iRobot Analyst Day

May 7, 2014

Forward Looking Statements

Certain statements made in this presentation that are not based on historical information
are forward-looking statements which are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995.

These statements are neither promises nor guarantees, but are subject to a variety of risks
and uncertainties, many of which are beyond our control, which could cause actual results
to differ materially from those contemplated in these forward-looking statements.

Investors are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof. iRobot Corporation undertakes no obligation to
update or revise the information contained in this presentation, whether as a result of new
information, future events or circumstances or otherwise.

This presentation contains various non-GAAP financial measures as defined by SEC

Regulation G, including Adjusted EBITDA, which we define as Earnings Before Interest, Taxes,
Depreciation, Amortization, merger and acquisition expenses, restructuring expenses, net
intellectual property litigation expenses and non-cash stock compensation expense. The
most directly comparable GAAP financial measures and a reconciliation of the differences
between the GAAP financial measures and the non-GAAP financial measures are posted on
the investor relations page of our web site at www.irobot.com.

For additional disclosure regarding these and other risks faced by iRobot Corporation, see
the disclosure contained in our public filings with the Securities
and Exchange Commission.
5/7/2014

Agenda

9:30 10:00 Continental Breakfast

10:00 10:05 Welcome

10:05 10:20 Colin Angle, Chairman & CEO iRobot Strategic Initiatives/ Business Unit Reviews

10:20 10:40 Paolo Pirjanian, PhD, Chief Technology Officer Technology Strategy

10:40 10:55 Glen Weinstein, Chief Legal Officer Intellectual Property

10:55 11:10 Q&A

11:10 11:20 Break

11:20 11:35 Christian Cerda, SVP & General Manager, Home Business Unit

11:35 11:45 Alison Dean, EVP & Chief Financial Officer

11:45 12:00 Q&A

12:00 12:15 AVA 500 Demonstration Youssef Saleh; Home Products Matt Lloyd

12:15 2:00
5/7/2014

Lunch
3

iRobot Strategic Initiatives

Colin Angle
Chairman & CEO

The Robot Company

24 Years of Empowering People To Do More

5/7/2014

The Robot Company

OUR MISSION:

OUR VISION:
1. Provide meaningful solutions to
important human needs.
2. Pioneer robotic technology delivering
greater ease and efficiency.

3. Be seen as a positive force for change

in the world.

5/7/2014

Global Growth
Cumulative

$7 billion annual market opportunity for vacuum cleaners, globally

(2013: NPD, GfK, Euromonitor)
$14 billion annual market opportunity for global home maintenance
(2013: NPD, GfK, Euromonitor)
Top selling vacuum in Spain is a Roomba above $200
(2013: GfK and internal sales data)
5/7/2014

Scaling Robot Vacuuming

2014
Commoditization Stage
Scale

Availability

Explosion Stage
Brand/Offer

Product Differentiation

Creation Stage
Mass Product

Genesis

Supply

Roomba - beginning of the explosion stage

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Defense & Security

Expanding markets and opportunities in public safety and industry

International revenue more than doubled from 2012 to 2013
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Remote Presence
Navigate & Interact In Complex Real World Environments

Video Collaboration
Ava 500

Telemedicine
RP-VITA

Investing in long-term growth

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Unlocking the Potential

Higher value
More autonomous
More accessible
Value

Autonomous Patrol
Continuous Home Maintenance
Teleporting Remote Presence
Floor Care
TeleOp Presence
Manufacturing

+ Stationary

+ Mobile

+ Navigating

+ Manipulating

Cloud

Productizing Robot Capabilities

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11

Technology Strategy
Paolo Pirjanian, PhD
EVP & Chief Technology Officer

Technology Strategy

Navigation near term focus

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13

Simultaneous Localization & Mapping (SLAM)

State of the art, high-end navigation today

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14

Visual SLAM (vSLAM)

Next Generation Navigation: Camera-based
mapping yields both 3D key-points and
environmental layout
Enables autonomous navigation: Uses
efficient algorithms for path planning, selfdocking, way-point navigation and efficient
coverage algorithms
Consumer-grade pricing: Worlds lowest cost
implementation use QVGA cameras, running
on an low-end video processor
Scalable solution: Can scale to 3D dense
maps, large environments, outdoor areas and
more

