iRobot Corporation (IRBT) announced the debut of its Braava Floor Mopping Robot in North America close on the heels of its successful introduction in the European market in the second quarter. Shares of this leader in delivering robotic technology-based solutions jumped 4% following the news as the product is expected to augment revenues.
The robot with dimensions of 3 inches height and width of 8.5 inches is convenient to use. At the push of a button, Braava will mop the floor and when it is done, the robot will return to where it started. It has been designed to systematically and efficiently mop (dry or damp) the entire floor in just one pass. This scores above the iRobot’s Roomba vacuum cleaning robot and Scooba floor washing robot, which require several passes to clean the floor.
iRobot will rollout two models under this series -- Braava 320 and Braava 380t. Both are designed to sweep and mop floors. Braava 380t is a costlier model due to its advanced features such as upgraded navigation, fast charging battery, a quick clean mode, a turbo charging mode and a furniture guard included on the bumper, and pause/resume functionality.
iRobot also makes robots used by military services and law-enforcement agencies. iRobot’s bomb-disposal robots is pitted against British rival, QinetiQ, Turkey's biggest defense contractor, Aselsan. Separately, Northrop Grumman Corp. (NOC) officially launched its CUTLASS unmanned ground vehicle, and plans to expand it internationally.
This might be a heavy blow to iRobot. Furthermore, a cut in defense spending will also affect iRobot’s revenues. However, given that cut in U.S defense spending will reduce demand for its military robots, iRobot has been prioritizing its home robots.
Since the launch of the company’s award winning flagship Roomba Vacuum Cleaning Robot in 2002, iRobot has achieved the milestone of selling more than 10 million home robots globally. In 2012, iRobot strengthened its home robot business by scooping up Evolution Robotics, which manufactured the Mint cleaning robot for $74 million.
Mint was the major competitor to its Scooba robot and the acquisition put iRobot in a strong position in the market for home cleaning robots. Braava is a revamped version of Evolution Robotics' Mint floor sweeping robots.
iRobot had launched Braava in the second quarter in Europe, which provided a boost to the region’s results compared to the first quarter. Domestic revenue growth of 26% along with international growth of 18% led to a 20% year-over-year increase in Home Robot revenues in the second quarter. The launch of Braava overseas and broadened availability of the Roomba 600 and 700 robots to retailers combined to increase Home Robot revenues.
The launch of Braava in the U.S along with further growth from adoption of the company’s core products are expected to lead to domestic revenue growth. Revenues are also expected to be strong in the overseas market driven by strong demand in Japan, continued Roomba sales in China and expanded distribution of Braava in EMEA. Given the successful domestic home robot business, iRobot expects the overall home robot market to grow 25% to 30% in 2013.
Robotic floor cleaners have proved to be one of the fastest growing consumer products in the past few years and iRobot is in a position to capitalize on the demand. Braava will undoubtedly provide a revenue boost for iRobot in the domestic market, which generated around one-third of the company's home robot revenues last quarter.
This will also provide a competitive edge to other manufacturers such as Philips (PHG), Samsung Electronics Co. Ltd. (SSNLF) ASUSTeK Computer, Inc. and Micro-Star International, who are introducing new generation of vacuum robots with smart mapping capabilities.
iRobot holds a Zacks Rank #2 (Buy).
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