The pioneer of sweeping robots, new CEO takes office

Failed acquisition, layoff crisis, ready to go

In the field of sweeping robots , iRobot, which was born out of the Artificial Intelligence Laboratory of the Massachusetts Institute of Technology in 1990, is the "pioneer". Since the launch of the first Roomba sweeping robot in 2002, it has sold more than 50 million robots worldwide and is a veritable industry leader.

However, recently, this pioneer in sweeping robots is facing unprecedented challenges and turning points.

In August 2022, iRobot reached a $17 billion acquisition agreement with Amazon. However, the deal has been investigated by the EU antitrust department since it was announced. The EU believes that Amazon's acquisition of iRobot may limit the latter's competitiveness in the market and lead to an imbalance in the industry ecosystem. Therefore, under the increasingly stringent antitrust regulatory situation, this acquisition is considered anti-competitive.

Previously, the EU had vetoed several mergers and acquisitions, including Microsoft's acquisition of game company Activision Blizzard and Qualcomm's acquisition of chip design company Arm. Amazon's acquisition of iRobot also fell through at the beginning of the year, and it paid iRobot a "breakup fee" of $94 million.

Shortly after the transaction was terminated, iRobot officially announced the layoff of 350 employees (about 1/3 of the total number of employees), abandoned the lawn mowing robot that had been shelved for more than 20 years, and started a "survival battle royale". Even the founder Colin Angle was "fallen", and iRobot's executive vice president and chief legal officer Glen Weinstein served as interim CEO.

New CEO confirmed

Recently, PR Newswire announced that Gary Cohen will serve as the new CEO of iRobot, and iRobot also reprinted this news on its official website.

It is worth noting that the new CEO Cohen is not a traditional robot or technology expert, so for iRobot, Cohen’s joining will undoubtedly bring both opportunities and challenges.

On the one hand, this senior management talent has helped companies achieve successful transformation many times. His outstanding capabilities in product innovation, brand building, global distribution and operational efficiency coincide with iRobot's current development needs. On the other hand, iRobot is in a very difficult period, and it remains to be seen whether the new official can revive the company.

Cohen needs to maintain the company's core strengths while decisively cutting off past shortcomings and finding new growth drivers for iRobot. Previously, Cohen successfully led the automotive parts company Qualitor Automotive to turn losses into profits, achieving a nearly 100% increase in sales and profits.

In addition to Qualitor Automotive, Cohen also performed very well at Timex. As the former CEO, he led a multi-brand business worth $800 million, managed a global team of 5,000 employees, and actively promoted product innovation and marketing reform. Earlier in his career, he held leadership positions at Energizer, Playtex, and Gillette, and had a deep understanding of the transformation and construction of large consumer companies.

This means that Cohen is likely to focus more on business model innovation, brand marketing and channel construction rather than pure technological breakthroughs. After all, for a consumer technology company, building a strong brand image, efficient operations and precise marketing are equally important.

This impressive past “transcript” also makes iRobot full of expectations.

Turned profit in the first quarter

While it searches for new leadership, iRobot isn't waiting for chaos to set in.

The company has launched a comprehensive operational restructuring in early 2024 to align its cost structure with current revenue expectations. Restructuring measures include layoffs, cutting R&D expenses, suspending non-core businesses, and concentrating global marketing resources. According to the plan, iRobot's restructuring will bring the company approximately $23 million in cost savings.

The initial results of the restructuring are already evident.

In the first quarter of 2024, iRobot turned a profit, achieving $150 million in revenue and $0.30 per share in net profit, compared with $160.3 million in revenue and $2.95 per share in the same period last year. However, iRobot was still in the red in the first quarter based on operating cash flow, but the loss was significantly reduced thanks to the $1.7 billion termination fee in the Amazon transaction.

In general, although the first quarter performance declined year-on-year, iRobot's operating expenses have been significantly reduced through measures such as laying off about 330 employees. The company said that this profit margin improvement plan is the top priority for the next few quarters. At the same time, iRobot is also actively developing new products, such as the Roomba Combo Essential and Roomba Vac Essential robots, which start at $250, through cooperation with OEM manufacturers.

As for the outlook for the second quarter and full year of 2024, iRobot showed a cautious attitude, saying that compared with the same period last year, the second quarter revenue is expected to be the weakest quarter in 2024, because the company expects large orders to shift from the second quarter of last year to the third quarter of this year. Due to the continued weakness of the yen against the US dollar, the second quarter revenue is expected to be affected by unfavorable currencies.

It is also worth noting that according to the first quarter financial report, sales of low- and mid-end robots (suggested retail price less than US$500) accounted for 81%, an increase from 12% in the same period last year.

Currently, consumers are becoming more rational, and product cost performance has become an important indicator for selecting from many manufacturers, and high-end robots will undoubtedly face greater cost pressure. Therefore, by launching mid- and low-end products with reasonable prices but certain intelligent functions, iRobot may be able to win market share in a larger market. After all, China's sweeping robot manufacturers have "blown up", and in the current situation, "living off the past" will only lead to a dead end.

The sweeping robot market is no longer the niche market it once was. As an industry pioneer, iRobot has attracted much attention for every development of the company. Can the new CEO live up to expectations and turn the tide? We will have to wait and see.