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Visual SLAM

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16

From 2D Maps

Connecting maps, users, and the Internet of Things

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17

Using Our Strengths in Navigation and Vision

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18

Combined with Low-cost Depth Sensors

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19

To Produce High Definition, 3D Maps

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20

IP Strategy and Patent Portfolio

Glen Weinstein
EVP & Chief Legal Officer

IP Strategy
Sword
Encourage or force competitors to
design products that avoid
iRobots technology
and brand identity

Openness
Embrace open source and
interoperability where
appropriate

5/7/2014

Shield
Ensure freedom to operate

Enforcement
Stress test patent assets while
pursuing business goals

22

Patent Portfolio
600

558

525

500
400

344

308

293

300
200

213

180

116
100
97

164

250

232

0
2011

2012
2013
Issued Patents

2014 YTD
U.S.

Int'l

iRobot ranked 5th overall by the Patent Board for having one of the
strongest patent portfolios in electronics and instruments industry
5/7/2014

23

Patent Portfolio Roomba

98 U.S. Patents

188 International Patents

Covering Roomba Technology

Covering Roomba Technology

Reliability
& UX, 7

Platforms &
Cleaning, 18

Navigation,

68

5/7/2014

Other, 5

Tier 1

58

Tier 2

61

Tier 3

29

Tier 4

28

24

Patent Portfolio SLAM Navigation

iRobots portfolio includes the
earliest filed patents on visual
SLAM (vSLAM), especially single
camera SLAM.

vSLAM
15

Non-Contact
ODOA

Features &
Landmarks

6
SIFT
6
1

5/7/2014

Cases descended from these early

matters are still being processed,
and iRobot continues to observe
the industry and tailor new sword
and shield patents based on the market.
Additional patents and patent applications
cover improvements and innovations through
the intervening years to the present day.

We are of course adding new patents

and patent applications based on the
state of the art as it is developed.

25

Patent Enforcement Considerations

Cost
Distraction
Litigation Success Rate
(Strength of Case)

Median litigation costs for a moderate-sized U.S. patent infringement suit

is $2.5 million; median cost for a large suit is $5.0 million
Source: AIPLA Report of the Economic Survey 2011
Depositions, document searches, etc.
Median time to trial was 2.5 years in 2012
Source: PWC 2013 Patent Litigation Study

Overall success rates for practicing entities is 34% ; overall consumer

product success rate is 35%
Source: PWC 2013 Patent Litigation Study (data from 1995-2012)

Counterclaims

Can defendant add a counterclaim for infringement of its own patent?

Might defendant be able to otherwise disrupt our business?

Achievable Business
Goals

Injunction? Damages/Royalties? Halo effect of strengthened portfolio?

Initiation of business discussion? Force design change?

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Patent Enforcement: 2013

Speed

Cost

Expertise

Availability of
Injunctions

Injunctions &
Damages
Available in the
Same Court

Influence of
Decisions

No Stay of Ruling
Pending Validity
Determination

Cost Recovery
(Loser Pays)

Source: Managing Intellectual Property (Sept. 2010)

5/7/2014

Brought two patent enforcement actions

in Germany in the second half of 2013.
Infringement of 5 patents against a
reseller of Chinese goods.
Infringement of 4 patents against
manufacturer of imported robots.

Received a preliminary injunction against

Chinese manufacturer in August 2013 on
all four patents from court in Dusseldorf,
Germany.

Additional Customs enforcement in

Germany, Netherlands & Spain.

27

Q&A

Home Business Unit

Christian Cerda
SVP & GM Home Business Unit

HBU Strategy
Portfolio
Expansion

BrandStrength
Preference
Brand

THE Robot Company

Premium position
360 to consumer

Product
Leadership
Robot
Performance
Core performance
Automation of task
User experience & connectivity
Quality

Supported by a winning team and effective go-to-market strategy

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Home Business Unit Growth & Profitability

