Breaking Down iRobot Corporation (IRBT) Financial Health: Key Insights for Investors

You're looking at iRobot Corporation (IRBT) right now and the picture is defintely stark, so let's cut straight to the numbers: the company is in a precarious financial position, navigating a liquidity crisis after its Amazon acquisition fell apart. For the third quarter of 2025, iRobot reported revenue of just $145.8 million, a sharp drop from the prior year, with U.S. sales specifically declining by a painful 33%. Here's the quick math on the risk: as of September 27, 2025, their cash and cash equivalents had plummeted to a critical low of just $24.8 million, a figure that signals extreme near-term pressure, especially when you consider they have no immediate sources for additional capital. The market has taken notice, with the company's valuation down to a mere fraction of the $1.7 billion Amazon once offered. This isn't a turnaround story yet; it's a high-stakes balance sheet review.

Revenue Analysis

You need to know the hard numbers, so let's cut right to it: iRobot Corporation (IRBT)'s revenue trajectory in 2025 shows a clear deceleration, driven by macro pressures and supply chain issues. The company's Q3 2025 revenue came in at $145.8 million, a sharp decline from $193.4 million in the same quarter last year, marking a year-over-year (YoY) decrease of approximately 24.6%. For the first nine months of 2025, the year-to-date revenue stands at roughly $375.0 million, a defintely challenging figure given the earlier Q1 and Q2 results.

The core of iRobot Corporation (IRBT)'s business remains a single segment, which simplifies the analysis but concentrates the risk: Consumer Robots and Accessories. This means the company's financial health is almost entirely tied to the sales performance of its robotic vacuums, like the Roomba, and mopping devices. Here's the quick math on where the money is coming from in terms of product mix, focusing on the higher-margin items.

• Mid-tier and Premium Robots: These are the units with a Manufacturer's Suggested Retail Price (MSRP) of $300 or more.
• Contribution to Sales: In Q3 2025, they represented 74% of total robot sales.
• The Trend: This is down from 79% in Q3 2024, showing a slight shift away from the most expensive products.

The regional performance tells a story of uneven demand and market-specific headwinds. The U.S. market, which is a massive piece of the pie, saw the most significant contraction. The Q3 2025 results show revenue dropping across all major regions, which is a major concern for any global enterprise. For a deeper dive into who is still investing despite these market struggles, you can read Exploring iRobot Corporation (IRBT) Investor Profile: Who's Buying and Why?

To be fair, the company is dealing with a challenging macroeconomic environment, plus internal issues like production delays and unforeseen shipping disruptions, which management cited as reasons for the revenue shortfall against their own internal expectations. Still, the regional declines are stark, as you can see below.

What this estimate hides is the sequential improvement from Q2's $127.6 million revenue to Q3's $145.8 million, but the overall trend is clearly one of contraction. The company is in a major transitional period, undergoing a strategic review to address these persistent challenges and explore alternatives, which signals the seriousness of the situation.

Profitability Metrics

You need to know if iRobot Corporation (IRBT) is making money, and the short answer right now is no, they are not. The company is currently operating at a significant loss, a trend that accelerated in the third quarter of 2025 (Q3 2025) due to market headwinds and a failure to fully leverage their fixed cost base. This is a critical liquidity issue, not just a profitability one.

Here's the quick math on their Q3 2025 performance, which ended September 27, 2025. Revenue dropped to just $145.8 million, a sharp decline from the prior year's $193.4 million. The profitability ratios show the pressure across the entire income statement:

• Gross Profit Margin: The GAAP (Generally Accepted Accounting Principles) Gross Margin was 31.0% in Q3 2025, a slight dip from 32.2% in the same quarter last year.
• Operating Profit Margin: The GAAP Operating Loss was ($17.7 million), translating to an Operating Margin of approximately -12.14%. This is a massive swing from the $7.3 million in operating income they posted in Q3 2024.
• Net Profit: The GAAP Net Loss Per Share widened to ($0.62) for the quarter.

