Good morning, good afternoon, or good evening. Regardless of when you're tuning in, I'd like to welcome you to iRobot's 2021 virtual Investor Day. My name's Andy Kramer. I'm Vice President of Investor Relations at iRobot. We're really excited about this event. It's a great opportunity for you to get much more insight into key areas of our business, the opportunities we see to drive profitable growth over the next several years, and the strategy we're implementing to capitalize on those opportunities. Before the event gets underway, I will need to remind everybody that the statements made during our Investor Day 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. Those 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 risk factors 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. Related to our financial disclosures during this event, we will reference certain non-GAAP financial measures as defined by SEC Regulation G. Those include non-GAAP gross margin, non-GAAP operating expense, non-GAAP operating income, and operating income margin, non-GAAP effective tax rate, and non-GAAP net income per share. We believe that our non-GAAP financial results help provide additional transparency into iRobot's underlying performance and potential. Our definition of these non-GAAP financial measures and reconciliations of each of these non-GAAP financial measures to the most directly comparable GAAP measure are provided at the end of the Investor Day presentation. It's available on our website at www.irobot.com. It's also available for download in the webcast viewer that you're using to view this presentation. Also, unless stated otherwise, the historical financial metrics that we share, as well as the financial metrics provided as part of our outlook that we reference during this Investor Day, will be on a non-GAAP basis only. For any individual shareholder who's tuning in, I would like to let you know that if you've owned 100 or more shares of iRobot's stock for at least six months, you are eligible to receive special offers, including discounts on a new floor cleaning robot or a free gift when you buy a new Roomba. It's pretty simple to validate your eligibility and redeem your perk. Just visit the Apple App Store or the Google Play Store and download the free Stockperks app. After that, you just create your profile on the Stockperks app, and then you'll be able to discover and redeem your perks. Today's Investor Day is entirely virtual. We'll do our best, however, to make it feel as though you're in the room with us, minus, of course, the mediocre food and obligatory corporate swag. The first part of our day will run a little bit more than an hour. You'll hear from our CEO, Colin Angle, our Chief Product Officer, Keith Hartsfield, and our Chief Marketing Officer, Kiran Smith. After that, we'll host a live interactive Q&A session with some of our analysts and shareholders. If you're not able to ask a question during the Q&A session via the video, you can submit your question in writing. You can submit it via email to investorrelations@irobot.com, or you can use the icon on your webcast viewer to submit your question that way. After that, we'll return to presentations. We'll do about 45 minutes of presentations from JJ Blanc, our Chief Commercial Officer, Charlie Kirol, our Chief Digital Business and Supply Chain Officer, and Julie Zeiler, our CFO. Julie will close out the presentations with a deeper dive into the key drivers for our performance and a detailed view into our long-term financial model. After that, we'll finish with another live Q&A session. At this point, that concludes my introductory comments. I'll turn the virtual Investor Day floor over to Colin Angle. Take it away, Colin. Hello, everyone. I'm excited to be here with you today for our first virtual Investor Day to tell you about our strategy and our plans moving forward. As you know, iRobot is the consumer robot company, and we lead the world in the building of this exciting new market and the innovation which stands behind it. Over the years, iRobot has done many things, founded in 1990. In 2016, we decided that we would put 100% of our focus on the consumer and the household technology and robotics industry. Most recently, we took a bold step beyond floor care into the smart home through adding intelligent air purification to our line of products. Beyond our corporate milestones, it's fun to look a little bit back at our history, where in 2001, iRobot created a breakthrough robot with tremendous mobility, which allowed our robots to be practically fielded out in Afghanistan and Iraq and serve mine hunting and disaster response missions. In 2010, we sent our Seaglider robot down to the Gulf of Mexico to oversee and ensure appropriate cleanup of the Deepwater Horizon oil spill disaster. Moving forward, as we committed ourselves to the home and the consumer, innovations continued with the self-emptying robots like the s9+ and most recently, with our most intelligent robot ever, the j7+ robot, capable of doing visual obstacle detection and avoidance to give the robot an even better ability to finish every mission it started. While iRobot has long been known for its robots, iRobot was founded on a core of artificial intelligence technology. In fact, back in 1990 when we were founded, iRobot's core technology was something called behavior control, which our founders invented, and to this day represents the core of modern artificial intelligence around the world. In 2015, we commercialized the first visual SLAM navigation engine in our Roomba 980, and in 2021, as I mentioned, adding visual object recognition to our portfolio. Our robots can dramatically better understand the environments that they're operating in, so they can do it more effectively and more completely. This type of innovation requires a company that is dedicated to solving hard problems. iRobot is a company on a mission, not just to imagine the future, but to build it. Today you're going to hear, not just from Julie Zeiler, our Chief Financial Officer, and myself, like you're used to, but we're opening the doors to give you firsthand access to our Chief Product Officer, Keith Hartsfield, our Chief Commercial Officer, JJ Blanc, our Chief Digital Business and Supply Chain Officer, Charlie Kirol, and our Chief Marketing Officer, Kiran Smith. A little bit of a word on our vision before I dive in. To build the world's most thoughtful robotics and intelligent home innovations that make life better. iRobot is all about building the future, and that means creating robots that intelligently partner with their owners in ways that machines and people have never collaborated before. To extend beyond what traditionally people think about as robots, and bring this thoughtful intelligence into other home innovations, all with the purpose of making your life at home safer, more healthy, and more manageable. Our strategy is probably best described as innovate, get, keep, and grow. Innovate our products, get customers into the franchise, keep them, love them, and then grow the value of that relationship over time. All supported by being able to attract and retain the world's best talent, ensure through a commitment to agile operations that we can on a day-to-day basis, work to overcome the daily challenges of ensuring a steady supply of product into the market, and by committing ourselves to being a data-driven company, where if we can't measure it, we can't optimize it, and we probably won't do it. These enablers complete the picture of iRobot today. I'm gonna talk to you about two transformations which are changing the landscape of iRobot and are critical to our future value creation and business. The first has to do with how we differentiate and the role software is increasingly playing in our business. The second is how we bring our product to market. Starting with software, if you think about a number of different industries, the PC industry, when it first came on the scene, was all about the hardware. How much hard drive did you have? How much RAM did you have? What was the CPU speed? The hardware was king, and the software that came on the PC really didn't figure into the decision process of which PC you selected. On or about Windows 3.1, that all changed. You can think about today, you would never imagine choosing the hardware of a PC prior to choosing which operating system you wanted that hardware to run. The same thing happened in cell phones. In the early days of cell phones, hardware was king. You looked for the coolest physical design, whether it was the tiny Razr phone or the BlackBerry with the keyboard. Hardware drove decision-making. Again, today, you choose which operating system you want first, and then you look to see what hardware options you have. I would say that in the robotics industry, we are following the same pattern. When we first launched the Roomba and for many years following, the question was, does this robot work? Can it actually clean? Hardware was king. Which hardware platform you'd purchase was the primary decision point. With the advent of iRobot Genius and the home intelligence software, which we are bringing to the market today, the differentiation between hardware is now eclipsed by the customer benefits delivered through software. iRobot's product strategy is to differentiate based on superior intelligence delivered on high performance, beautifully designed hardware. It is this software that is going to ultimately bring the next level of performance and the next level of collaboration between robot and person. I'm gonna spend just a little bit of time talking through what I mean. What is iRobot Genius? What is a home intelligence platform? Why should our customers care so deeply about it? Well, there are four tenets I will talk through, and the first is this idea that we already have in our home an operating system. Take your shoes off before you come in the door. Wash your hands before you sit down for dinner. Don't wake the baby during nap time. This operating system shouldn't just apply to the people that live in the home. It should apply to the technology we bring into the home. By making sure that the architecture of the intelligence that we're building and putting into our products respect the home that have the privilege of being invited into is core to developing an ongoing, effective partnership. Secondly, we must realize and accept that even today we are beyond the level of acceptability in home complexity. People are being asked to serve more as an IT department for their home technology than enjoy the benefits of their home technology, and this must change. Through the integration and approach of iRobot Genius, we seek to capture preferences as opposed to asking our customer to program them indirectly, and then leave the details of the implementation of those preferences to the technology itself. That's in support of giving our customers better control over what actually happens. The third tenet says, I know your preferences. I understand that I should, for example, clean while you're not home, so I don't annoy you. I also must be a great listener, and that's where this collaborative intelligence concept comes in. A great home intelligence system should be able to take a very, very precise command, clean around the kitchen table, or a very general command, clean the house, and do the right thing. Through a thorough and deep understanding of the home, we can do that with Genius. Then lastly, underlying all of this performance, we have to understand the fact that homes are dynamic places. They constantly change. Furniture moves. You shouldn't have to remap every time you open a door or move a table or a couch. This intelligence system needs to continuously update and securely update to new furniture, new layouts, and of course, new device software. And when you buy a new Roomba or you add a new smart device to your home, this knowledge should seamlessly and automatically