Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 28, 2025

Basis of Presentation and Foreign Currency Translation

The accompanying consolidated financial statements include those of iRobot and its subsidiaries, after elimination of all intercompany balances and transactions. iRobot has prepared the accompanying unaudited consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP").

In the opinion of management, all adjustments necessary to the unaudited interim consolidated financial statements have been made to state fairly the Company's financial position. Interim results are not necessarily indicative of results for the full fiscal year or any future periods. The information included in this Form 10-Q should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in its Annual Report on Form 10-K for the fiscal year ended December 28, 2024, filed with the Securities and Exchange Commission on March 12, 2025.

Fiscal Period, Policy

The Company operates and reports using a 52-53 week fiscal year ending on the Saturday closest to December 31. Accordingly, the Company's fiscal quarters end on the Saturday that falls closest to the last day of the third month of each quarter.

Recently Issued Accounting Standards

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that recently issued standards, which are not yet effective, will not have a material impact on the Company's consolidated financial statements upon adoption.

Use of Estimates

The preparation of these consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenue and expenses. These estimates and judgments, include but are not limited to, revenue recognition, including variable consideration and other obligations such as sales incentives and product returns; impairment of goodwill and long-lived assets; valuation of non-marketable equity investments; valuation of debt; valuation of performance-based awards with market conditions; inventory excess and obsolescence; loss on purchase commitments; loss contingencies; and accounting for income taxes and related valuation allowances. The Company bases its estimates and assumptions on historical experience, market participant fair value considerations, projected future cash flows, current economic conditions, and various other factors that the Company believes are reasonable under the circumstances. Actual results and outcomes may differ from the Company's estimates and assumptions.

Cash, cash equivalents and restricted cash

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with maturity of three months or less at the time of purchase to be cash and cash equivalents. The Company invests its excess cash primarily in money market funds. Accordingly, its cash and cash equivalents are subject to minimal market risk. At June 28, 2025 and December 28, 2024, cash and cash equivalents totaled $40.6 million and $134.3 million, respectively. These cash and cash equivalents are carried at cost, which approximates fair value.

The Company's restricted cash balance totaled $38.4 million as of June 28, 2025, $36.0 million of which was set aside for future repayment of the Term Loan subject to the limited ability of the Company to utilize such amounts at the discretion of the lenders for the purchase of inventory. During the third quarter of fiscal 2024, the Company elected to draw down $40.0 million of the restricted cash which was repaid to the restricted account in March 2025. During the three months ended June 28, 2025, in connection with Amendment No. 3, the Company made a $4.0 million principal repayment to the Term Loan from the restricted cash account. On July 29, 2025, with the lenders' consent, the Company drew down an additional $10.0 million of the $36.0 million remaining in the restricted cash account. See Note 9, Debt, for additional information. The other $2.4 million of restricted cash is used as collateral for the Company's credit card program and to secure the outstanding letters of credit and is included in other assets on the consolidated balance sheets.

Allowance for Credit Losses

The Company maintains an allowance for credit losses for accounts receivable using an expected loss model that requires the use of forward-looking information to calculate credit loss estimate. The expected loss methodology is developed through consideration of factors including, but not limited to, historical collection experience, current customer credit ratings, customer concentrations, current and future economic and market conditions and age of the receivable. The Company reviews and adjusts the allowance for credit losses on a quarterly basis. Accounts receivable balances are written off against the allowance when the Company determines that the balances are not recoverable. At June 28, 2025 and December 28, 2024, the Company had an allowance for credit losses of $3.0 million.

Inventory

Inventory primarily consists of finished goods and, to a lesser extent, components, which are purchased from contract manufacturers. Inventory is stated at the lower of cost or net realizable value with cost being determined using the standard cost method, which approximates actual costs determined on the first-in, first-out basis. Inventory costs primarily consist of materials, inbound freight, import duties, tariffs and other handling fees. The Company writes down its inventory for estimated obsolescence or excess inventory based upon assumptions around market conditions and estimates of future demand including consideration of product life cycle status, product development plans and current sales levels. Inventory write-downs and losses on purchase commitments are recorded in cost of product revenue. Net realizable value is the estimated selling price less estimated costs of completion, disposal and transportation. Adjustments to reduce inventory to net realizable value are recognized in cost of product revenue and have not been significant for the periods presented.

Impairment of Goodwill and Long-Lived Assets

Goodwill is assessed for impairment at the reporting unit level annually during the fourth quarter of each fiscal year or more frequently if the Company believes indicators of impairment exist. During the three months ended June 28, 2025, the Company did not identify any triggering events. All goodwill is allocated to the Company's one reporting unit which had a negative carrying value as of June 28, 2025.

The Company periodically evaluates the recoverability of other long-lived assets whenever events and changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. There were no triggering events identified on the long-lived assets during the three months ended June 28, 2025.

Short-Term and Strategic Investments

Strategic Investments

The Company holds non-marketable equity securities as part of its strategic investments portfolio. The Company classifies the majority of these securities as equity securities without readily determinable fair values and measures these investments at cost, less any impairment, adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer. These investments are valued using significant unobservable inputs or data in an inactive market and the valuation requires the Company's judgment due to the absence of market prices and inherent lack of liquidity. The Company monitors non-marketable equity investments for impairment indicators, such as deterioration in the investee's financial condition and business forecasts and lower valuations in recent or proposed financings. The estimated fair value is based on quantitative and qualitative factors including, but not limited to, subsequent financing activities by the investee and projected discounted cash flows. The Company performs an assessment on a quarterly basis to assess whether triggering events for impairment exist and to identify any observable price changes. Changes in fair value of non-marketable equity investments are recorded in other income (expense), net on the consolidated statements of operations. At June 28, 2025 and December 28,

2024, the Company's equity securities without readily determinable fair values totaled $10.9 million and $11.1 million, respectively and are included in other assets on the consolidated balance sheets.

Warrants

The Company accounts for common stock warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants and applicable authoritative guidance in ASC 480, "Distinguishing Liabilities from Equity," and ASC 815, "Derivatives and Hedging." Warrants classified as equity are recorded at fair value as of the date of issuance and no further adjustments to their valuation are made. Warrants classified as derivative liabilities that require separate accounting as liabilities are recorded at their fair value on the date of issuance and are revalued on each subsequent balance sheet date until such instruments are exercised or expire, with any changes in the fair value between reporting periods recorded as other income or expense. See Note 11, Stockholders' Equity, for additional information.

Net Loss Per Share

Basic loss per share is calculated using the Company's weighted-average outstanding common shares. Diluted earnings per share is calculated using the Company's weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method. Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods, as the inclusion of all potential common share equivalents outstanding would have been antidilutive.

The following table presents the calculation of both basic and diluted net loss per share (in thousands, except per share amounts):


	Three Months Ended				Six Months Ended
	June 28, 2025		June 29, 2024		June 28, 2025		June 29, 2024
Net loss	$	(22,808)	$	(70,646)	$	(110,081)	$	(62,039)
Weighted-average shares outstanding	33,410		29,309		32,259		28,740


Basic and diluted loss per share	$	(0.68)	$	(2.41)	$	(3.41)	$	(2.16)

Employee stock awards and warrants together representing approximately 4.4 million and 4.1 million weighted average shares of common stock for the three months ended June 28, 2025 and June 29, 2024, respectively, and approximately 2.5 million and 3.3 million shares for the six months ended June 28, 2025 and June 29, 2024, respectively, were excluded from the computation of diluted earnings per share as their effect would have been antidilutive.