Profitability Trends and Operational Efficiency

The trend in profitability is defintely concerning; it points to a business model under severe stress from both top-line revenue decline and cost inflexibility. While the gross margin is holding up reasonably well at 31.0%, the problem is further down the income statement. Gross margin is what's left after Cost of Goods Sold (COGS), and that 31% suggests their manufacturing and supply chain costs are still relatively competitive.

But then you hit the operating expenses. GAAP Operating Expenses climbed to $62.9 million in Q3 2025, up from $55.1 million a year ago. This increase, coupled with the revenue shortfall, means the company is unable to cover its fixed costs-things like R&D, sales, and administrative overhead. The CEO noted this directly, stating they were unable to fully leverage their fixed cost base. This inability to scale down costs fast enough while revenue shrinks is the core operational efficiency challenge right now.

The company is in a tough spot. One clean one-liner: The operating loss is a direct result of falling sales hitting a rigid cost structure.

Industry Comparison: A Mixed View

When we compare iRobot Corporation's margins to the broader industry, we see a mixed picture that highlights their unique position as a consumer robotics specialist. The household appliance manufacturing industry is huge, with the U.S. market estimated at $24.2 billion in 2025, but IRBT operates in the high-growth consumer robotics segment, which is projected to be a $13.69 billion global market in 2025.

Here is how iRobot Corporation's Q3 2025 Gross Margin stacks up against some industrial proxies:

Their 31.0% gross margin is actually better than the average for Electrical Equipment & Parts, but slightly below the Electronic Components average. This suggests that the cost of building a Roomba is not the primary issue; the market is willing to pay a price that allows for a healthy gross profit. The real issue is the negative Operating Margin of -12.14%, which indicates that their overhead structure is simply too large for their current sales volume. For investors, this means the focus should be less on product pricing and more on the company's strategic review process and its ability to drastically cut Selling, General, and Administrative (SG&A) expenses. You can learn more about the company's strategic vision here: Mission Statement, Vision, & Core Values of iRobot Corporation (IRBT).

Debt vs. Equity Structure

The short answer is that iRobot Corporation (IRBT) is currently financing its operations almost entirely through debt, not equity, which is a significant red flag for investors. As of the second quarter of 2025, the company's capital structure shows a dangerous reliance on creditors due to a negative shareholder equity position.

Current Debt Levels and Composition

iRobot's debt is substantial and heavily skewed toward short-term obligations, which creates immediate liquidity pressure. As of the end of the second quarter of 2025, the company's total debt was approximately $226.9 million.

• Short-Term Debt & Capital Lease Obligation: $207.8 million
• Long-Term Debt & Capital Lease Obligation: $19.1 million

That 91% concentration in short-term debt is a massive concern. It means the majority of their obligations are coming due within the next year, forcing management to constantly scramble for cash or new financing.

The Debt-to-Equity Reality

The debt-to-equity (D/E) ratio is a key measure of financial leverage, showing how much debt a company uses to finance its assets relative to the value of its shareholders' equity. For iRobot, this metric is distorted because the company has a Stockholders' Deficit (negative equity) of -$7.7 million as of June 2025. Here's the quick math: Total Debt of $226.9 million divided by negative equity gives a D/E ratio of approximately -29.50.

A typical, healthy D/E ratio in the broader Consumer Discretionary sector is around 67.7% to 80.4%, meaning a company has less debt than equity. iRobot's negative ratio means creditors effectively own more of the company's assets than the shareholders do, signaling a deep structural problem. It's defintely not a sign of a balanced capital structure.

Refinancing and Financial Distress

The company's recent actions confirm this financial distress. In October 2025, iRobot entered into a sixth amendment to its senior secured term loan with TCG Senior Funding L.L.C., extending a waiver for certain loan covenants until December 1, 2025. This term loan had a fair value of $203.2 million as of June 2025.

