Good day, and thank you for standing by. Welcome to the iRobot-Aeris Acquisition conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star one on your telephone. Please be advised today's conference may be recorded. If you require any further assistance, please press star, then zero. I will then hand the conference over to your host today, Andrew Kramer. Please go ahead. Very much, operator, and good morning, everyone. Joining me on today's call are iRobot's Chairman and CEO, Colin Angle, and Executive Vice President and Chief Financial Officer, Julie Zeiler. Before I set the agenda for today's call, I would like to note that statements made on today's call that are not based on historical information are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties and involve many factors that could cause actual results to differ materially from those expressed or implied by such statements. Additional information on these risks and uncertainties can be found in our public filings with the Securities and Exchange Commission. iRobot undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information or circumstances. For today's call, our agenda will be as follows. Colin will share his perspective on the strategic rationale behind today's news. Julie will review some of the high-level financial details in support of the transaction and its potential impact on the business going forward. Colin will conclude our commentary with some closing remarks. After that, we'll open the call to questions. At this point, I'll turn the call over to Colin Angle. Good morning, and thank you for joining us on relatively short notice. We are excited to discuss today's announcement that we have acquired Aeris Cleantec AG, a Swiss-based company that designs and sells a range of high-quality, high-performance air purifiers to consumers around the world. By acquiring the Aeris portfolio of premium air purifiers, we have taken a small but important step to help realize iRobot's vision to build the world's most thoughtful robotics and develop intelligent home innovations that make life better. I'd like to spend the next several minutes outlining our rationale for this acquisition. Air purification is an attractive adjacent category for us to enter. The global residential air purification market was over $3.4 billion in 2020, and is expected to nearly double to $6.7 billion by 2027. Based on our initial research, we expect that the premium segment of this category will grow faster than the broader market. This bright outlook is in part a by-product of the pandemic, which has increased consumer awareness of the value of maintaining a cleaner, healthier home. Just as important, when we most recently surveyed our customers, they told us that air purification was the single most appealing adjacency. In fact, many customers already thought we participated in this product category. Aeris is a great fit for iRobot. Like iRobot, Aeris was born out of technology developed at MIT when it was founded five years ago. The company's air of premium air purifiers help people improve air quality in their homes by quietly removing a wide range of pollutants, including allergens, smoke, odors, and pet dander. Aeris's products are distinguished by their sophisticated design, quality craftsmanship, HEPA filtration, state-of-the-art engineering, and software intelligence. As an engineer, what really stands out for me is that based on an innovative design, the air purifiers simply move more air through a better filter quietly, effectively, and efficiently. Despite the obvious differences between the two companies' products, we share a similar philosophy for product design and competitive differentiation. Like iRobot, in RVC, Aeris is succeeding in the premium segment of a growth-oriented category by providing its customers with products that leverage the insights and technologies necessary to operate their products according to their unique, personalized needs and tastes. While Aeris's product development plans for 2022 would be compelling on their own, we are most excited about what our two companies will accomplish together. We see tremendous potential to extend AI home understanding and other relevant technologies that power our Genius Home Intelligence platform into air purification. As we noted in our Q3 results last month, we see Genius as a fundamental building block to help us create a larger ecosystem as we enter new adjacent robotic and smart home categories. By integrating elements of our Genius technology into the Aeris product portfolio, we expect to further extend our competitive differentiation in this category with air purification systems, which will be unique for their intelligence and resulting performance. Aeris is still in the earliest stages of its growth and will benefit from iRobot's extensive global network of retailers and distributors, strong brand, and marketing expertise. Aeris is on track this year to more than double its 2020 revenue of $8 million. As we execute on our innovation and go-to-market strategies, our commercial teams across North America, EMEA, and the Asia Pacific region are confident that they can expand the number of retailers and distributors that sell our air purifier products. Just as important, we plan to market the Aeris, the Aeris products directly to our growing base of more than 12.5 million connected customers. Cross-selling and