iRobot 2015 Annual Report Download - page 112

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reallocated research and development resources from a next generation remote presence platform to opportunities in our home
robots business unit. These actions were taken to solidify our position as the leader in diversified home robots and to focus on
key technologies, with an emphasis on software, that allow our robots to understand the homes in which they operate. It is our
intent to continue investing in these critical technologies and the economic opportunities they unlock.
As of January 2, 2016, we had 622 full-time employees. We have developed expertise in the disciplines necessary to
build durable, high-performance and cost-effective robots through the close integration of software, electronics and hardware.
Our core technologies serve as reusable building blocks that we adapt and expand to develop next generation and new products,
reducing the time, cost and risk of product development. Our significant expertise in robot design and engineering positions us
to capitalize on the expected growth in the market for robot-based products.
Although we have successfully launched consumer and defense and security products, our continued success depends
upon our ability to respond to a number of future challenges. We believe the most significant of these challenges include
increasing market competition, and our ability to successfully develop and introduce products and product enhancements into
both new and existing markets.
During 2015, we launched our first connected robot, Roomba 980. Roomba 980 has navigating and mapping capabilities
using vSLAM technology that we acquired as part of our acquisition of Evolution Robotics. Roomba 980 was available on our
website, in select retail locations in the U.S. and in Japan, as well as several European markets during fiscal 2015. Roomba 980
will be available in additional domestic and international locations in fiscal 2016.
Our total revenue for 2015 was $616.8 million, which represents an 11% increase from 2014 revenue of $556.8 million.
This increase in revenue was largely attributable to a $52.2 million increase in revenue in our home robots business as a direct
result of growth in our domestic market. Domestic growth was primarily attributable to increased sales as a result of significant
media investments as well as the launch of Roomba 980. International home robots revenue growth slowed compared to fiscal
2014 as a result of negative macroeconomic conditions, specifically in Japan and Russia, offset by a significant growth increase
in China. Revenue increased $9.5 million in our defense and security business as compared to 2014, primarily attributable to
increased sales of our SUGV robot. During 2015, we recorded a net benefit to revenue and income before income taxes of $6.9
million related to adjustments to our product returns reserves compared to a net benefit to revenue and income before income
taxes of $4.3 million and $5.7 million during fiscal 2014. The adjustments recorded in each of these periods resulted from
lower product returns experience as compared to estimates used to establish reserves in prior periods, resulting from continued
improvements in product quality, especially in our most recently released products. Our home robots revenue represented 91%
of our total revenue for both 2015 and 2014. With the expected divestiture of our defense and security business, our revenue
for the next few years will be driven by our rapidly growing home robots business.
Our total revenue for 2014 was $556.8 million, which represents a 14% increase from 2013 revenue of $487.4 million.
This increase in revenue was largely attributable to a $79.6 million increase in revenue in our home robots business as a direct
result of growth in both domestic and international markets, which was primarily driven by expanded distribution of our
Roomba 800 series robot worldwide, growth in China and the replacement of the Roomba 500 series robot with the higher-
priced Roomba 600 series in club stores. The increase in home robots revenue was partially offset by a decrease in revenue of
$4.5 million in our defense and security business related to continued budget reductions within the U.S. government in 2014.
We began selling our remote presence robots into the healthcare market and the enterprise market in 2013 and 2014,
respectively. However, these sales did not generate meaningful revenue in 2014 or 2013. Our home robots revenue represented
91% of our total 2014 revenue compared to 88% in 2013.
Revenue
We currently derive revenue from product sales and, to a lesser extent, government and commercial research and
development contracts. Product revenue is derived from the sale of our various home cleaning robots and defense and security
robots and related spares and accessories. Research and development revenue is derived from the execution of contracts
awarded by the U.S. federal government, other governments and a small number of other partners.