Fierce competition isn’t helping. Now, the company is even exploring a possible sale.
People don’t say they have robot vacuums. They say they have a Roomba. It’s a special achievement for a company to have users replace a common name with a brand name. The metonymy—Kleenex for tissue, for instance—shows how deeply the brand has penetrated culture and society. Roomba has succeeded in this regard. Still, the company behind it faces significant challenges.
iRobot is in trouble. The company that designs and manufactures Roomba robotic vacuum cleaners recently released its financial results, and the tone was pessimistic. Its managers warned that they have “substantial doubt” about its ability to continue as a going concern.
Lower revenues. The 44% drop in revenues compared to the same period the previous year stood out in the results for the last quarter of 2024. iRobot officials cited “competitive challenges that the company is addressing” as one reason.
Complex options. iRobot explained that it has begun analyzing its possible strategic moves to address the situation. According to Bloomberg, one option is to refinance its debt. Another is to seek a buyer.
Amazon already considered buying iRobot. Interestingly, Amazon previously sought to acquire the company. The tech giant, now led by Andy Jassy, theoretically moved forward with the purchase. However, the EU threatened to block the deal, prompting Amazon to back out and abandon the deal.
A shell of what it was. When Amazon aimed to acquire iRobot, Roomba’s valuation was $1.4 billion. Its current market value is just $200 million, seven times less.
Outstanding debt. Investment firm Carlyle Group Inc. loaned iRobot $200 million in 2023. Even then, the company’s finances were shaky, and the loan provided some liquidity. At the time, Amazon’s acquisition was in progress. Since the deal fell through, Carlyle can now charge iRobot a steep interest rate of 9%.
Too much competition. Roomba robot vacuums remain highly regarded, but in recent years, competitors have closed the gap. The robot vacuum trend has spurred other brands to match performance, and iRobot has felt the intense pressure.
Image | Onur Binay (Unsplash)
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