iRobot (IRBT) Loss Narrows Sales Beat

Key Points

• iRobot reported a narrower-than-expected non-GAAP loss for Q2 2025 and GAAP revenue exceeded analyst forecasts for Q2 2025.

• Gross margin (GAAP) expanded sharply year over year in Q2 2025, primarily due to the absence of a one-time manufacturing transition charge that affected the prior-year period.

• Liquidity and cash flow remain a concern, with ongoing strategic review and no forward guidance issued.

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iRobot (NASDAQ:IRBT), the robotics company known for its Roomba robotic vacuum cleaners and home-cleaning devices, reported its second quarter 2025 results on August 7, 2025. The company reported a non-GAAP loss per share of $0.27 for Q2 FY2025, significantly better than the analyst estimate of a $1.12 non-GAAP loss. GAAP revenue was $127.6 million for Q2 FY2025, also above the $125.0 million GAAP consensus estimate. The quarter showed marked improvement in both GAAP and non-GAAP gross margin and operating loss compared to the prior year and the company's cash position continued to weaken, with cash and cash equivalents falling from $69.9 million as of March 29, 2025, to $40.6 million as of June 28, 2025. The quarter's results beat expectations, with non-GAAP EPS of -0.27 and GAAP revenue of $127.6 million, both exceeding analyst estimates, but liquidity risks and persistent cash burn remain, and management did not provide forward guidance, reflecting ongoing uncertainty.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

About iRobot: Focus and Business Model

iRobot designs and sells robotic home-cleaning products, including robotic vacuum cleaners, mops, and related accessories. The company's Roomba robot vacuums have defined its brand and are a staple in the consumer electronics market.

The business centers on continual product innovation, supply chain efficiency, strong consumer branding, and cost discipline. In recent years, iRobot focused on expanding its product lineup, optimizing costs through headcount reductions, and strengthening its supply chain via an asset-light manufacturing model. Key measures of success have included innovation in robotics, operational efficiency, and the ability to adapt to changing consumer demand and global market pressures.

Quarter in Detail: Revenue, Margins, and Operations

The quarter brought better-than-expected results on both non-GAAP earnings and GAAP revenue. GAAP revenue for Q2 2025 was $127.6 million, representing a 23.3% decline compared to the prior year on a GAAP basis. This drop followed pronounced weakness in the U.S. market, where GAAP revenue declined to $56.4 million from $84.4 million in Q2 2024, a 33% decrease. Europe, the Middle East, and Africa (EMEA) revenue slid 17%, while Japan provided a rare bright spot, growing 6% to $29.4 million.

iRobot's gross margin improved notably, rising to 30.2% on a non-GAAP basis in Q2 FY2025, compared to 16.7% in Q2 FY2024. This rebound reflects improved cost discipline and the cycling of $18.4 million in one-time manufacturing transition costs that had weighed on Q2 FY2024 results. Cost control was evident, with non-GAAP operating expenses dropping to $65.5 million from $75.9 million in Q2 2024. The company reduced its headcount to 509 employees as of June 28, 2025, down from 726 a year earlier. Non-GAAP operating loss narrowed to $27.0 million in Q2 2025, nearly halving from $48.2 million in Q2 2024.

Sales trends highlighted price and product-mix pressures. The average selling price per robot declined from $330 in Q2 2024 to $301 in Q2 2025. The share of robots sold at mid-range and premium price points (those priced at $300 and above) dropped to 73% from 76%. Total robot units shipped declined to 516,000 in Q2 2025 from 574,000 in Q2 2024, indicating weaker volume and lower pricing. Inventory fell 13% to $88.2 million as of Q2 2025, while GAAP days in inventory rose from 67 in Q2 2024 to 90 in Q2 2025, underscoring slower product turnover.

On the product front, the company launched the Roomba Max 705 Combo Robot + AutoWash Dock, a combination vacuum and mop robot, in July 2025. During the annual Amazon Prime Day sales event held July 8-11, iRobot secured the top three bestseller spots among robot vacuum cleaners, suggesting ongoing consumer interest. Despite heavy discounting in promotions, the company reinforced its Roomba brand through new marketing campaigns launched in June.

The period saw persistent liquidity concerns. Cash and equivalents (GAAP) fell to $40.6 million as of June 28, 2025, from $69.9 million at the prior quarter-end and $134.3 million at FY2024 year-end. With $203 million of term loan debt outstanding and $36.0 million held as restricted cash to secure future debt payments as of Q2 2025, iRobot’s operational flexibility remains limited. Net cash used in operating activities (GAAP) totaled $56.6 million for the first half of FY2025, and shareholder equity (GAAP) slipped into a deficit of negative $7.7 million as of Q2 FY2025. The company remains in active negotiations with its lenders, and a debt covenant waiver was extended to September 19, 2025. iRobot does not currently pay a dividend.

Looking Ahead: Outlook and Strategic Uncertainty

Management did not provide forward financial guidance for the coming quarter or the full year. The company suspended its usual practice of offering projections and canceled its earnings call due to an ongoing strategic review. The review includes consideration of a potential sale, strategic transaction, or debt refinancing, with no announced timetable for completion.

For investors, the main focus in the quarters ahead will be on iRobot's cash position, execution of new product strategies, revenue stability in key markets such as the U.S. and Europe, and the outcome of the formal strategic review. Ongoing liquidity management, operational performance, and recovery of demand in its core categories remain critical watch areas in light of persistent losses and negative equity.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool recommends iRobot. The Motley Fool has a disclosure policy.