transfer to that new device or technology, much like your old software on your cell phone moves seamlessly to a new one. These four pillars of the Genius home intelligence system represent the anchor that answers the question, what is this home intelligence system, and why should I want it? We'll measure our success through looking at what is our share in the marketplace. How does iRobot's innovation engine lead to the development and release of new products? How actively is iRobot updating this intelligence system with new features, like the feature we launched just a week or so ago around recognizing Christmas trees and shoes and socks, just a few months after launching Genius 3.0. About the intellectual property, which serves as our moat to protect the leadership that we have in this category. Today, we have sizable segment share around the globe, a clear leadership position in robots above $200. We've launched two major releases of Genius this year. We have nearly 1,800 patents worldwide and have launched two new products this year in addition. In 2024, expect continuous commitment to upgrading this differentiated intelligence, protecting our intellectual property, and launching many, many new products, and certainly not just products that clean floors. On the segment share, you should expect iRobot's commitment to innovation to deliver continued leadership. As the home robot industry continues to evolve, one thing that I will acknowledge is the fact that traditional ways of measuring share, which focus on retail distribution, are becoming a little less accurate because of the tremendous growth in direct sales. We'll do our best to continue to report segment share, but there will be more estimates required, and the fidelity of some of that data will be less accurate than it was in the past. Time to switch gears to our go-to-market strategy. This is the get, keep, and grow dimensions. If you think about where we are moving, it's from this idea of the old iRobot, which was really focused on a transaction at a retail point of sale. Whereas today, that is still important, but once you're in the franchise, we hope by investing in understanding your needs, your home, your challenges, how you want your home maintained, we can create a lasting and long-term relationship and understand your needs well enough that we can market solutions directly to you that meets your individual needs. This is important because it creates a dramatic improvement in iRobot's ability to financially grow. The idea of a retail sale, on average, it's worth about $250. The gross margins today are in the mid-30s%, and it's moderately expensive to go find you and get you to buy. If we can take that, which actually is a very powerful engine to getting new customers into the franchise, and then augment that by saying, "Okay, we now know who you are. You've opted into communications with us," like 12.5 million customers have done today, and then we can transact with you in a much more efficient fashion because we can email you directly or communicate directly with you on the app. We can capture more of the revenue, and in doing so, improve our gross margins dramatically. We are multiplying the value of every customer who comes into the iRobot franchise, which accelerates growth in a sustainable fashion and improves profitability substantially. We've begun talking about even the step after this idea of nurturing and growing our customers by giving them an opportunity not just to transact with us in a wholesale perspective, but instead join us on a journey encapsulated by a subscription, where the barrier to purchase is lower because you're spreading your payments out. The relationship is enhanced because of the white-glove opportunity we have to meet your needs. Because you are committing to us in a multi-period fashion, we're able to actually improve our economics even further over a multiyear period. Breaking that down, that's how do we bring a new customer into the franchise? It's predominantly retail. It is tremendously effective. I mentioned 12.5 million customers. You can see the very, very rapid growth iRobot has enjoyed in its connected consumer base. If you roll the clock forward a few years to 2024, we believe we can get that number over 30 million connected customers, each representing an opportunity to harvest and nurture over time. How will we keep? Well, we look at the utilization. How often are you using your robot? How can we make sure that you're having a great experience? Because while your robot will tell us if it's being used, by looking at continually improving our customer satisfaction scores and our net promoter scores. Honestly, they are already quite awesome. 90% utilization. Net promoter score is to die for, and customer satisfaction above industry standards. I think that we will continue to invest. We'll continue to make sure that as we scale as an organization, that we can deliver the same type of amazing experience over time and perhaps strive to even do better. On the growth side, the key metric is existing customer revenue. How much of iRobot's revenue is coming from our existing customers? Because while we have 12.5 million rapidly growing on our way to 30 million, how can we sell you more stuff? How can we better meet your needs? Where we are today is the fact that about 1/3 of our revenue comes from existing customers, 11% from people who have not yet connected their robots or bought robots that were impossible to connect because they didn't have the technology in them. 21% of our revenue today comes from connected customers. This is growing very quickly, and we believe that by 2024, that 21% can get above 35% in that connected customer revenue base. These are customers, we know how to get to you, we know how you use our products, and we understand your level of satisfaction and what you want next. A 35% CAGR over the next few years in connected customer revenue. We'll see a slight decrease in non-connected customers as we're basically no longer selling robots that are unconnected. We continually work to increase the percentage of our customers who opt to connect the robots that they buy. There's another opportunity in front of us with this rapidly growing and accessible customer base who is excited about the iRobot brand and is excited about the way that we understand them and their home. We're taking a step into growing our total addressable market. Today, 20 billion TAM is our market opportunity as we estimate it. By adding air purification, we grow that by another 10 billion. By looking at how we can leverage our connected customer, our brand strength, and this AI and home understanding technology to take products which are simply premium and turn them into differentiated and intelligently energized to do a better job, we believe that we have a right to play in well over $200 billion of addressable market, all brought together under the roof of the smart home, managing the smart home, making the smart home more efficient, enabling the smart home to be a secure location, and ultimately making the smart home a healthier place to live and raise your family. Why was air purification our first diversification past the floor? Well, simply put, if you look at the overlap between Roomba customers and customers who are very interested and excited about purchasing air purifiers, it's about an 80% overlap. As we looked at our brand, we discovered that despite the fact iRobot isn't even in air purification, we are one of the top brands that customers in general expect to buy an air purifier from. We feel like we have brand permission. We feel like we have tremendous overlap in connected customers. We believe that adding the Genius home intelligence system to air purification can make a profoundly differentiated product experience, because instead of spending a lot of money on air, an air purifier, discovering that when it's on high, it makes a lot of noise, and thus leaving it on the lowest setting forever, we can make that air purifier smart. Just like you want Roomba to clean when you're away, you could have your air purifier kick up to its highest level when no one is home. You can also make that air purifier work differently depending on which room it's in, because the Genius, it knows where it is. Looking at our financial model, it lays out like this: revenue enjoying a 16%-18% CAGR, bringing us up well over $2 billion, $2.4 billion-$2.6 billion. Gross profit margin accelerating to 43%. To set expectations, that is not going to be a linear march. In 2022, we still see significant headwinds based on the elevated costs of shipping and tariffs, although we believe that those headwinds will ease, allowing 2023 to start to accelerate toward that 43%, which we will achieve in 2024. Through that journey, we will be continuously leveraging our scale to improve operating profit margin to between 12% and 13% by 2024, yielding a 2024 EPS between $7.50 and $9.25, which we are very excited to be sharing with you today. The RVC category remains vibrant and underpenetrated. We have tremendous growth opportunity in front of us with just Roomba. We think our investments that we've made over the past three, four years in software have given us a foundation to truly differentiate based on the artificial intelligence, the machine learning, the visual object recognition technology, and iRobot's ability of pulling all of that together into real customer differentiation, that we can multiply our customer unit economics by moving from a company focused solely on get, to one that looks at keeping its customers and growing the value of each individual customer. Then further growing that financial contribution with each of our customers by giving them things that they would expect and be excited to purchase from iRobot. Doing so, I believe iRobot enters a new era of value creation. Thank you. As we transition to the next speaker, a little bit of fun. Top 5 Roomba names. Not surprised it's Rosie. Pretty surprised about Wally. Profoundly surprised that DJ Roomba has made it to number 3, and the others make sense. Thank you very much. Good morning. My name is Keith Hartsfield, and I'm the Chief Product Officer for iRobot. I'm gonna tell you what we've got going on around products and services today. iRobot is a market leader, and we've sort of invented and grown the category. We've got a really strong brand and tremendous market access. We pay attention to our customers. That's an integral part of how we do what we do. We continue to maintain market leadership across all geos outside of, say, mainland China, with tremendous product and service offerings. One of the really exciting things for us is that the market's in its early days. As you can see on the left, depending on which market you look at, the household penetration is very low. We believe everyone needs clean floors and the things that we have to offer consumers as they live in their homes, whether it be around maintaining their house or other things that we can do that I'll allude to later. But we're a market leader, and we have great access to these consumers, and we have NPS scores that go up over time. As long as we stay focused, I believe we'll enjoy a nice ride as we look forward. Let me talk a little bit about why I think we can do that. One of the things that is central to how iRobot does what they do is we put consumers at the center of everything that we do. I see our job is to bring innovation against consumers' needs in the places that they live. That'll drive loyalty and sustainable differentiation because the way you do that, the way you clean someone's floor actually matters. Let me tell you a little bit more about how we do that. Starts with paying attention to your customers. We do a lot of organic first-hand studies with consumers directly, focus groups. We have a lot of quant product studies. We do all kinds of user experience testing, whether it be going into people's homes and studying how