upselling air purifiers to our connected customers fits perfectly into our strategy to drive existing customer revenue growth and improve our profitability over the coming years. Over the past 18 months, we've made substantial investments in our people, processes, and technology infrastructure to deliver a world-class online buying experience and put the right offers in front of the right customers at the right time. Looking at the retail and D2C sales synergies, we are optimistic that air purification will be a $150 million in annual revenue product category for iRobot within the next several years, while helping improve the long-term profit profile of the company. To make that happen, we plan to prioritize marketing investments in 2022 that will rebrand the Aeris products and build broader consumer awareness for them. As we begin to integrate Aeris into our organization, we plan to begin selling air purification directly on our website, app, and other digital channels during the second half of next year. We also expect to advance initiatives aimed at optimizing manufacturing synergies, lowering overall production costs, and driving logistic efficiencies. We expect that the investments we make to drive growth in combination with a range of supply chain initiatives will enable this transaction to be accretive to our earnings in 2023. In summary, we are excited to welcome the Aeris team into the iRobot family. This transaction accomplishes a number of important objectives. It supports our product diversification ambitions and expands our total addressable market. It presents us with substantial opportunities to innovate in ways that will elevate our value proposition to customers worldwide. It creates significant sales synergies by leveraging our existing retail distribution and marketing capability to bring the Aeris products to a wider range of consumers around the globe. Related to this, it enables us to provide our expansive, expanding connected customer base with another compelling reason to transact directly with us. Finally, as we execute on our go-to-market innovation and integration plans, it will help us drive solid revenue growth and convert it into better profitability, strong earnings growth, and robust cash generation over the coming years. At this point, I will pass the call over to Julie for some additional color on the financial parameters of the deal and our financial expectations for it going forward. Julie? Thank you, Colin. As Colin discussed, this is an exciting milestone that enables iRobot to enter a natural growth-oriented adjacency with a strong set of premium products. In terms of the transaction details, we acquired Aeris for an initial cash payment of just over $70 million, with a modest potential earn-out that is contingent on achieving certain financial targets next year. As Colin alluded to, Aeris is still quite small. With the transaction completed, all 30-plus Aeris employees have already joined iRobot, including the firm's co-founders, who will lead our newly created air purification product operations group that includes engineering, product management, and design. With only six weeks left until the end of the quarter, we expect Aeris will contribute less than $3 million to our Q4 revenue, with an operating loss of less than $2 million, primarily as a result of elevated sales and marketing costs during the holiday season. As we plan for 2022, we are optimistic that revenue from our air purification products will at least double Aeris' full year 2021 revenue of less than $20 million. From a profitability perspective, we expect that the Aeris business will be modestly dilutive to iRobot's full year 2022 earnings as we invest the resources necessary to rebrand these products and sell them directly on our website, as well as to retailers and distribution partners around the world. As we execute on these plans, we anticipate improved operating performance from this product category during the second half of next year, and that this transaction will be accretive to our full year 2023 earnings as we build further top-line momentum. That concludes my comments. I'll turn it over to Colin before we open the call to questions. Thank you. This acquisition is a very exciting step forward in the smart home marketplace and further crystallizes our vision for iRobot. The guiding North Star for iRobot has always been about using our technology to empower people to do more. Accordingly, we move forward focused on building the world's most thoughtful robotics and intelligent home innovations to make life better. Ultimately, we believe our products and services will help people live longer and more independently in their homes. To make that happen, the smart home must be maintained, efficient, secure, and healthy. This MESH acronym helps illustrate how we are thinking about adjacent product categories that may be attractive for iRobot as we move forward. Our core floor cleaning robots, Roomba and Braava, support maintenance. Adding Aeris air purification products extends iRobot into home health. The myriad of product categories that support a MESH home is a 10x multiplier on our total addressable market, increasing it from over $20 billion for floor care to well over $200 billion. In addition to pursuing partnerships and M&A to enter new markets, we are realigning our engineering resources in ways that help us drive innovation