This is a critical action because the lenders waived iRobot's obligation to provide an auditor's report without a going concern qualification for the fiscal year 2024. A going concern qualification means the auditor has substantial doubt about the company's ability to continue operating. The company is currently engaged in a strategic review that includes exploring potential sales or a comprehensive debt refinancing, because they may be unable to secure additional funding otherwise.

To be fair, they are actively trying to fix this, but right now, the balance is heavily tipped toward managing debt obligations to simply keep the lights on, not leveraging a healthy mix of debt and equity for growth. For a deeper dive into who is still buying into this difficult situation, check out Exploring iRobot Corporation (IRBT) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You're looking at iRobot Corporation (IRBT)'s balance sheet, and honestly, the liquidity picture is flashing red. The core takeaway is simple: the company's short-term assets are nowhere near covering its short-term debts, a situation that has worsened significantly in the 2025 fiscal year.

This isn't just an academic problem; it's a near-term operational risk.

Assessing iRobot Corporation (IRBT)'s Liquidity Positions

A quick look at the liquidity ratios tells the story plainly. The current ratio (current assets divided by current liabilities) is a primary measure of a company's ability to pay obligations coming due within a year. For iRobot Corporation, the Trailing Twelve Months (TTM) Current Ratio is approximately 0.52. [cite: 12, 14 from first search] This is a major concern, as a ratio below 1.0 means current liabilities exceed current assets.

The Quick Ratio (or acid-test ratio), which is even more conservative as it strips out inventory, is sitting at a mere 0.17 for the TTM period. [cite: 12, 14 from first search] This ratio is defintely a warning sign; it means that if iRobot Corporation had to pay all its immediate bills without selling any of its products, it would only have 17 cents of highly liquid assets for every dollar of liability.

• Current Ratio (TTM): 0.52 (Below 1.0 is a red flag). [cite: 12, 14 from first search]
• Quick Ratio (TTM): 0.17 (Extremely low, indicating high immediate risk). [cite: 12, 14 from first search]

Working Capital Trends and Cash Position

The working capital trend confirms the strain. Working capital is simply current assets minus current liabilities, and for iRobot Corporation on a TTM basis, it's a negative number: approximately -$232.41 million. [cite: 11 from first search] This negative figure means the company is relying on long-term assets or external financing to fund its day-to-day operations, which is fundamentally unsustainable without a major turnaround.

As of September 27, 2025, the cash and cash equivalents totaled just $24.8 million, a sharp drop from the prior quarter. This low cash balance, coupled with the negative working capital, puts the company in a precarious position, especially considering the seasonal nature of consumer electronics sales.

Cash Flow Statements Overview: The Burn Rate

The cash flow statement shows where the money is actually going. For the third quarter of 2025 (Q3 2025), iRobot Corporation reported a net cash used in operating activities (Operating Cash Flow) of -$47.59 million. This is the core issue: the business itself is burning cash, not generating it.

Here's the quick math on the cash flow trends you need to see:

The negative operating cash flow is the engine driving the liquidity crisis. When your core business is losing money on a cash basis, you have to turn to financing, but the company explicitly stated as of September 27, 2025, that they had no sources upon which it can draw for additional capital. This is the most critical liquidity concern.

This lack of available capital is a clear and present danger, making the ongoing strategic review absolutely essential. You can dig deeper into who is holding the bag on this in Exploring iRobot Corporation (IRBT) Investor Profile: Who's Buying and Why?.

Valuation Analysis

You're looking at iRobot Corporation (IRBT) because the stock price has fallen so dramatically, and you're wondering if this is a deep value play or a classic value trap. Let's be direct: the valuation metrics, combined with the company's near-term financial reality, point to an extremely high-risk situation where the stock is trading at distressed levels, not simply 'undervalued.'

The core issue is profitability. Since iRobot Corporation is currently reporting net losses, traditional valuation multiples like Price-to-Earnings (P/E) and Price-to-Book (P/B) are either negative or simply not applicable, which immediately signals a fundamental business challenge. The Trailing Twelve Month (TTM) P/E ratio, for example, stood at -0.26 as of November 2025, which is a clear indicator of negative earnings.