robots move or understanding what do you wish the robot should do and sort of titrating out what people's needs are, what are their expectations of technology, and how does iRobot help them get what they need from the technologies that we're creating on their behalf. Over time, we've built up a very large installed base of connected consumers. We have the ability to understand how they're using our robots and our technologies in their home. 12.5 million is quite a big number compared to how many robots we sell every year. The 12.5 million connected consumers is part of the story. What they do with their robots and how we can understand the opportunities in that data is really important. The 15 million missions per week gives us a rich data set. What kind of missions? How many got stuck? How many were successful, et cetera? The number of maps that are created is another source of insight. How many rooms do people have? What kind of rooms are they cleaning? What kind of rooms are they not cleaning, et cetera? Where are the hazards found most frequently? These are all rich opportunities to learn. Our data science and analytics teams take a look at 12 TB of data every week, and it gives us a really rich source of information. Not to be overlooked, the privacy by design philosophy is like we put this on a pedestal at iRobot. We make sure that there's encrypted, protected information in the cloud that even if you get into the cloud, you don't find out anything interesting. We keep as much of that as possible on the robot, protected from being hacked and things like that. We do see the opportunity to put that information to good use by the fleet learning and even the personalized learning we can get about how each person is using their robots or the context of their home. There's opportunities that we can give to our engineering and technology teams to create more value for our consumers. Over the years, those of you that have been following us will know that we've had a lot of innovations come to market. Along the top would be the traditional view of the products, you know, the 900 series back in 2016 up to and including the i3+ and the i1, as well in the j7. The product roadmap has become very rich over time. I would draw your attention to the bottom in terms of how we do what we do. The way that we've developed technologies that clean your floor better over time, and the way we brought Genius out in the end of 2020, and evolved the capabilities to do things like enable voice communication with the Roomba via voice assistant. Say, "Hey, Roomba, clean around the kitchen table. I just, you know, had dinner, and there's stuff everywhere around the table." You can do things like that. The latest j7 product release that came with the Pet Owner's Promise to avoid objects because we decided to put the camera on the front of the robot, and we put that rich sensing capability to use in a lot of cool ways. One of the things we announced recently was the ability to avoid Christmas tree skirts and things like that. That is an ever-improving technology. Because we have a rich data science and machine learning practice, we're gonna continue to evolve those models over time and continue to deliver on consumers' needs. That Genius drumbeat, we do that a couple times a year. We release a set of improvements across the fleet of products to help them do what consumers need them to do better. I think it's working. If you look over time, we certainly have a whole lineup. We've also seen the mix of premium products increase and increase over time as we've grown our revenue and our share over time. Shifting that mix up is very important, and it speaks to the fact that we're doing something that is resonating with our consumers, right? Bringing that autonomy that people want to go clean their homes, but doing it with thoughtful intelligence so that we do it in a way that is comfortable for them. One of the analogies I've used in the past is if you had an autonomous teenager cleaning your house, it'd be a bad experience because they'd come when and how they wanted to, and they wouldn't probably listen very well. What we want is that engagement with the technology and the consumer so that we can pay attention to how they'd like to have their house cleaned and do it in the way that they want. That's where we think the magic lies. That personalized control when you need it, the thoughtful intelligence of, "Hey, did you know I can set up a keep-out zone around the dog bowl so we don't bump the dog bowl and spill water, et cetera?" There's a lot of opportunities and to bring value to consumers when we do things in that way. The kind of things that you've seen us talk about in the past, you know, the best-in-class cleaning, the object avoidance with front-facing cameras is a really rich opportunity with a lot of runway. We have mops that are really great at mopping, and we have vacuums that are really great at vacuuming, so we developed the teaming capabilities so that we can say, "Hey, vacuum and then mop the kitchen," in a very seamless way for consumers to get the best of the cleaning experience in the way that they want it. You'll see us start to push out, and we're in beta now on the i3 platform to push out mapping to consumers. You'll see that start to expand with time as well. As you see us bring the Clean Base down to even the i1 level, we did that because we know the consumers really don't wanna empty the bin every time that the robot runs a mission, and we're trying to make that more accessible to a large swath of our customer base. As I alluded to, the Genius platform is a really important part of what we do. At a very high level, I think Genius is how we deliver on the technology in all of its glory against consumers' needs in a seamless and sort of human way, a very accessible way for people. Last year, we launched Genius 1.0 with the notion of understanding the consumer's needs, and one of the big needs they had was to pay attention to how I want you to clean. We put in a lot of experiences in Genius 1.0 around how, when, and where the Roomba should clean the house or the Braava should clean the house. We set up things like precision clean zones around a kitchen table or around a countertop or around a couch that could be automatically identified and placed on a map because that's what people needed. Recommended keep-out zones were a big deal. If we got stuck in the same place several times, we would say, "Hey, do you wanna put an automatic keep-out zone in this spot so that your Roomba doesn't get stuck?" Seasonal recommendations were important because a large portion of our user base has pets. Understanding when it's shedding season, when we can clean more frequently to keep your house, you know, a little bit better than it was, resonated very well with our consumers. In Genius 2.0, we brought in innovations like showing you how much time is left on the mission. Sometimes you only have a little while before the company arrives, and you wanna make sure you clean as much as you can, or the Roomba cleans as much as it can before they arrive. Clean While I'm Away was a really big value to consumers, resonated very well because when you leave the house, we could say, "Hey, would you like us to clean while you're away?" You could say, "Yes," and it would just happen like magic. It was a delighter for our customers in Genius 2.0. This Q1, we launched Genius 3.0. Genius 3.0 brought a bunch of interesting things as well. One of the observations we got out of the research was that people they want that benefit, but they're not necessarily technology enthusiasts. We needed to sort of simplify it down to what they're after and those human needs that they have. House rules was around, "Hey, pay attention to what I'm doing." That if I have Do Not Disturb set up, don't vacuum then. Don't interrupt my Zoom meeting or don't interrupt my nap. Our Quiet Drive is if the dock is in one part of the home and you wanna clean the kitchen, which may not be where the dock is, don't be noisy when you're passing through areas you're not cleaning, right? Just those little elements of paying attention to the user's needs and helping them get the best out of our technologies. Careful Drive was to be more gentle in the home. We enhanced the capabilities of the robots to do just that. Preferences, not programming, really gets to that. Hey, this should be easy for people to understand how to use. What if the voice assistant could give you a notification that's saying, "Hey, I'm done cleaning the office." That's really interesting to consumers. The health recommendations, other things to help you keep your home just as you like it. We're paying attention to people in the context of their home and trying to enable the technology to make that a little bit easier and a little bit better for our consumers. Collaborative intelligence is all about that, "Hey, I noticed that you have had me clean here a bunch of times. Would you like to set up a clean zone or a keep-out zone?" Or the in-the-moment cleaning, as I had alluded to earlier with the voice assistants. You can do all of those things now. In terms of the home knowledge, making it easier and quicker to set up, so we remove the barrier to engagement. In many cases, we can give you suggestions that are high probability suggestions for what room, what the label for that room should be. We're starting to, as you get your second robot, being able to share maps across robots. If you had an i7 and you get a j7, we can copy that map in. Continuously updating the maps, especially as we start to share maps over time, when you set up keep-out zones and clean zones, those things will be able to start being shared more and more with time as Genius continues to evolve. This is a very powerful platform for us to continue to deliver innovation that's personalized, with that thoughtful intelligence and the personalized control that are really important to our consumers. The j7, you guys hopefully saw that we launched the j7 recently. It's... The designers did a tremendous job of making this a beautiful device without sacrificing anything on the capabilities. You've got the spun metal on top. You've got a much more compact clean base because we got feedback from our consumers that we love the functionality, but we wish it was less imposing physically. We put a space in that clean base on the top to store those bags that we know you're going to need, so you don't have to go to the closet or wherever you were keeping them previously, right? All those elements of consumer-led design where, you know, form follows function and things are less imposing, they blend into your environment, those are things that in terms of how we do what we do in the physical space that we think really matter to consumers. Even the detail of the leather tab on top of the Clean Base is a very well-received element of the physical design, and it wasn't by accident. We paid attention to what people's preferences were, what resonated with them, and we designed things that address those aesthetic needs as well as the functional needs. The j7+, one of the most interesting and most cool things I believe about the front-facing camera and the continuous learning capabilities that we brought in, the PrecisionVision Navigation is very robust. So when we see something we don't recognize, we have a large fleet of devices. We can continue to, with consumers opting into this, say, "Hey, I saw something. Do you want me to avoid this, or do you want me to keep going, or do you wanna move it?" Then I can carry on in my next mission. We have the user in the loop to help us train the models and help them get the best experience. The Roomba j7 and j7+ is our newest product, and very, very happy with this. It's a very, very thoughtfully designed product. You know, the physical aspects that I alluded to earlier are very important to consumers. It just blends into their home. Physically, it's a very pleasing