iRobot 2005 Annual Report Download - page 22

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half of the year. This variability may lead to volatility in our stock price as equity research analysts and
investors respond to these quarterly fluctuations. These fluctuations will be due to numerous factors including:
‚ seasonality in the sales of our consumer products;
‚ the size and timing of orders from military and other government agencies;
‚ the mix of products that we sell in the period;
‚ disruption of supply of our products from our manufacturers;
‚ the inability to attract and retain qualified, revenue-generating personnel;
‚ unanticipated costs incurred in the introduction of new products;
‚ costs of labor and raw materials;
‚ changes in our rate of returns for our consumer products;
‚ our ability to introduce new products and enhancements to our existing products on a timely basis;
‚ price reductions;
‚ the amount of government funding and the political, budgetary and purchasing constraints of our
government agency customers; and
‚ cancellations, delays or contract amendments by government agency customers.
Revenue for any particular quarter and revenue from sales of our consumer products are difficult to
predict. Chain stores and other national retailers typically place orders for the holiday season in the third
quarter and early in the fourth quarter. The timing of these holiday season shipments could materially affect
our third or fourth quarter results in any fiscal year. Because of quarterly fluctuations, we believe that
quarter-to-quarter comparisons of our operating results are not necessarily meaningful. Moreover, our
operating results may not meet expectations of equity research analysts or investors. If this occurs, the trading
price of our common stock could fall substantially either suddenly or over time.
A majority of our business currently depends on our consumer robots, and our sales growth and operating
results would be negatively impacted if we are unable to enhance our current consumer robots or develop
new consumer robots at competitive prices or in a timely manner.
For the years ended December 31, 2005 and 2004, we derived 65.4% and 73.8% of our total revenue from
our home floor care robots, respectively. For the foreseeable future, we expect that a majority of our revenue
will continue to be derived from sales of consumer home floor care products. Accordingly, our future success
depends upon our ability to further penetrate the consumer home floor care market, to enhance our current
consumer products and develop and introduce new consumer products offering enhanced performance and
functionality at competitive prices. The development and application of new technologies involve time,
substantial costs and risks. For example, we have devoted significant time and incurred significant expenses in
connection with developing our Scooba robot, which is designed to sweep, wash, scrub and dry hard floors, and
we have recently made our Scooba robot available for volume distribution. Our results in 2006 will depend in
part on the success of this new product line, and there can be no assurance that it will attain market
acceptance. Our inability, for technological or other reasons, to achieve significant sales of our Scooba robot,
or to enhance, develop and introduce other products in a timely manner, or at all, would materially harm our
sales growth and operating results.
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