What happened

Shares of iRobot Corporation (NASDAQ:IRBT) were down 11.9% as of 11:30 a.m. EST Thursday after the consumer robotics specialist announced stronger-than-expected fourth-quarter 2016 results, but followed with mixed 2017 guidance.

So what

Though iRobot's results don't look impressive on the surface, it effectively crushed its own outlook. Quarterly revenue climbed 3% year over year, to $212.5 million, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) declined 18.3%, to $28.6 million. That translated to a 29% decline in net income, to $13.7 million, and a 24.6% decline in net income per share, to $0.49.

The Roomba 960 on a white carpet inside a house.

iRobot's Roomba 960. Image source: iRobot Corporation.

But keep in mind last year's fourth-quarter results included $31 million in revenue, and $0.23 per share in earnings from iRobot's since divested defense and security business, as well as a $0.06-per-share gain on the the sale of investments. And iRobot's financial guidance called for significantly lower fourth-quarter revenue of $202 million to $207 million, net income per share of $0.36 to $0.44, and adjusted EBITDA of $22 million to $26 million.

Within iRobot's top line, consumer robot revenue jumped 21.1% year over year, including a 47% jump in domestic home robot sales on strong demand for high-end Roombas and investments in ad media and national promotions. To be fair, international revenue fell 3%, albeit primarily as iRobot recorded a $5 million revenue reduction as it created a "small reserve for pricing adjustments, recognizing the need to respond to rapidly changing market conditions in some of our overseas markets."

"Our Q4 and full-year 2016 results exceeded our increased expectations," elaborated iRobot's founder and CEO, Colin Angle. "Record Q4 revenue was driven by very strong sales in the United States despite having the highest number of competitors we've ever seen."

Now what

iRobot also told investors to expect full-year 2017 revenue of $770 million to $785 million. That represents growth of 17% to 19% over 2016, and notably includes $20 million to $25 million in incremental revenue from the company's impending acquisition of its Japanese distributor. 2017 earnings per share should be in the range of $1.35 to $1.65, including a one-time negative impact of $0.25 to $0.35 per share from the acquisition.

By comparison, analysts' consensus estimates called for lower 2017 revenue of $762.5 million, and earnings near the high end of iRobot's anticipated range. But it also appears those figures weren't incorporating the effects of the acquisition -- the exclusion of which would have made iRobot fall slightly short (relative to expectations) on the top line, while coming out well ahead of consensus estimates for earnings -- that is, assuming iRobot doesn't extend its long streak of under-promising and over-delivering this year.

All things considered, this was another great quarter from iRobot -- the market is wrong to bid shares down on Thursday.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.