product. The technologies inside, though, are even more exciting, at least to me and I think many consumers. The object recognition that PrecisionVision Navigation, the front-facing camera that enables all of that, is really powerful for us because it allows us today to identify things like cords or pet waste or, as we announced recently, things like Christmas tree skirts and things like that. That'll continue to get better and better and better. Not to be underestimated, though, the mission completion, when you can tell the robot to go clean something, it does it and comes back to the dock successfully. j7's a significant step up in that. Because of the PrecisionVision Navigation, it doesn't get stuck as often. It's very efficient with how it does its thing. And it's much more autonomous because of that. The other thing to think about, you know, video streaming capability is something that the j7 can do. We're doing a beta now to sort of test this concept with consumers to see how they wanna use it. It might be completely unrelated to cleaning your floor, but there may be ways that people find that technology interesting and useful. We'll have to see how that evolves with time, but that's the kind of thing that we're trying to continue to innovate on against consumers' needs in their home. Like the security or peace of mind aspect. Hey, who's at the front door? Or have you seen my dog recently? Things like that are things that we could at least think about doing for our consumers. All of this is enabled by the fact that we're building in leading edge technologies into our products, right? Onboard machine learning, so everything doesn't need to be done in the cloud. It's probably better and faster to do on the robot, but it's also much more secure, so the data stays on the robot. Making sure that we incorporate things like a front-facing camera and other sensors we'll continue to put into products and extend out this platform are really interesting as opportunities to continue to innovate. Wait, there's more. As you're aware, we've got the Roomba and the Braava franchise that have been around and people are fairly familiar. We started with a hand vac last year or earlier this year, I guess, bringing that product into market. You'll see us evolve that as well, because that's an obvious thing that people need for stairs and other places that they wanna clean, where they may not most easily use a robot for. We just acquired a company called Aeris. Not only can we clean your floors, we can clean your home. There's some interesting things that we can do as we have all these connected devices. We can probably get them to work better together with time and provide more utility for our consumers in the home, because they have more needs than just maintaining a clean floor. They may want a more efficient home. They may want a more safe home where they can get peace of mind, or they may want a more healthy home, which is where the air purifier sort of plays a role, at least one of the roles it can play in the home. You'll see us start to diversify the categories of products that we offer to consumers, but you'll also see us bring those things together in a way that'll matter for consumers, so that they're not just discrete categories, they're things that are better together against the consumer's needs in their home. Let me talk a little bit about Aeris. Aeris is. Well, we acquired them. They're a relatively small company by comparison to iRobot. The reason we bought them, they have tremendous technologies, and they put a lot of craftsmanship into their products. They didn't just take off-the-shelf capabilities and make an air purifier. They put a lot of thought into how they design the filters in these products. As a result, you get real HEPA and significantly higher clean air delivery rates. We can clean the air in a room much more quickly than many of the competitors in the market. The premium positioning of their products is also very well aligned with our brand, and we think we can leverage our routes to market. As we rebrand Aeris into iRobot, I think we can really start to take a meaningful role in the air purification space for people in their homes as well. When you think about that market, you know, by price tier, it's relatively evenly split. We'll be playing, you know, in that premium space where we think we can actually clean the air more effectively, and we can do it in a way where there are opportunities to do things like, "Hey, I just vacuumed the floor. Probably some dust got kicked up in the air. We should clean the air at the same time." We have the ability to know how to clean when people are away. We can probably also put the air cleaners in turbo mode when you leave, 'cause they are a little bit louder when they're in high power mode, and then we can tune it down to low power mode when people are in the home, so we don't create unnecessary, you know, acoustic disturbance in the home. But we believe that we'll have a very strong product offering with the Aeris lineup coming into iRobot, and we'll be able to lead out in that market as well. Services. Let me talk a little bit about services. We've launched iRobot Select and Smart Care and some other offerings out to consumers. The reason that this matters is that we can really give people that. We can lower the barrier for entry, so people don't have to spend, you know, $800 or $1,000 for a premium robot. They can spend, you know, a little bit upfront and pay us by the month. That value exchange that we do every month, you get a white glove support, you get the extended warranties, and you get the peace of mind of accidental damage protection, things like that, so that you'll always have a well-functioning robot, right? The way the program is intended to work is you have a contract for a few years, but we believe that, and so far, we've been doing this long enough to get, you know, nearly 50,000 subscribers now. There's very, very low churn in this model, which is great for us. We're working to optimize the services that we're providing so that that value exchange is a value exchange and not some form of financing, because there's a lot of value to get out of the Select offering. This is exciting to me because this'll help us build a significant amount of recurring revenue over time. Although it's very early days today, there'll be a lot to talk about in the future as we start to scale these services out and create what I think is a really interesting business model for the investment community and shareholders, but also for us, from a consumer perspective, provide consumers access to our premium products, and let people get into our best product lines much more early in their journey in the RVC category, which I think will play to our benefit, but also benefit the consumers tremendously. Okay. The services is growing at a nice rate, but it's very small. The connected consumer base is really important. All the stuff that you heard Colin allude to, and Kiran will talk more about in keep and grow, is all about paying attention to the installed base. One of the things as it relates to services, a lot of the people that are current Roomba or iRobot customers are really interested in iRobot Select because they understand what the value of the offering can be. As we start to pay attention to these connected consumers, and this is growing very rapidly, geometrically still, for the foreseeable future, we have a ton of opportunity not only to pay attention to those users and find ways to remonetize them, but because we have all of the data that we have in the Home Knowledge Cloud, we can start to personalize those offers. We can keep people more engaged, and then we can grow what they do with iRobot by offering them things like Select or things like an add-on robot, a Braava, to go with their Roomba, a Roomba for upstairs. Because we have some idea about how they're living and what their needs are within their home. I don't wanna overlook the other things that we do that I think are really important to our consumers. Customer support as well is very important. We put a lot of energy into upping our game in terms of how we train people, what kind of experiences that the agents get. What we know is that if the agents have everything at their fingertips to take all the calls that we get, whether it's a pre-sales call or it's, you know, someone's having trouble with a setup or they have a warranty issue or whatever that they wanna deal with. Giving all of those information points to the agents. The training of the people is critical. The process that we put together in terms of being able to tell people where their order is, the concierge white glove experiences to train our agents. We have different capability sets in our agent pool to allow us to deliver great service to people when they call, and it reflects itself in our agent and our consumer CSAT numbers, and we track those very closely week by week. The voice of the customer is another really important element of this. We hear a lot from people that are our customers that call us, whether it's pre-sales or whether it's post-sales. It helps us optimize what we do. For instance, in many cases, a repair is better for the consumer, and it's much easier for us to say, "Send a battery out," instead of saying, "Hey, send us the robot back, and we'll send a replacement out." There's a lot of things that we're learning. We're consistently improving this. But we're focused on the consumer's experience and how everything we do should be in service of giving them something that's a little better and commensurate with our brand and the loyalty that it engenders from our consumer base. I see that as a very important part of how we do what we do, both on the product and services side. Just bringing it all together. You know, the reasons to believe that we've got the ability to differentiate and win in the long run, we have a ton of data and a very big, and I'll say, rapidly growing installed base because we've got more and more connected products with more and more sensors. We put the time and energy into our Home Knowledge Cloud to make sure that that's a tool both for our engineers to figure out how to make the products do different things that are more meaningful for our customers, but also for the marketing and care teams to make sure that we are helping, we are identifying those opportunities to provide value to our consumers. From a product perspective, we're continuing to innovate with best-in-class products. You know, you see products that look similar, but they're not in terms of how they work. Using the rich data set, the rich sensors that we'll continue to put out into our robots, all in service of delivering amazing experiences for our customers. I talked a little bit about the services offering. We see the services offering pulling from all across the universe. It'll pull people into the category that weren't yet intending to enter the category. It'll pull entry and core consumers up to premium products, and it'll get more people engaged in our premium products and the care and the replenishment automatically of all the things that they need to have a well-functioning robot. All these things are really, really good. The benefit for iRobot is it's a really, really interesting business model because you build an install base of consumers and a recurring revenue that is very attractive for us. It allows us to optimize how we focus on providing value for our consumers. Then in support, we've always got our ear to the ground, listening to the voice of the customer and paying attention to what else can we do post-service or even pre-sales to help facilitate bringing people into the franchise and helping them get the absolute best experience as they take their journey with iRobot. With that, I think, I've said most of what I needed to say on products and services. I thank you for your time and attention, and I look forward to the questions. Hello. My