Is iRobot Corporation Overvalued or Undervalued?

In a situation like this, we pivot to Price-to-Sales (P/S) and Enterprise Value-to-EBITDA (EV/EBITDA) to get a clearer picture of the company's market capitalization relative to its underlying business activity. The numbers show the market has priced in significant risk, a defintely necessary caution.

• Price-to-Sales (P/S): The TTM P/S ratio is remarkably low, hovering between 0.09x and 0.10x as of late 2025. This is a fraction of the industry average, suggesting the market values the company's sales at almost nothing, which can signal deep undervaluation or, more likely here, severe distress.
• Enterprise Value-to-EBITDA (EV/EBITDA): This ratio is also negative, estimated at around -1.7x, because the company's Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is negative. The Enterprise Value is approximately $251.06 million, reflecting the market cap plus net debt.

Here's the quick math: A P/S ratio of 0.10x tells you the market is only willing to pay ten cents for every dollar of iRobot Corporation's sales, a stark contrast to healthy technology companies. This isn't a valuation signal; it's a liquidity and solvency signal.

Stock Trend and Analyst Consensus

The stock price trend over the last year maps perfectly to the financial deterioration. The stock has been in a severe downward spiral, falling by approximately -77.44% over the last 12 months, with the 52-week range spanning from a high of $13.06 to a low of $1.40.

As of November 2025, the stock price sits near its 52-week low, trading around $1.50. This price action reflects the company's Q3 2025 revenue of only $145.8 million and its precarious cash position of $24.8 million as of September 27, 2025.

The analyst community is equally cautious. You won't find a chorus of 'Buy' ratings here.

The consensus rating from Wall Street analysts is a 'Reduce' or 'Hold,' based on one 'Sell' and one 'Hold' rating, which is a clear warning sign. This is not a growth stock; it's a turnaround speculation, and the market is telling you to be careful. If you want to dive deeper into the operational challenges driving this valuation, check out the full analysis at Breaking Down iRobot Corporation (IRBT) Financial Health: Key Insights for Investors.

Risk Factors

If you're looking at iRobot Corporation (IRBT) right now, you need to understand the immediate and substantial risks. This isn't a growth story with minor hiccups; it's a critical liquidity and market share challenge. The company's financial health is under immense pressure, leading to a 'going concern' warning issued earlier in the year.

Honest to goodness, the core issue is cash and the ability to service debt. As of September 27, 2025, cash and cash equivalents totaled just $24.8 million, a significant drop from $40.6 million just one quarter earlier. The company has also stated it has no sources upon which it can draw for additional capital, which is a major red flag for near-term flexibility.

Operational and Financial Risks: The Liquidity Squeeze

The most pressing risk is the operational and financial strain caused by persistent underperformance and a precarious debt situation. The company is in a strategic review, exploring a potential sale or refinancing, but the uncertainty itself is a risk. A critical indicator of this strain is the repeated need to secure waivers from lenders on its senior secured term loan, with the waiver period most recently extended to October 24, 2025. If this waiver isn't extended, the company faces default.

The Q3 2025 results underscore the problem: revenue fell well below internal expectations to $145.8 million, resulting in a GAAP operating loss of $17.7 million. This shortfall increased cash usage and pressured profitability because they couldn't defintely leverage their fixed cost base.

• Going Concern: Substantial doubt exists about the ability to continue operations.
• Cash Burn: Cash and equivalents dropped to $24.8 million in Q3 2025.
• Debt Default: Risk of defaulting on term loan covenants without further lender waivers.

External and Market Headwinds

iRobot Corporation faces a brutal external environment. The primary challenge is intense competition, particularly from Chinese manufacturers who are aggressively entering the robotic floorcare market. This competition forces promotional spending, pressuring gross margins, which were 31.0% (GAAP) in Q3 2025.

