iRobot 2015 Annual Report Download - page 122

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39
Our revenue increased 14.2% to $556.8 million in fiscal 2014 from $487.4 million in fiscal 2013. Revenue increased
$79.6 million, or 18.6%, in our home robots business unit, and decreased $4.5 million, or 9.0%, in our defense and security
business unit.
The $79.6 million increase in revenue from our home robots business unit was driven by a 12.5% increase in units
shipped and a 6.1% increase in net average selling price. In fiscal 2014, international home robots revenue increased $46.0
million, or 16.8%, and domestic home robots revenue increased $33.5 million, or 21.8%, compared to fiscal 2013. Total home
robots shipped in fiscal 2014 were 2,174,000 units compared to 1,933,000 units in fiscal 2013. The increase in both domestic
and international home robots revenue was primarily driven by expanded distribution of our Roomba 800 series robot
worldwide, and the replacement of the Roomba 500 series robot with the higher-priced Roomba 600 series in club stores.
International home robots revenue growth was further supported by strong demand in China, where revenue increased over
200% in fiscal 2014 compared to fiscal 2013.
The $4.5 million decrease in revenue from our defense and security business unit was driven by a $4.7 million decrease
in defense and security robot revenue and a $1.2 million decrease in recurring contract development revenue generated under
research and development contracts, partially offset by a $1.4 million increase in product life cycle revenue (spare parts,
accessories). Total defense and security robots shipped in fiscal 2014 were 265 units compared to 534 units in fiscal 2013,
while the net average selling price of our defense and security robots increased from approximately $36 thousand in fiscal 2013
to approximately $56 thousand in fiscal 2014. The decrease in the number of units shipped and the increase in average selling
price resulted from decreased sales of our lower-priced FirstLook robot in fiscal 2014 as compared to fiscal 2013. The $1.2
million decrease in contract revenue was primarily due to a decrease in revenue related to the U.S. Army's Brigade Combat
Team Modernization program, for which efforts were completed during the first half of fiscal 2013. The $1.4 million increase
in product life cycle revenue was due to an increase in Packbot upgrades, partially offset by decreases in FirstLook and SUGV
spares. Continued funding delays for government contracts have reduced our near-term visibility in our defense and security
business unit and contributed to the decrease in period-over-period revenue in this business unit. As previously described, we
have entered into an agreement to sell our defense and security business unit. We anticipate this transaction will close during
the first quarter of 2016.
Cost of Revenue
Fiscal Year Ended
December 27,
2014
December 28,
2013 Dollar Change Percent Change
(In thousands)
Total cost of revenue $298,791 $266,247 $ 32,544 12.2%
As a percentage of total revenue 53.7% 54.6%
Total cost of revenue increased to $298.8 million in fiscal 2014, compared to $266.2 million in fiscal 2013. The increase
is primarily due to the 12.5% increase in home robot units shipped, as well as the increase in per unit costs of defense and
security robots driven by a lower mix of the lower-cost FirstLook robot in fiscal 2014 compared to fiscal 2013. These increases
are partially offset by the 50.4% decrease in defense and security units shipped in fiscal 2014 as compared to fiscal 2013.
Gross Margin
Fiscal Year Ended
December 27,
2014
December 28,
2013 Dollar Change Percent Change
(In thousands)
Total gross margin $258,055 $221,154 $ 36,901 16.7%
As a percentage of total revenue 46.3% 45.4%
Gross margin increased $36.9 million, or 16.7%, to $258.1 million (46.3% of revenue) in fiscal 2014 from $221.2 million
(45.4% of revenue) in fiscal 2013. The increase in gross margin as a percentage of revenue was the result of the home robots
business unit gross margin increasing 1.2 percentage points, partially offset by the defense and security business unit gross