name is Kiran Smith, and I'm the Global Chief Marketing Officer at iRobot. Today, I'm gonna be talking to you about executing on our strategy of get, keep, and grow. The great part about being at iRobot is how well we know our customers. We know the customers that we need to get into our family with great products and great offers that they can't refuse, and we know the ones we need to keep and grow and what they're looking for. That's a little bit about what I'm gonna be talking to you about today. If you look at what we know about our customers today, it starts with the basic demographics: household income, number of children, whether they have pets. We then layer on attitudinal behaviors, attitudes about cleaning, how they feel about RVCs, and on the category. Then we look at their actual behaviors on how they clean, use their robot. Finally, we look at what their most influential touch points are, where are they most open to hearing from us and catering our communications to those moments. That full look gives us the ability to have personalized conversations with our customers and creates a much richer relationship. If you look at where the evolution of iRobot's communication channel strategy has been, we've come a long way. 10 years ago, 100% of our investment was made in mass media. Today, 100% of our investment is targeted and 75% is digital. This allows us to be where our customers are and talking to them in a way that's cut through and gives us a more consistent, constant conversation with them. It's also being in the right context. Some of the work that we've done in this last year has been a lot of fun. We were able to explore if we are in situational experiences where a customer is not necessarily expected to hear from us, can we make it work and will it resonate? We tried it. We were in gyms, elevators, roadside billboards, and golf courses, and customers got the message, and they did like hearing from us. If you look at the numbers, the results were great. The result of this testing saw an increase in purchase intent, favorability, and consideration, and they were all increased when we were in those contextual conversations. It's also about how we're differentiating ourselves. As we looked around the RVC category, we saw ourselves in a sea of sameness. Our competitors are all talking about themselves in the same way. They're talking about features, price points, hardware-centric, and that wasn't resonating. If you go on social, you'll see the brand love that people have for iRobot, but we weren't engaging with them in that same way that they were talking about us. That was the inspiration of our new brand platform. We wanted to break out of that sea of sameness. The new positioning works harder for us and allows us to be breakthrough and allows us to connect with customers in a way that we haven't been able to before. We are now leaning into the brand love that customers have for iRobot, and that allows us to have richer conversations and allows us to have more fun. Let me share a little bit of that work with you. I was told to clean under the couch, which isn't scary at all. Hey, long time no see. Introducing the Roomba J7+ robot vacuum that cleans specific spots with just the sound of your voice. iRobot, so you can human. The advantage that we have is that we know the connected customer we need to keep and grow, and our top priority is building a stronger, enduring partnership with them. Let's use Maria and Dave, our preoccupied parents, as an example. Not only do we know how Maria and Dave use their robots, we know what's important to them outside of that. What are their goals? What are their behaviors? What are the things that are top of mind? What are the tensions that they're dealing with every day? And what are their values and motivators? Having an understanding of that and working that language into our marketing communications allows to show Maria and Dave that we know there's a lot going on in their lives and that we can help play a part by just making their lives a little bit easier. We also know how they feel about tech. That allows us to set up the right level of coaching as they set up their robots, use their robots, and celebrate key milestones. We know a lot about our 12.5 million connected customers. We know about their robot, how they use it, what their names are, how they're doing on maintenance, and how they're personalizing their experiences and using their app. This knowledge allows us to personalize our communication with them and celebrate milestones, but it also allows us to coach them as they continue to learn to use their robot and get the most value out of it. This is all powered by some of the technology investments we've made over the past year. Partnering with Salesforce on tools such as Commerce Cloud, Service Cloud, and Marketing Cloud allows us to be able to create a much more robust 360 view of our customers and gain the insights that we need to deliver the right offer to the right customer at the right time. Let me give you an example. It's all about how we create a personalized experience from start to finish. A customer goes into Google, and they enter vacuuming hardwood floors. What then happens is that they get a personalized homepage experience based upon their search. We ask them a few more questions to learn about their home, and then based upon the robot recommendation, create a personalized email. What we also do is can offer a few more other products that would be a good complement to the robot. Once they get their robot, that's when the cheerleading begins. We cheer them on their first milestones, their first run of their robot, their one-year anniversary, their 100th clean. We also encourage them in terms of coaching to make sure that they're using their robot and getting the most out of it. This is really important because we know the more often a customer uses the robot, the more likely they are to stick with it and get to see the true value of it. As we continue to grow the relationship, it's about the upsell and cross-sell opportunities. Using their robot name in their communication, acknowledging how they're using the robot, and making recommendations on accessories that are right for their particular robot. These are all ways of us showing our customers that we know them and that we are looking for them to really love the robot the same way that we do. The foundation of our growth strategy is based upon our existing customers, specifically our connected customers. By having the data we have on our connected customers, their robots, and how they're using them, that enables us to be able to personalize their experiences and gives us the upsell and cross-sell opportunities. We're just at the very beginning of this journey, which is what makes it so exciting. As we think about upsell opportunities, it's about replacement robots, accessories. As we think about cross-sell opportunities, it's about supplemental robots and about adjacencies and services. It's these cross-sell adjacency opportunities is why I'm so excited about the acquisition of Aeris. Air purification is a segment our customers already thought we were in and is a segment that they believe will make a meaningful difference in their lives. For us, bringing the iRobot brand to air purification allows us to further build out the home ecosystem and create that connected home. If you look at the key enablers of what will drive our strategy forward, it is a combination of the investments in the tools that we've made, over 30 technology advancements over the past few years. It is about the people that we've invested in, creating some of the best teams, in the business. It's about the processes that we've put in place that will both drive our short-term and long-term results. All of this is fueled by the amazing data that we have. Combining all of these things it is what will lead us to strong growth and accelerated profitability. I wanna thank you for your time today, and now it's time for our Q&A. iRobot's broader leadership team will be participating in this session, and it includes Colin, Keith, and Kiran, who you've heard from, as well as some folks who you'll hear from later today, including JJ Blanc, our Chief Commercial Officer, Charlie Kirol, our Chief Digital and Business and Supply Chain Officer, and Julie Zeiler, our CFO. In addition to these individuals, we have Faris Hababa, who joined us earlier this year as our Chief R&D Officer, Glenn Weinstein, our General Counsel, and Russ Campanello, our EVP of HR and Corporate Communications. I'll remind everybody who's viewing the live stream that you can submit your questions in writing. You can email me at investorrelations@irobot.com, or you can use the questions tab on the webcast viewer. For those of you who are directly participating in the interactive Zoom, please use the raise hand button at the bottom of the Zoom viewer to indicate that you have a question. When I call on you'll need to unmute your microphone to ask the question. Given the timing, we will ask those of you who are on Zoom to limit yourself to just a single question, if possible, so that we can get as many questions in as time allows. Once you've asked the question, please put yourself back on mute. Why don't we go? We have a few hands raised. I see Jim Ricchiuti from Needham & Company. Why don't we go to Jim for the first question? Hi, can you hear me okay? I can hear you. Terrific. Good morning, everyone. Just a question regarding Genius. I'm wondering how we should think about your efforts to grow the customer awareness of that. Is this something that's going to be operating in the background, or are you going to begin to really promote this more actively with consumers across the product portfolio? It's a great question, Jim. You definitely will see us putting more and more spotlight on Genius as it continues to grow in its capability and the differentiating capabilities continue to grow. You saw a little bit of a different strategy as we launched the j7+ with Genius being more front and center as our j7 launch really was a Genius 3.0 and j7+ launch. That was indicative of a trend. You'll definitely see us message and work to build differentiated equity in Genius as we roll the clock forward. It'll be a center point of next year. Great. Why don't we go to Asiya from Citigroup? Great. Hopefully, you guys can hear me. Yeah. Thank you for the opportunity. I guess the question around, you know, your connected consumer revenue base growing, if you could walk us through. You guys have had a recent acquisition. What percentage, you know, as you think about that D2C revenue ramp, do you expect from, let's say, existing Roomba accessories versus newer products such as the air purification? And then as I look into 2024, you know, would that imply, you know, that ramp, would that imply new adjacent market entries as well? If you could kind of walk us through the cadence of the connected consumer revenue ramp that you've baked in. Sure. I'll say a couple things, and Julie, jump in. I think that the idea of existing customers, first off, we'll primarily be transacting with them in a direct fashion, so that'll be adding to the digital dimension of our business. Certainly, our acquisition of Aeris is a next step in the growing of the adjacent opportunities to transact. As we move forward, you shouldn't be surprised to see us to continue to try to build out breadth as we grow the absolute size. What's important for us, as Colin said, and we think about how we're gonna develop those existing customers over time, we do expect that we will see more of that, those interactions move to our D2C platform. We will continue to, and you'll hear JJ in a little bit talk about, retail being an important channel for us. We will continue to look to have vibrant partnerships across our channels, so that our customers can find our products where and when they want. That said, when I get to my piece in a