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TheStreet Open House

iRobot CEO Sees Strong Overseas Growth as Revenue Worries Investors

Stocks in this article: IRBT

NEW YORK (TheStreet) -- iRobot (IRBT) shares closed down over 7% a day after the announcement of the company's second quarter results on Tuesday.

The Bedford, Mass.-based company reported quarterly earnings of 28 cents a share, in line with analysts' expectations and flat with the year-ago period. The robotic technology company reported revenue of $139.8 million, below the $142.5 million analysts polled by Thomson Reuters were expecting but an increase over $130.4 million for the same period last year. The company's revenue guidance for the coming quarter was also below analysts' expectations.

Shares closed Wednesday down 7.5% at $35.90.

The company's robotic vacuum cleaner, Roomba, has been a popular product internationally this quarter, driving the company's international revenue growth of 19% for its Home Robot operations. Domestic growth was 7%, fueling a 15% year-over-year increase in revenue for its Home Robot business.

"What we've seen internationally is a strong reversal from last year in Europe. We're seeing growth in Europe primarily driven by our Roomba category, our robot vacuum cleaners. With China, our expansion into China, actually leading and driving much of that growth-- driven by Roomba and the launch of our [Roomba] 800 series robot," said iRobot CEO Colin Angle in a phone interview with TheStreet.


The company reported a decrease in revenue for its Defense and Security business at $45 million, $5 million lower than the company's original expectation for the year. iRobot said it had a backlog totaling $21 million in its Defense and Security unit.

"The highlights on defense this quarter had a lot to do with bringing more contracts in and building our backlog and our pipeline, giving us strong confidence in hitting our $45 million revenue target for the year."

The most notable Defense and Security international contact for iRobot this year, according to Angle was the tech company's contract with Brazil where the company's technology was used for the 2014 FIFA World Cup. Angle said iRobot is looking to expand internationally with its defense and security business.

"One of the goals for our defense and security is diversifying our customer base beyond just the U.S. Department of Defense but also expanding internationally and to local police forces and we were successful in bringing in a large number of orders." said Angle.

Angle reported that this quarter saw the first even split in orders between domestic and international buyers for its defense and security and is looking to expand the business over the next year.

Angle said an emerging business opportunity for iRobot is the company's developments in health care with RP-VITATM, the first FDA-cleared telemedicine robot.

"Our original primary use was diagnosing stroke and we're seeing more excitement around the robot to do sophisticated diagnoses where a hospital would see intensive care related needs or specialists on a very frequent basis. The robot is proving its ability to allow remote doctors to operate successfully in an intensive care unit which is a new and exciting growth opportunity," said Angle.

Looking ahead to the quarter ending in September, iRobot said it expects non-GAAP earnings to be between 32 and 35 cents a share, with revenue expected to be between $133 million and $136 million. Analysts surveyed by Thomson Reuters expect the company to earn 33 cents a share on $141 million in sales.

-- Written by Kathryn Mykleseth in New York

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