On this episode of Industry Focus: Technology, Dylan Lewis is joined by Fool.com contributor Danny Vena to discuss the potential for strong results at iRobot (IRBT +0.00%) after robotic vacuums "cleaned up" at Amazon.com (AMZN 0.21%) over the holidays.
A full transcript follows the video.
This video was recorded on Jan. 12, 2018.
Dylan Lewis: The next company we're going to talk about is iRobot, and this is a business that we haven't really talked about before, so it's probably worth giving a quick rundown on what they do and sell, Danny.
Danny Vena: iRobot is the No. 1 selling robotic vacuum cleaner. Basically, it's a small disk-shaped device that you put on the floor, you press play, and it navigates about your house vacuuming as it goes.
Lewis: Yeah. And it seems very futuristic. Frankly, it is futuristic. It's a very cool thing to see in action, see this robot move about your house, pick up lint and crumbs and all that stuff. iRobot did not get name-checked in Amazon's press released, but from Amazon's press release, we have, robot vacuums were among the best-selling home items on Amazon.com over the holiday season. They are, frankly, the de facto robot vacuum cleaner provider, right, Danny?
Vena: Absolutely. In fact, I like to play connect-the-dots a little bit. If you go back again to Amazon Prime Day in July, in that press release, one of the models of the Roomba, which is the iRobot vacuum, that device was the top-selling household item, if I remember correctly, for Amazon Prime Day. So when they called out robotic vacuums, and iRobot is the de facto leader, you can draw a straight line from there to iRobot -- probably did significant business on Amazon during the holiday quarter.
Lewis: And this is kind of consistent with what we've heard from management at iRobot talking about 2017 being a step change for them in adoption of robotic vacuum cleaners. It seems like for them, this is a big growth year, and one where they see adoption really increasing. We look at this being a particularly strong seller in the holiday season, and I do think this is something that's a pretty good sign for iRobot as a business. You look at how they're composed right now, it's the most important segments for the company right now. I think vacuums make up about 80% of their shipment and something like 90% of their revenue.
Vena: Absolutely. It's important to note, if you go back, iRobot also used to play in the defense sector, and they were creating robots for the military to do things like look into buildings, or things that would help out bomb squads, stuff like that, that's what they were trying to get into. And that didn't work out so well. They divested that part of the business in the last couple of years. Now, they're strictly focusing on the consumer market. And you're right, it's more than 80% of their business, these robotic vacuums. They also have a similar device called the Scooba that's good for mopping your kitchen floor.
Lewis: And I believe they also have a small pool cleaner segment as well. But unlike, maybe, the next business we're going to talk about, this is a company where strong sales of the device probably indicate pretty good results for the business, because iRobot's results are so tied to the sales of their Roomba and vacuum cleaner products.