little bit, Asya, you'll see I'll go through our expectations for our D2C channel over this period. Okay. Thank you. Great. Why don't we go to Ben Rose? Ben. Hello and hi, and good morning to everybody. Question for Colin. Should we be thinking in terms of the company's acquisition strategy, that it will be sort of equally focused on adjacent categories as well as in terms of new product categories as well as potentially other robotic products? You know, in my presentation, I laid out a chart trying to give a little bit of clarity around the breadth of opportunities that we see the company having brand permission to pursue. Dividing things into robots and other devices that help maintain the home, help deliver a more efficiently run home security, and as well as robots and devices that can incrementally add to the health of the home. We view our expertise in intelligence as being differentiating and additive to both devices that move and intelligent devices that sit stationary. But you'll definitely see a mix of types of products over time. You know, I think that Aeris just made a ton of sense given the size and the growth aspects of air purification, the expectation from our customers that we are actually already in it, which was a bit surprising, but certainly motivating nonetheless, and the opportunity to differentiate we saw. That was just a short putt that made a lot of sense, but there's much more to come. Okay, thank you very much. Thanks, Ben. Why don't we go now to Derek Soderberg from Colliers? Derek, if you can take yourself off mute. Can you hear me now? Yeah, we can. Great. Well, good morning, everyone, and thanks for the presentation this morning. Julie, I just wanted to, you know, get some detail on the growth, you know, as you look at the timeframe to 2024. Just curious if you can share some of your assumptions on growth. Is it more linear? Should we expect faster growth in the near term and then sort of slow down? And how does sort of the inorganic piece play into that? Just any detail on your assumptions for growth over that timeframe, that'd be great. Sure, Derek. Maybe if I could ask you to hold that question, we'll get to my presentation in this next period, where I try to lay out some of those key assumptions. Then I'd be happy to go into more detail with you once you've heard that. Okay, great. Then if I could just squeeze in, you know, another one. You know, just on the adjacent markets, can you share if there are any specific markets that you're pursuing, any that have sort of emerged that have piqued your interest? Then sort of how do you guys leverage the customer data to sort of inform which markets you wanna pursue? Again, there's the chart which was in my presentation, and those slides will be shared afterwards, so you can go and study that in detail where we think that we have opportunities to play. I think the only square on there where we'd say probably not would be in the smart speaker side. iRobot has no intention of getting into the smart speaker business. Certainly security is of interest to us. Keith talked about the beta we have ongoing as to where we're taking advantage of the mobility of Roomba to add some very unique aspects that can be differentiated in that space. That's of interest and, you know, we've long talked about other areas within the maintenance of the home that we continue to be interested in, and nothing has changed on that front. We think it's a target-rich environment. You know, I think that robotics were not supposed to be all about vacuuming the floor. We have much more to do. All right. Well, the next question we'll take will be from Mike Latimore from Northland. Mike, go ahead. Just wanna make sure you're unmuted. There you go. Sounds good. Thanks. Good morning. Yeah, the object detection data that you guys are getting is really interesting. Seems like that'll accelerate with your, you know, new products here, but I guess can you just elaborate on that a little bit? You know, how much of that imagery or video can you actually have access and use? And then are you developing your own algorithms based on that, or are you leveraging some of the sort of third-party recognition services that are out there? The way it works, the recognition technology on the robot is local. Mm-hmm. We do have running on the robot the ability to see things that we consider are of interest and give our users the ability to opt in and contribute that image of interest into our learning database, that we are now actively crowdsourcing images from the home, each one with an opt-in permission from the user, and each one, even before we ask for permission, screened to ensure it has no people in the image to be hyper respectful of privacy and security issues. That crowdsourcing data is now augmenting our internal efforts to go build large portfolios of images on which we train our models. We're definitely using third-party tools to improve the training efficiency and the labeling of those images that we capture. The view perspective from a robot on the floor is sufficiently different from a traditional view that the data sets that are currently just go by this recognition algorithm. Those don't work very well from a robot perspective, and so we are building some very unique proprietary models about what can we discover and tell about a home based on a camera down at foot level. You know, the larger our fleet, the more crowdsourced information we have. I don't know, Keith, if you wanna add anything to that. Yeah. I think you covered most of it, Colin. The other thing that I think is important to understand, the inference models are on the device, and because we're making them out of necessity, and to a certain extent, it also allows us to customize how we make those inference models to suit the platforms we put in our robots. It allows us to bring in, as we add sensors to the robots, richer and richer models. Because we have that big installed base of people to train on, we think that'll enable a long-term advantage for us. Great. Thank you. Yep. Great. We've received a number of questions through email and through the chat viewer, and I'll try and encapsulate a couple of them. It's all about the adjacent markets, you know, the potential expansion of our total addressable market. One of them is, you know, a mix of what do you expect as a mix between partnership, internal development, acquisition over the next even longer than, you know, what we might present in the LTFM, next 5-10 years. Related to that, lawnmower is a category of interest to many of our investors. Anything to add on that front? Related it to our software, any potential for that to be applied to third-party products, i.e., would we license the software? Let me take a first shot at this, and then Keith, Kiran, Julie, if anyone wants to jump in and add to it. You know, I think that the time is now to start talking about the growth of adjacencies. In earlier moments in iRobot history, the sheer expense of launching new products into retail meant that it was costly and was gonna be a very, very long road to reach levels of material contribution. Given the fact that we are still at an early stage on the Roomba growth curve, it was just very difficult to justify the massive investment on yet a new product launched through retail. With 12.5 million connected customers, having invested for the last couple of years on the technology stack, which will allow us to precisely target those customers, and with Genius coming of age as an umbrella differentiation, we find ourselves at a moment in time where this just makes sense. Our customers love their Roomba. We know a lot about their needs, a lot about their home. We can take premium products and make them sustainably differentiated and use this new engine of growth to accelerate value creation at iRobot. You know, I think the. At the end of the day, this is not a willy-nilly sprint. This is something where, as I mentioned in my section, the smart home is already at saturation of complexity. As we think about how we're going to go bring new things out, how we're going to deliver that differentiated experience, it's all with this, and I think Keith used the words, putting the customer at the center of everything we do. How do we make sure each addition gives you better capability and at the same time reduces overall home complexity so that by investing in air purifier, you actually made your home easier to operate than you were prior to making that investment in air purification. Experience has to lead our journey, and we will be picky in what types of things we bring out. It is more of a walled garden experience-first-led selection process. That doesn't mean that iRobot must organically develop everything. It doesn't mean that we need to do organic plus inorganic acquisitions to grow this set of adjacent products. We definitely are interested in partnering. We are interested in how Genius can help other companies who are willing to embrace the same experience first philosophy in the smart home. We are definitely open to that, but there is no additional detail or that I would offer at this investor day along those lines. You know, iRobot has a vision of how the smart home needs to evolve, and we're excited for others to join us in that journey. Great. We have, John Babcock, who's been waiting patiently to ask a question. John, why don't you, open your mic and, we'll go from there. John, we're waiting for you. It looks like there could be, potentially an audio issue. John, why don't we plan to take your question, in the second interactive Q&A, we'll try to get that resolved. One other question that did come in by email from an individual investor who loves Roomba and really appreciates iRobot. They look at other products coming in from the competition, more specifically two-in-one products that can combine some level of mopping and vacuuming. They appreciate the software centricity of where we're going, but are wondering, does the hardware need to change from a hardware innovation perspective? We believe that hardware innovation is absolutely part of our strategy, and that as we see ways of enhancing the customer experience through hardware, we're going to be embracing that as well. Right now, what we're not willing to do is sacrifice the quality of the experience by investing in lower-end solutions. The idea of gee, how come we haven't done more on two-in-ones, well, it's because right now a two-in-one is a substantial compromise in customer experience. You have to decide before you set your robot free. Are you going to vacuum just the hard floors and avoid the carpets and area rugs? The user is very much pulled into the active maintenance and setup and cleanup of the robot. The amount of time being saved and the convenience delivered is quite different. That maybe at the lower end, there's some opportunities where that two-in-one experience makes some sense. Where iRobot's real energy and passion lie is in that premium experience. You know, again, the two-in-ones currently do a very poor job of mopping up all the way up to the edge or in corners because of the way they're laid out. We think by separating the mopping from the vacuuming, we can give the customer experience where they don't have to mop after they robot mop. They can depend on an automated full solution where you can vacuum, and then you can send your Braava out to do a superior mopping job. Until such time as that changes, that there's a solution to doing better, you'll see iRobot continue to focus on what is the experience that we believe is gonna make our customers put that mop back in the closet. Relying on robots to simply live up to the promise that you bought them for. That's what it's all about. You didn't buy your Roomba to vacuum after it because it missed the edges. Nor do you buy a robot mop so that you can do a modestly good job mopping the centers of your floors and then take out your mop and bucket and do the edges. You know, it