iRobot 2007 Annual Report Download - page 54

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• 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;
• warranty costs associated with our consumer products;
• the amount of government funding and the political, budgetary and purchasing constraints of our govern-
ment agency customers; and
• cancellations, delays or contract amendments by government agency customers.
Predicting revenue for any particular quarter and from sales of our consumer products includes many
challenges. 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.
Our future profitability may fluctuate, and we have a limited operating history on which you can base
your evaluation of our business.
As of December 29, 2007, we had an accumulated deficit of $11.6 million. Over the past four years, our
accumulated deficit has decreased by $15.5 million due to annual operating profitability. Because we operate in a
rapidly evolving industry, there are challenges to predicting our future operating results, and we cannot be certain
that our revenues will grow at rates that will allow us to maintain profitability during every fiscal quarter, or even
every fiscal year. In addition, we only have limited operating history on which you can base your evaluation of our
business.
A majority of our business currently depends on our consumer robots, and our sales growth and operat-
ing 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 29, 2007 and December 30, 2006, we derived 58.0% and 59.5% of our total
revenue from our consumer robots, respectively. For the foreseeable future, we expect that a significant portion of
our revenue will continue to be derived from sales of consumer robots in general and home floor care products in
particular. Accordingly, our future success depends upon our ability to further penetrate the consumer home 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 technol-
ogies involve time, substantial costs and risks. Our results in 2008 will depend in part on the success of product lines
introduced during 2007, such as the Roomba 500 series robot, Verro pool cleaning robot and the Looj gutter
cleaning robot, and there can be no assurance that these new products will achieve or maintain any level of retail or
consumer acceptance. Our inability to achieve significant sales of our newly introduced robots, or to enhance,
develop and introduce other products in a timely manner, or at all, would materially harm our sales growth and
operating results.
We depend on the U.S. federal government for a significant portion of our revenue, and any reduction in
the amount of business that we do with the U.S. federal government would negatively impact our operat-
ing results and financial condition.
For the years ended December 29, 2007 and December 30, 2006, we derived 34.9% and 34.4% of our total
revenue, respectively, directly or indirectly, from the U.S. federal government and its agencies. Any reduction in the
amount of revenue that we derive from a limited number of U.S. federal government agencies without an offsetting
increase in new sales to other customers would have a material adverse effect on our operating results.
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