and move into new categories. We will plan to share more insight about our vision, strategy, products, go-to-market operations, and updated financial profile when we host our Investor Day on December ninth. In the meantime, we are happy to answer questions about this transaction during the Q&A. That concludes our comments. Operator, we will now take your questions. Thank you. Our first question comes from the line of Asiya Merchant with Citi. Your line is open. Please go ahead. Oh, great. Thank you for the opportunity. Congratulations on the acquisition. Quick question. Like, you know, from a profitability perspective, you guys talked about being diluted. Can you share any insights on, you know, how profitable, at least on the gross margin lines, are these purifiers? I understand OpEx, you know, you guys will drive synergies on that front and leverage your distribution and marketing spend on that. If you could talk a little bit about gross margins and perhaps even what share Aeris has in the broader air purifying market. Thank you. Sure, Asiya. Why don't I begin, and then I'll let Colin jump in. You know, as we think about gross margin, we have to recognize that this is a business that is not yet at scale. Based on everything we understand, we believe there are significant opportunities in manufacturing synergies, in lowering production costs, in driving logistics efficiencies. All of those things tell us that over time, we will be able to bring the gross margin to a place where we would expect them to be for this type of technology. Relative to your Oh, sorry. Please go ahead, Colin. I was gonna comment on the part of the share question. In 2020, the global residential air purification market was about $3.4 billion. We talked about Aeris having sales around $8 million in 2020. Obviously, Aeris is a new high-growth disruptive player in the marketplace, and we're excited to have found them at this moment in time and believe that we can take advantage of the engineering and technology that they have in their product to rapidly grow our share and build iRobot into a leading player in the air purification market. Okay. Maybe this is something perhaps you guys are gonna share at your analyst event here in a couple of weeks, but just, you know, are there synergies or relative to the target market, you know, you guys have talked about the households that are attracted to Roombas and iRobots versus the households that are perhaps the segmented market of Aeris. Do you guys see the cross-selling opportunities over there? Is this more of going after bigger households, larger TAM opportunity without really driving big price movements in your product or the pricing strategies of your product? Maybe this is something you guys wanna share at your analyst event, but just kinda curious how, you know, this particular product category came on the radar, versus, you know, other robots that you guys have talked about, like lawnmowers, for example. Yeah. No, happy to go and answer that. When we analyzed our customer base and asked them within the main MESH framework of places that we can expand, what is the closest adjacency, air came out as the winner. We felt like this was something that there was an opportunity for an inorganic move. There's a huge benefit that we see in taking a smart air purifier that is a standalone device and hooking it into our Genius Home Intelligence system to give that air purifier the context to optimize its performance, based on where in the home it is and what's going on in the home at the time. that the synergy around customers and also the performance synergies that exist made this a very attractive move and one that we could execute quickly and bring to market swiftly. Okay. Thank you. You bet. Thank you. Our next question comes from the line of Ben Rose with Battle Road Research. Your line is open. Please go ahead. Yes, good morning and congratulations on the acquisition. It's been a while since we've seen a product acquisition, so it's very exciting. Couple of questions, Colin. With respect to my first question is, where are the products currently being manufactured and what are your plans in terms of the manufacturing integration? Sure. They're currently being manufactured in China, are subject to the current tariffs to anticipate your next question. We're definitely looking at all options and believe that we have a good high-quality situation that we're getting them manufactured today and there may be opportunities. Okay. With regard to when you look at the expected $16 million in revenue for the company's products this year, you know, roughly what percentage of that is coming from, if you will, classic retail channels, e-commerce and other retailers at this time? The vast majority of it, you know, well over 50% of it is coming from consumer channels. They do have some commercial products which raise the bar even higher in the level of filtration that they're able to deliver that they are present in the commercial side, but that's the minority of their business. The technology is great, and there may be some opportunities to take advantage of that as well. Okay, great. If I may, just one more. Does the company have any patents, and then maybe kind of a follow-up on that is, maybe just a little bit on your vision as to how, products in this category can be differentiated from the competition? You know, from the perspective