just doesn't make sense. A robot's view on what we do is this. This is not a gimmick, this is true labor reduction, this is true enhancement of your home experience, and we have a very high bar. Keith, yeah, I'm singing a song that you love to sing, so if you wanna add to it. No, you hit it all, Colin. All right. Well, I'm well trained. Great. Well, that concludes the first Q&A session that we'll do. We have a brief video to share, and before the actual presentations begin, maybe it'll run about a minute, a minute and a h alf or so. So at this time, you know, we'll go on to mute and take the cameras off, and we'll run the presentations. Thank you very much. For years, we've been really focused on designing robots that clean the best that they could, but now we wanted to take it a step beyond and clean the way you would. We want to make your life easier. That's the whole point of what we do. We designed a new front-facing camera, an edge detect bumper. It recognizes when there's obstacles and avoids them and keeps on cleaning. What makes j7 really special is the digital experiences. that really offers a lot of freedom for a user, and I think it's something that's very important and very valuable to our customers. Good day, everyone. My name is JJ Blanc. I joined iRobot seven years ago as GM EMEA, and became chief commercial officer in March last year. Very happy to share with you some highlights of the commercial execution we have across the globe in support of our strategy. I'm gonna first provide an overview of the global robotic vacuum segment evolution over the last five years. I will then describe some key performance pillars we have built over these years and share how we translate the get, keep, grow strategy into our channels. Let me start with the snapshot of market segment size. In 2016, we divested our military business to focus solely on consumer robotic technology. This choice has certainly accelerated the momentum of our category and contribute to establish iRobot as a clear leader in the eyes of both consumers and our go-to market partners. Our investments, they have fueled five consecutive years of double-digit growth, helping doubling the segment size, as you see on this slide, from $1.1 billion-$2.5 billion. This growth happened in all regions, and it's far superior to the overall floor care category. When you see this kind of growth, you would expect an opposite negative effect on pricing, but our category over these last years has been able to sustain stable pricing level, proving our consumers clearly see value investing in our products. Obviously, they can be found at all price points today, but iRobot as a leader focuses on premium and mid-tier, driving ARSPs and stronger consumer engagement. Now, while these categories continue to expand, we still have plenty of leeway ahead of us. As far as household adoption, we believe our category just entered into the early majority phase, and therefore offering still ample room for continued growth. Of course, household penetration is varying a lot across markets. Some countries like U.S., Spain, Switzerland, they have reached a point where the RVC conversation is starting to be balanced between bringing first-time buyers and winning their second purchase. Others, like Japan and/or the U.K., they still require a lot of education on the value of robotic vacuum cleaner. Our global presence, our ability to learn and adapt to local context gives us an essential competitive advantage. Now, our leadership is based on few key important pillars, and let me quickly underscore some of them. Starting from our recognized product excellence and leading technology. As Colin presented, hardware innovation has historically differentiated our products. Now, our strategy has evolved to achieve even higher consumer engagement and satisfaction. We decided to provide every consumer with a personalized cleaning experience with software. The success of j7 and Genius 3.0 launch and the unique P.O.O.P. consumer promise campaign three months ago is a great example of how we are creating value through software. In consumer, we are no longer selling a list of product features. We are selling customized user benefits relying on robot intelligence. The good news is that the benefits that Genius is bringing are now available across several price points in our range. Second point, we have built the largest network of retailers and distributors in our category. We work hand in hand with them, educating consumers, presenting top-selling offers, and building the category awareness. We really very much value the trust and the long-lasting relationships with these partners. Recently, the pandemic was a true test of our ability to adapt to rapid changing shopping behaviors. All the in-store programs were virtualized during the first months of the pandemic, and we continue to be very nimble, mobilizing our resources to support online and offline. Lastly, our ability to execute is built on an end-to-end consumer-centric approach, and this commitment gets regular credit with multiple awards for our products, for customer care operations. The last one we're very proud of, from the most demanding cybersecurity certification from TÜV, the German international product certification company. Now, this slide is showing the last five years revenue performance of iRobot. We have achieved strong top-line growth and solid momentum. This business has grown double-digit every year and has expanded in every region. A substantial share is coming from direct retail and DTC. Another comes from our network of distributors, which is generating 20%-25% of our total revenue. Over the past months, it's worth to mention that the challenges in supply prevented us from fully responding to the demand. We have tried to handle these difficult times. We have systematically prioritized product and shipments of premium products to our most strategic countries and partners. Following me, you will hear Charlie, our Chief Supply Chain Officer, explaining how we are building structural resilience to address the tensions in the supply environment. Now let me switch gear and touch a little bit on the strategy. You heard Colin, Keith, and Kiran describing how we are going to focus on consumer lifetime value and our get, keep, and grow pillars. How do we translate this in commercial? First, it's about executing a strong omni-channel retail strategy to meet consumers where and how they shop. It's true that purchasing journeys are diverse and complex. We strive to build integrated shopper experience, marrying up online and offline activities, and helping consumers to choose the best offer, acting on every touch point. That's really what we are doing a lot. Retail is our number one new customer acquisition engine, and we devote a lot of investments behind our acquisition strategy. It's also building new DTC capabilities to grow the share of repeat purchases. Our DTC teams are deploying exclusive offers to upsell, cross-sell, and are launching specific programs to our large connected consumer base. Finally, from a commercial perspective, we innovate by introducing new business models, such as the Select subscription program. Let me now dive a little bit more into the channels. As I said, if I start with retail is a tremendously effective acquisition engine. We have built partnership with more than 430 retail accounts online and offline across the globe, and this is really giving us a unique reach in our regions. Our teams are working with a wide range of retail channels, from electronic specialists, online pure players, department stores, shopping club, mass merchants. We are really multi-channels. In retail, offline is an essential pillar of our go-to-market approach. Delivering a premium shopping experience is at the core of the partnership with the offline retailers. Selling premium requires to be present with high-quality displays in a large number of premium locations. To do that, we collaborate with our key partners to design the shopper experience in their stores to increase conversion, optimizing the assortment, enhancing the signage, and improving the placement and the product information in-store. Every week, we track consumer sales in the majority of our stores and can dynamically reallocate our resources, our focus to continuously optimize the performance. You see on this slide, we have two recent examples of shop-in-shop concept. One on the left-hand side is Yodobashi in Japan. It was the first time there was a branded area in the floor care category. The other one to the right is with Darty in France, and we're doing more of this project in multiple markets. Once we are doing this revamping of displays, we track metrics. For example, we measure the growth of premium mix, its total in total sales, its weight in total sales, and it often increases by 50%. Once we have the display right, we leverage our 450 sales associates to oversee the execution in more than 20,000 stores. They spend a really good amount of time in training and merchandising. We offer a wide variety of training formats. We do have the online iRobot Academy. We are doing large-scale in-person training events, and this is really key to kind of bring a good level of knowledge in the stores. For example, in the U.S., our field team trains 14,000 Best Buy associates, and also interacts with more than 60,000 Best Buy consumers annually. We truly view our physical store execution as a strong, defendable competitive advantage. Moving to online. Online has been historically an important channel, and COVID-19 certainly accelerated the online growth, which is now carrying 60% of our sales. In online, our objective is simple. We want to make the online experience as premium as the offline experience, and this is requiring important activities and different skills. It's about providing high-quality product pages. 100% of our online partners are equipped with our A+ content, with video animation, Q&As, tips, and this is featured on the left side. We also build many dedicated brand stores to maximize the interaction with our consumers. The other important factor is about ensuring high visibility on partners' websites and search platforms, which is really crucial to support our repeated, dedicated digital campaigns we are deploying with them. As an example, we enjoy extended visibility on Amazon, being considered as a top brand. We have preferential homepage placement. We have best-selling offers during the events like Prime Day or Black Friday. We are offering bundles, pairing a Roomba with their smart home assistants, and we are also collaborating with them, doing joint media campaign like the one we are running now in U.S. and EMEA. Online and offline are very complementary, and they both help to get new consumers in the family. Now, turning over to the other pillar of the strategy, which aims at growing the existing consumers revenue over time. Let me talk about DTC. In 2019, we made a strategic decision to invest in our direct-to-consumer capabilities. At that time, DTC was only representing 6% of our total business. Two years later, it has doubled in weight, reaching 13%. In order to develop DTC, we are making significant investments in tools, processes, and people to improve our website experience, our e-commerce operating systems, and our marketing activations. We've been able to augment our traffic and its quality, which resulted into higher conversion and higher order value. In every region, we have built dedicated DTC teams that truly work cross-functional on test, learn, improve mode, fast and nimble, addressing structural capabilities from performance marketing to fulfillment execution. More importantly, on our DTC, we are offering consumers more than a robot. We want to sell them a full solution for their cleaning needs. We create unique bundle offers. We launch exclusive products such as the Braava m6 Graphite. We foster the attachment of accessories. We introduce new categories