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iRobot was long overdue for a product redesign to win back its once overwhelming share of the robot vacuum market. The company just announced such a reinvention for its complete product line; it turns out this was a Hail Mary move to get its head out of the muck.
iRobot's latest SEC filings paint a grim financial landscape for the company's next 12 months. In them, we read that iRobot, maker of Roomba robot vacuums, is in significant financial trouble, as evidenced by heavy debt, loan challenges, market struggles, and declining revenue.
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The company already laid off 40% of its workforce in 2024, cut back on hiring, closed offices, subleased part of its HQ, and reduced marketing costs. These measures saved iRobot $126.4 million, but not enough to stabilize the company. Now, iRobot is banking on the launch of a completely new product line this year to reestablish the spot in the robot market that has been weakened by the strong competition from Roborock, Dreame, and Ecovacs.
Part of its redesign involves adopting certain features that have long graced these competitors' robot vacuums, like dual rotating mop pads and a transparent marketing strategy on its devices. However, the iRobot filings clearly state that if the new Roomba product line doesn't sell well, the company may be unable to sustain operations beyond 12 months. Even the company's auditors expressed doubt about iRobot's ability to continue.
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iRobot is also exploring other strategies, such as selling or merging with another company or finding new financing to support itself.
What happens to your Roomba if iRobot goes under?
If iRobot were to shut down, existing Roomba models would continue to work, but they would be offline and function in a limited manner. However, iRobot shutting down altogether in the near future is very unlikely, as the company is exploring several avenues to stay afloat.
But if the company fails and does shut down, iRobot will stop offering customer support, software updates, and support for some smart home integrations that rely on cloud servers. This means that you'd likely be able to use your Roomba from the iRobot app or through the robot's button to launch it, but you would probably encounter more bugs that won't have a fix and be unable to use Alexa or Google Assistant for voice control.
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Without updates to the iRobot app or your Roomba, your robot vacuum would also be open to potential vulnerabilities exploited by bad actors if it remains connected to the internet.
If iRobot shuts down, replacement parts will also be much harder to come by. You'd have to rely on third-party vendors and independent manufacturers for filters, brushes, dust bags, and other parts.
Why is iRobot struggling financially?
iRobot is currently burdened by heavy debt that has become unmanageable as the market shifted and competitors took over the top robot vacuum spots. In 2023, the company took out a $200 million loan from The Carlyle Group with hopes of supporting its operations during the Amazon merger review. The Amazon takeover fell through, and the company has been stuck with the loan since.
Even with its cost-cutting measures in 2024, iRobot's revenue declined 23.4% by the end of the year compared to 2023, dropping to $681.8 million.
Also: I test robot vacuums for a living, and this one has the most useful cleaning feature I've seen yet
iRobot amended the loan with The Carlyle Group for a temporary waiver on certain financial obligations, which cost the company $3.6 million in fees and forced it to issue 6% of its stock warrants to lenders. The temporary waiver expires on May 6, 2025. If this waiver is not extended, iRobot says it could default on the loan.
The company blames several factors for its current financial outlook, including losing market share to aggressive Chinese competitors like Roborock, lower consumer demand, and macroeconomic factors. In the end, iRobot is looking for a way out of this hole, for which its new product line seems promising, especially in addition to a strategic sale.
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