iRobot launched the new, cheaper app-enabled Roomba 960 this quarter. Image source: iRobot Corporation.
What happened
Shares of iRobot Corporation (IRBT +0.00%) were up 12% as of 1:00 p.m. EDT after the robotics specialist announced stronger-than-expected third-quarter 2016 results.
So what
Quarterly revenue increased 17.4% year over year, to $168.6 million, and translated to 52.5% growth in net income to $19.4 million. Thanks to share repurchases over the past year, net income per diluted share increased 66.7% year over year, to $0.70. Adjusted earnings before interest, taxes, depreciation, and amortization also increased 37.1%, to $35.5 million.
By comparison, three months ago iRobot told investors to expect third-quarter revenue of $155 million to $160 million, adjusted EBITDA of $25 million to $28 million, and earnings per share of $0.40 to $0.45.
iRobot's top line was driven by 23% growth in consumer revenue, boosted by strength in the Asia-Pacific region, where the company enjoyed a "very successful" launch of its new Braava jet floor mopping robot this quarter. Meanwhile, domestic revenue increased 13% year over year in the third quarter, thanks in part to the launch of the new app-controlled Roomba 960, which, at $699, offers a more affordable option relative to its already popular high-end Roomba 980 at $899. Investors should also keep in mind that last year's third quarter included results from iRobot's defense and security business, which was sold earlier this year.
Now what
To be fair, management also noted that this quarter's outperformance was partly driven by a new Chinese partner's request for third-quarter delivery of Braava jet and Roomba orders that were previously expected to ship in the fourth quarter.
But even then, iRobot's overall results were more than strong enough to merit another increase to its full-year guidance. iRobot now anticipates full-year revenue of $650 million to $655 million (up from $640 million to $645 million previously), adjusted EBITDA of $88 million to $92 million (up from $85 million to $90 million previously), net income of $38 million to $41 million (up from $36 million to $40 million previously), and net income per share of $1.36 to $1.44 (up from $1.26 to $1.40 previously).
Finally, for the current quarter, iRobot expects revenue of $202 million to $207 million, adjusted EBITDA of $22 million to $26 million, net income of $10 million to $13 million, and earnings per share of $0.36 to $0.44.
In the end, this is a fairly straightforward beat-and-raise scenario, and there's nothing not to like about these solid results as iRobot validates its decision to focus on the fast-growing home robotics industry. As a result, it's no surprise to see shares of iRobot trading significantly higher today.