of issued patents, the answer is no, but there's a lot of technology in the works. As far as what differentiates the product, this is great engineering. This is something that just I love when I find a company who can narrow down what is the problem, how do we actually, without smoke and mirrors and gimmicks, solve the problem as purely and efficiently as possible. The founders were inspired by spending time in Beijing and just seeing what a huge and terrible problem air purification is. They knew that a solution would simply move more air through a better HEPA filter more efficiently and make sure that you minimize the amount of air that's impure being sucked back into the device, effectively reducing its effect. That, relative to leading players and so forth, this moves a lot more air through its HEPA filtration, for the price, and we think that ultimately gives us the ability to affect more square footage in a home and deliver a superior experience to the end customers. They have also integrated that air purification with high-quality air purity sensing so that, based on the insight that once you put your air purifier in your home and you turn it on, you tend not to touch it again, and you tend to put that air purifier on low because, on high it makes an uncomfortable amount of noise. The idea of intelligence can help maximize the utility of this air purifier that you built by building in sensing and intelligence also resonated very powerfully with us, and we think we can take that foundation of intelligence and that foundation of superior performance, marry it with our Genius Home Intelligence system, and create an air purification experience which delivers way more clean air into the home and make your home truly a healthier place to live. This is a big deal. We think it's tremendous differentiation and there's a lot more on the roadmap to come. Great. That sounds very exciting. Look forward to, you know, hearing and learning more about it. You bet. Thank you. Our next question comes from the line of John Babcock with Bank of America. Your line is open. Please go ahead. Hey, good morning. I was wondering, first if you could talk about the software currently within the Aeris products and how you ultimately envision the Genius platform further enhancing the offering? The product as it exists today, it has an app. It has the ability to go operate and control the air purifier remotely. It also has the opportunity to set different parameters on at which the robot would turn on to different levels of power based on the air quality. That's the fundamental linkage between air quality sensing and the air purifier's behavior is there. We look to take that to a different place using the Genius intelligence, where frankly, if you think about it, where an air purifier is in the home actually tremendously impacts how you want it to operate. Where sound is far more important in bedrooms and power and anticipation of things getting smoky and so forth, it could be a very different profile in the kitchen. Whether you're home or not obviously could impact on what the device can do. Even interpreting what is happening in the home can be influenced by understanding more about where and what window adjacencies and other things exist in the home. We see a very long roadmap of taking a great platform of air purification and making it automatically, without burdening the consumer, able to behave in a way where many times more cubic feet of air is purified in a way which is more respectful to what's going on in the home than any air purifier has even been imagined in its creation. We love the synergies with this product. We think it's a great example of how context, this idea of where is this in the home, what's going on in the home, can be used to multiply the effectiveness of the investments we make in devices that we put in our home. Gotcha. Are you imagining any link between the robot vacuum and robot mops and the air purifier at all? You know, how are you kinda thinking about that? Or maybe that's taking it too far. I mean, it's not taking it too far, but I won't tell you everything what we're gonna do. You can imagine that there are linkages between things like vacuuming and air quality and there's other opportunities for synergies as well. Gotcha. I don't know the extent to which, you know, based on any surveys or based on any other knowledge you might have in the market, but just kinda curious, to the extent that you might currently have customer overlap with air purifier market. You know, I recognize this business is small, but just wondering, you know, if you have any sense as to how many people that own your vacuums now might also own air purifiers. I mean, I can give you this, that when you survey a general pop customer base, and you ask them for brands that they would expect to buy air purifiers from, iRobot is one of the top brands that people expect, even above companies that are dyed in the wool air purifier companies. We see a tremendous brand permission, and we also believe that willingness to invest in premium quality floor care translates very well to wanting to invest in premium quality air purification products. I won't give you the details, but I will say that we think this is a very powerful and logical adjacency. Gotcha. Just one clarification, and I think this even goes back to a question I mentioned earlier, but just overall, you