provided April 22, 2014

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$M (except EPS) Q1-14 Q2-14* FY 2014*

Revenue 114 138 - 145 560 - 570

YoY Growth % 8% 6% - 11% 15% - 17%

EPS 0.18 0.15 - 0.25 1.00 - 1.15

Adjusted EBITDA 14 13 - 17 74 - 78

Financial Targets - 2016


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487

565

12.8%13.5%

FY'13 FY'14* FY'15 FY'16

Revenue Revenue CAGR (Mid-High Teens) Adjusted EBITDA Margin (%) (High Teens)

2014 expectations: Strong next step in progressing toward targets

Financial Targets - 2016

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$M

* Expectations provided April 22, 2014

Takeaways


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• Strong financial performance – revenue growth and profitability

• Home Robots key driver

•Strong balance sheet allows for acquisitions and stock repurchase

• Focused investment drive strategy

• Tracking well to long term (2016) targets.

Takeaways

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Q&A


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Thank You

IRobot 2014 Analyst Day Presentatio

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