HBU Sales in millions, 22% CAGR
$M
$600

Other Key Metrics

19%
20%

$500

507.5

28%
21%
356.8
326.9

278.5
229.3

$200

151.5

2011

2012

2013

2014 Est*

GM%

40%

45%

49%

49%

49%

ASP

189

207

222

231

245

427.9

$400

$300

2010

273.7
239.2

195.7

$100

77.9

82.8

2010

2011

117.6

154.1

180.6

2013

2014 Est*

CAGR
Total

22%

Int'l

21%

Domestic

23%

$0
2012
Domestic

International

* 2014 expectations provided February 5, 2014

Delivering continuous profitable growth

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HBU Product Introductions

2011

2012

2013

2014

Roomba
700 Series
Roomba
600 Series

Roomba
800 Series
Mint 4200/5200

Scooba 450
Looj 330

Scooba 230

Braava 300 series

Scooba 390

Mirra 530

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Roomba 800 Launch Success

Aeroforce extractors improve cleaning by

up to 50% with virtually no maintenance

needed
Exceeding expectations on those selected
retail outlets where launched
R880 top selling SKU in its category on
Amazon NA with~ 5 star rating
#1 SKU iRobot eCommerce, since launch
Rolling out progressively at retail in NA,
EMEA, Japan
The rubber rollers on the bottom have been
the biggest difference. Our old vacuum had the
bristled roller on the bottom and wouldn't even
rotate it was so tangled in hair. Now, hair isn't a
problem.

I had a Roomba many years ago when they first

came out. That Roomba was a novelty. This
Roomba is a masterpiece.
33

5/7/2014

Scooba 450 Launch Success

New 3 cycle cleaning process removes up to

99.3% of common household bacteria
Much improved product robustness, quality and
usability
Scooba available on e-commerce sites as well as
being rolled-out on select retailers across NA
and EMEA

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34

Huge Addressable Markets

North America - $2.2 billion

EMEA - $2.5 billion

14%
4%

14%
iRobot

6%

Other Robots

80%

82%

Other Robots

APAC - $2.2 billion

12%
4%
iRobot
84%

Other Robots

$7 billion annual market opportunity

Source: Vacuum Cleaners >$200 USD, 2013 retail prices (based on NPD, GfK, Euromonitor, iRobot internal data)
5/7/2014

iRobot

35

Robotic Vacuum Market

Robotic Vacuum $ Spent*

Robotic Vacuum $ as % of
total $ Vacuum Market**

$1,400
100%
$1,200

90%
80%

$1,000

70%
Millions

$800

60%
50%

$600

40%
$400

30%
20%

$200

10%
$-

14.6%

15.7%

18.1%

2011

2012

2013

0%
2011

2012

2013

Strong growth continues in robotic vacuum cleaning market

Source: *GfK, NPD, iRobot data 2013
**Vacuum cleaners >$200/robotic vacuum revenues
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36

Robotic Vacuum Global $ Market Share

EMEA

North America
iRobot
Neato
Others

6%
12%

2%

13%

8%
16%

62%

83%

APAC
1%
4%
5%

1%
7%

15%
67%

iRobot
Sharp
Ecovacs
Toshiba
LG
Philips
Others

Source: 2013 NPD, GfK, iRobot internal data, Robotic Vacuum Cleaners >$200 retail prices
5/7/2014

37

iRobot
Samsung
LG
Neato
Others

Competitors with Steady Cadence of Launches

2011

2012

2013

2014

Roomba
700 Series

Roomba
800 Series

Samsung Navibot S
LG Home-Bot Square
Neato Signature Pro

Sharp Cocorobo V90

Ecovacs Deepoo 900 (not yet shipping)

Maintaining global market leadership position

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38

China Go-To-Market Strategy

Entered Chinese market in 2011; will exit 2014 with 500 POS

Only market where robotic vacuum cleaners were being sold pre-iRobot; category
familiarization

2013 revenues < $10 million; expected to grow materially in 2014

Annual robotic vacuum cleaner market in China grew 33% in 2013 to ~ $100
million*

China could become iRobots largest non-U.S. market

Controlled growth strategy in large and growing market

* GfK 2013
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39

Takeaways
Robust product pipeline will support market-leading position in the face of

increasing global competition

Successfully integrating consumer-driven technology innovation around

cleaning efficacy and ease of use; premium branded products

Focused on profitable growth through new products, controlled retail

expansion, and prudent investment in the brand and consumer touch

points
Optimistic about capturing our slice of the growing global robotic vacuum

cleaner market
Home Robots will drive iRobot growth and profitability next couple of years
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40