know, you did talk about how you expect this to improve the company's long-term profit profile. Could you just elaborate on that point? Well, we announced in 2023 that we believe this is an accretive acquisition. We believe that it has the potential to scale to a very material revenue level at gross margins, well, which will help move in a positive direction our overall gross margins. Okay. Thank you. That's all I have. Thank you. Thank you. As a reminder, if you have a question at this time, please press star then one. Our next question comes from the line of Jim Ricchiuti with Needham & Company. Your line is open. Please go ahead. Thank you. Good morning. The question I had is just looking at the products. Are filters and accessories a significant part of their business? Filters are an important consumable, but they're not a material, or they're not a driver of current revenue. It is an ongoing expense, and there would be accessory revenue associated with it. Got it. Not knowing a whole lot about the market, Colin, you talk about the premium segment of the market being faster growing. Is there any way you can give us a little bit more color as to how much that premium segment represents of the broader market? I think that would be something that we'll make more clear as we go forward. I think that it's tied to our positioning, but you know, the premium side of the market over $500 is the area that we think is outperforming the remainder of the market. As the market continues to grow and appreciation for performance continues to grow, there is a greater appreciation that if you want to move enough air to actually purify a room, you're going to be spending money in the premium cost categories. There's, you know, this is a market where there is great opportunity to more clearly deliver performance, more clearly deliver information around how clean is the air in your room, actually, particularly more than a few feet away from the air purifier itself. This all favors the market developing toward more premium, better air purification products. Got it. Maybe a question for you, Julie. Should we think about this business as having the kind of a similar seasonality as your existing business? You know, that's a great question. I think, you know, some of the things that drive consumers are the same. I think as we look at this business, there are some other factors that play into the seasonality, depending on various pollution levels and timing of things like forest fires. As our place in this premium market grows, I think we'll have a better view of how that will play out through the quarters in a given year. Yeah, I think it's too early to tell because, you know, in vacuuming, you tend to buy a vacuum cleaner when you need one. Yet, our business is seasonal because investing in a Roomba is something that is also a discretionary purchase and viewed as something that is a special purchase for a home. I think that a lot of air purifiers get sold around pollen season. A lot of air purifiers out in California get sold when the wildfires are raging. Yet, I think that as a premium market, premium device, it may inherit some of Roomba's dynamics as well. I think as the more mature, the category gets, you'll see it happening throughout the year. I think that we'll always have a bit of seasonality. Is this mainly a U.S. business as of now, or is it? It is a global and will remain a global business. We think air purification is something that will play well in all of our markets. No, I'm sorry. Maybe I should have been more clear. I know it's small, but is the bulk of the revenues generated from the U.S. or is it more dispersed? It's a global business today with a heavy North America presence. Got it. Last question, and Colin, I don't wanna front-run the Investor Day, but, you know, when you describe this mesh framework, you know, obviously now you're in two of these areas. I'm wondering, you know, how we might think about the other two areas that you outlined in this framework as areas that would be of interest to the company or not. I think I've plainly stated that they are of interest to the company. From the perspective of pacing, you know, we are fully committed to making sure we get the most out of this Aeris acquisition. It does represent iRobot putting a foot back into the M&A domain and looking more aggressively at inorganic growth as a lever that can fit, particularly as we have built out our direct-to-consumer capabilities and have grown our existing customer revenue. You know, there is no timeline, nor should there be an immediate expectation that we're going to be acquisition heavy. I do think that with this acquisition, we are signaling that iRobot is moving beyond a sole focus on the floor into robots and smart home technology that can improve the mesh home experience. Got it. That's helpful. Congratulations. Thank you. Thank you. Thank you. Thank you, and I'm showing no further questions at this time, and I would like to turn the conference back over to Andrew Kramer for any further remarks. Great. Thank you, operator. Thanks to everybody for tuning in on short notice. Appreciate everybody's support, and we look forward to spending more time with you at our upcoming Investor Day on December ninth. Details of that should be publicly announced very soon. That concludes today's call. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day. Goodbye.