Plus, broader market conditions are not helping. The decline in consumer sentiment and spending is evident in the regional sales performance for Q3 2025: U.S. revenue declined a sharp 33% year-over-year, while EMEA revenue was down 13%, and Japan saw a 9% drop. These numbers signal persistent demand softness across all major geographies.

Mitigation Strategies and Their Limits

The company is fighting back with its 'iRobot Elevate' turnaround strategy, which focuses on cost control and product innovation. They've made meaningful progress on cost structure, including a workforce reduction of approximately 440 employees, which was 40% of the global workforce at the end of 2023. This has helped tighten control over operating expenses.

The strategic plan is banking heavily on a revitalized product roadmap in fiscal year 2025, which includes new launches designed to improve competitiveness. What this estimate hides, however, is that the success of these new products is not guaranteed to reverse the severe revenue decline quickly enough to solve the immediate liquidity crisis. The outcome of the strategic review remains the most critical, and uncertain, factor.

For a deeper dive into the company's long-term vision that underpins this turnaround, you should review the Mission Statement, Vision, & Core Values of iRobot Corporation (IRBT).

Growth Opportunities

You're looking at iRobot Corporation (IRBT) right now and seeing a company in the middle of a major, high-stakes turnaround. The direct takeaway is this: future growth hinges entirely on the success of their 2025 product refresh and the deep cost-cutting from the iRobot Elevate strategy. If they execute, they can stabilize revenue and improve margins, but the financial risk is defintely still significant.

Product Innovation and Technological Moat

The primary growth driver is a massive product cycle. iRobot Corporation launched the largest suite of new products in its history in early 2025, including the Roomba 105 Vac Robot series and the Roomba 205 DustCompactor Vac Robot, plus the Roomba® Max 705 Combo Robot + AutoWash™ Dock later in the year. This is a direct shot at competitors like SharkNinja and Roborock, focusing on premium and mid-tier segments, which represented 80% of their total robot sales in fiscal 2024.

• Launch new Roomba models to stimulate sales.
• Invest in AI, machine learning, and vSLAM technology.
• Expand the direct-to-consumer sales channel.

Their competitive edge isn't just a brand name; it's a deep technological moat built on over 30 years of robotics experience. As of December 28, 2024, the company held 566 U.S. patents and over 1,200 foreign patents, protecting their core technology in cleaning, mapping, and navigation. That's a lot of intellectual property to protect their market position.

2025 Financial Projections and Turnaround Strategy

The numbers for fiscal year 2025 show the transition is painful but necessary. Analysts forecast full-year 2025 revenue to be around $535.6 million, a decline from the 2024 revenue of $681.8 million. However, the company is targeting year-over-year revenue growth in the second half of 2025 as the new products gain traction. The focus is less on top-line growth right now and more on profitability.

Here's the quick math on the expected path to profitability:

The iRobot Elevate strategy has been crucial, reducing the global workforce by over 50% since 2023 and transforming the R&D and supply chain to cut costs. This is designed to drive gross-margin expansion and improved cash flow from operations in 2025.

Near-Term Risks and Strategic Actions

What this estimate hides is the precarious financial situation. The Board of Directors is conducting an ongoing review of strategic alternatives, including a potential sale or strategic transaction. This is a clear signal that the company is exploring all options to maximize shareholder value, or simply to survive. Plus, they've had to repeatedly amend their term loan to extend covenant waivers, most recently to October 24, 2025, which raises significant concerns about their ability to continue operations if an extension or resolution isn't secured.

The immediate action for you is to watch the sales traction of the new products in Q4 2025. If the new Roomba lineup doesn't translate into significant sales growth, the financial restructuring won't be enough. For a deeper dive into the balance sheet, check out Breaking Down iRobot Corporation (IRBT) Financial Health: Key Insights for Investors. You need to see a clear path to refinancing or a strategic deal finalized soon.