CFO Perspective
Alison Dean
EVP & Chief Financial Officer

A year of significant progress

Financial Growth

Continued Cash Generation

2013

2014*

Revenue
YoY Growth %

$487

$565

11.7%

15.9%

GM%

45.4%

45.0%

Opex %

38.7%

36.0%

Adjusted EBITDA Margin

12.8%

13.5%

EPS

$0.94

$1.08

$M (except EPS)

Strong OCF; cash near record high levels

Robotics ecosystem expansion

Investment/acquisition opportunities increase

Renewed/doubled share repurchase program

* Midpoint of expectations provided April 22, 2014

Recognized Technology Leader

Business Momentum

Braava introduced to international markets

Successfully executed 2 major product transitions

Significant technology advancements

New RPBU platform AVA 500 B2B sales model

The Economist Robots offer a unique insight into what

people want from technology

Fast Company iRobot #1 most innovative in robotics

Bloomberg Brink Forefront of Robotics iRobots grand

patriarch of robotics scene

CNN Make, create, innovate series

the field

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42

iRobot as a pioneer in

Technology Leaders - Peers

No direct public peers
Why are peers important?
1.

Externally informs others about iRobot

2.

Investors / Analysts
Industry Classification Agencies
Employees

Internally informs us about

Valuation
Compensation
Financial Targets

Peer group analysis is important; identifying peers is challenging.

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iRobots View of Relevant Peer Characteristics

Disruptive technologies
Products with high IP content / wide moat

Hardware and software solutions

Global brand
Market leader
> $250M - $3B in revenue and revenue growth rate of 10 25%
GM: 40 50%

Constantly evolving An art not a science

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44

A Selection of iRobot Defined Peers

Trimble Navigation

Designs and distributes positioning products and applications enabled by GPS tech

3D Systems Corp

Manufactures and markets 3D printers and print materials for professionals and consumers

Garmin

Portable GPS enables navigation devices for automotive, outdoor, fitness, marine, aviation markets

Polycom

Video, voice and content management/sharing

Synaptics

Develops human interface touch based solutions for consumer electronics (smartphones, tablets, touchscreen apps, and GPS)

AeroVironment

Design and production of unmanned aircraft systems

Stratasys

Designs desktop 3D printers for idea and design development

Dolby Labs

Content creation and playback technologies for entertainment industry

Hologic

Diagnostic, medical imaging systems and surgical products for women

FLIR Systems

Designs and manufactures thermal imaging systems for variety of applications worldwide

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45

Investment Framework
Strategic Alignment
Does the opportunity support or advance
our strategic vision?

Market Attractiveness
Size of addressable market
Estimated growth of market

How similar is this business to our existing

businesses?

Can we leverage our current resources or

technologies?

Competitive Strength

Profitability of market

Barriers to entry

Investment Timing

Expertise in relevant technologies

Is the opportunity near or long term?

Brand strength in addressable market

Significant one-time investment or multiple

years of sustained investments?

Familiarity with customer / channels

Timing of cash outflows and inflows

Manufacturing / Operational efficiencies?

Invest to pursue defined strategy

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Internal R&D Prioritization Framework

iRobot
R&D

Products 75-80%

Technologies 20-25%
Manipulation

Navigation

Cloud

Core

Emerging

Future

Roomba

AVA 500

PackBot

RP-VITA

Braava

Other

FirstLook
Scooba

Focused investment
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2014 Results and Expectations

$M (except EPS)

Q1-14

Q2-14*

FY 2014*

Revenue
YoY Growth %

114

138 - 145

560 - 570

8%

6% - 11%

15% - 17%

EPS

0.18

0.15 - 0.25

1.00 - 1.15

14

13 - 17

74 - 78

Adjusted EBITDA

Q1 exceeded expectations; Reaffirmed 2014 expectations

* Expectations provided April 22, 2014
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Financial Targets - 2016

12.8%

13.5%

565
487

FY'13

$M

Revenue

FY'14*
Revenue CAGR (Mid-High Teens)

FY'15

FY'16

Adjusted EBITDA Margin (%) (High Teens)

2014 expectations: Strong next step in progressing toward targets

* Expectations provided April 22, 2014
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Takeaways
Strong financial performance revenue growth and profitability
Home Robots key driver

Strong balance sheet allows for acquisitions and stock repurchase

Focused investment drive strategy

Tracking well to long term (2016) targets.

5/7/2014

50

Q&A

Thank You