with an exclusive handheld vacuum cleaner. Those are really the first steps on our DTC journey. We have large room to improve the shopping experience further, being mobile first, leveraging the iRobot app, and better understanding our existing consumers. We believe we can significantly increase our repeat sales, progressively lowering our cost of acquisitions. Now, we have also launched a new type of offer. We are testing different formats of subscription services in three different markets. In Japan, we created Robot Smart Plan in 2019, leasing robots to consumers. This is a quite successful initiative in the low-penetration market to overcome the believability and the price barrier. In the U.S., we are deploying iRobot Select, and as Keith described, the offer provides white glove assistance and service and free accessories replenishment to really keep the robot running at the top performance. Finally, in Europe, in Germany, we have launched a partnership with a rental company to learn about consumer interest in this type of offer. These three programs will help us understand the future potential of this new business model, and we look forward providing you updates going forward. Now, moving to our recent acquisition and diversification. The last month, we have announced the acquisition of Aeris, a Swiss startup building top-performing air purifiers. We surely see tremendous potential integrating their premium product into our broad sales network, leveraging our go-to-market capabilities. We will launch in several new markets, including Japan and many launch markets in EMEA. We plan to list these new products with our top partners. We will showcase our air quality line in-store where we hold branded corners and shop-in-shops like I showed you before. We will leverage our field presence and training capabilities to ensure high quality of execution like our Roomba execution. We will bring it into our selling, online selling machine, and deploying premium contents, implementing our performance marketing tactics. Last but not least, the air quality range will be created in our DTC stores. We do believe our large install base has pretty high affinity with this category, and we see promising opportunity building cross-selling offers for them. We are very excited. This is the start of the journey of diversification, and we're really excited to expand beyond floor care and nurture our setup and assets. Now, I tried to provide you with an overview of our global commercial strategy. Let me share with you a quick snapshot of how we deploy in the three regions. Over the last five years, we have built a truly international presence, enabling us to grow faster. We do have now iRobot commercial teams in 12 countries and a strong distributor partnership network covering more than 30 markets. Our go-to market is not one-size-fits-all. It's a balance between driving efficiencies, harmonizing core processes, and taking into account local market realities to customize some assets, some messages, and some channel strategy. Starting with North America. In this region, our great team is maintaining leadership position with more than 75% segment share. They are strengthening our very high share and premium above $600, leveraging digital features of Genius, as well as our teaming offers with vacuuming and mopping bundles. They also work out to accelerate the growth of DTC, including bringing Select as a new model. Now let me highlight a couple of future opportunities for the region. First, it's about reinforcing partnership with key retailers to create more and more value and differentiation with digital features. Second, it's about deepening our consumer relationships through product diversification and loyalty programs to grow repeat purchases. Lastly, exploring the opening of new channels, small businesses, pet specialists. We do have many ideas where we could offer Roomba. Now going east to EMEA. EMEA is a very crowded marketplace with more than 120 brands competing in our category. We are implementing a tailored go-to-market approach to address diverse competitive environments and category maturities. We enjoy an overall segment leadership, but we really focus into our key markets, France, Italy, Poland. We also believe we still have large white spaces in emerging markets, Turkey, South Africa, Central Europe, and we work to develop that now. Lastly, I want to mention that we also make a unique go-to-market experience as we have chosen this year for the U.K. a DTC only approach to boost category awareness and accelerate household penetration. What we see next, like in the U.S., partner with key retailers to create value and differentiation with digital features, continuing creating a match in-store consumer experience offline is really critical in many markets in EMEA, and grow our nascent DTC business in our top markets. In closing with Japan. In Japan, we are holding a strong leadership with over 70% segment share. Our ASP is very healthy because our premium mix is high. Offline is still the channel, the main channel in Japan, and therefore we pay very important attention and focus to build success in offline. What do we see next? Again, Genius first, we will partner with retailers to create more value and differentiation with Genius digital features. We continue to focus on our omni-channel execution supported by strong marketing campaigns to boost the awareness and the adoption. Finally, we're gonna scale the Robot Smart Plan subscription business, enhancing our offer, optimizing the cost of acquisition, and maintaining a long-term. Wrapping up my section, let me try to kind of re-emphasize the main areas of focus going forward for the commercial team. We will continue to evolve our capabilities to support the omni-channel requirements. This is very critical. We expect robust expansion of our DTC channels through repeat purchases, and we are working to bring this up. We are ready to leverage our selling engine to successfully diversify our product portfolio, and this is starting now with air quality. We believe we hold a strong position to maintain category leadership and drive growth, including new markets and new categories. This is concluding my section. Thank you. Good morning. My name is Charlie Kirol, and I have the unique honor to serve as iRobot's first Chief Supply Chain Officer. When we move to Q&A, please feel free to call me Charlie. I joined the management team approximately 19 months ago and just days before COVID-19 pandemic started to impact Chinese-based supply chains. Prior to joining iRobot, I held significant leadership positions across virtually all the traditional supply chain functional disciplines to include plan, source, make, deliver, and service. My previous employers include General Electric, Stanley Black & Decker, and most recently, Sensata Technologies. My career has allowed me to learn, grow, and deliver meaningful results in a half a dozen industries. I believe my background has prepared me well to not only navigate iRobot through the current supply chain challenges, but also position our operations to enable profitable growth. I thought it would be helpful to share a quick snapshot of the iRobot supply chain and global operations network. It's important for you to briefly understand this current network as a baseline because it is the starting point for the countermeasures we have launched in the face of the current supply chain headwinds, and also serves as the springboard for the transformational activities I will share in later slides. The iRobot supply chain was built with a very keen focus on cost optimization as the primary vector while serving principally our retail end market. We are evolving the supply chain to not only focus on cost, but also factor in continuity of supply and resiliency, also known as supply chain flexibility. We are making tangible progress on all three fronts. My goal in this presentation is to share actions and plans to address my three big supply chain areas of focus. I call them my big rocks. The first is mitigate, and how iRobot is successfully navigating the current macro supply chain challenges. The second is growth. Here I will share how the supply chain team is supporting the get and grow elements of our strategy. Finally, the third, disrupt, how we're disrupting our own supply chain. I'll share some of those disruptive strategies that will allow for increased product flexibility, reduced time to market, and our ability to double down on our industry-leading quality position. Okay, the first big rock is mitigate. The goal here is to share what we are proactively doing across the iRobot supply chain and operations network to minimize and/or offset the major macro level supply chain headwinds that are affecting many organizations, to include iRobot. Given the variety of supply chain challenges many markets are facing globally, it has prompted a tremendous amount of attention, and one could even call it the great supply chain awakening. Supply chain risk management has become a critical capability for all organizations, and iRobot is no exception. In this section, I will cover the actions we already have underway as mitigation steps targeting multiple time horizons, all with an expected improvement in continuity and supply chain resiliency. It's really important to note here there is no silver bullet that will address all the headwinds we face today. iRobot has and is still experiencing these macro-level supply chain headwinds, the ones we're seeing across all industries, and they include semiconductor, IC, and passive electronic component shortages, raw material input inflation on resins and metals, container shortages and increased costs in most trade lanes, and then ultimately, higher air freight costs due to limited capacity on big body airframes. While we are seeing pockets of improvement, it's fair and balanced to say that all of these macro challenges will remain throughout 2022, and in many instances, into 2023. Our teams will stay focused on mitigating and predicting the fragility in our supply chain, and we will take proactive analytics and actions to offset. We've completed many benchmarking sessions with industry and supply chain subject matter experts to pressure test our focus, plans, and priorities. Our tactics and levers are proven to drive stability over time and are highlighted on the next slide. The number of COVID-19 era supply chain headwinds have been significant and vary in scope, impact, and complexity. Again, there is not one lever to address all the material, labor, logistics, and transportation challenges we face. Our strategy has been to use some combination of all the tactics portrayed on this slide. The focus has been on prioritizing supply continuity and driving supply resiliency. This does not mean we've lost our focus on supply chain cost optimizations. In today's complex environment, we must maintain our laser focus on continuity and flexibility as our most important priorities. Why these two areas of focus? These efforts not only mitigate the current challenges, but strengthen our overall supply chain and operational capabilities to manage risk in the future. Our desired outcomes have consistently been to maximize production, ensure delivery, and to protect our margins. Let me touch upon a few of these tactics on the next slide. I wanted to share these two actions because they are universally applicable to almost all supply chain headwinds and risks that we may face. On the left, we have an example of strengthening our supply continuity through safety stock. Currently, safety stock inventory at the end of October represents approximately $20 million, and we only have $500,000 to go before the end of the year, and we are on target. At an item level, safety stock inventory is making really nice progress, and we will continue to push our third-party suppliers to help us achieve our 2022 year-end targets. The timing to achieve full target value remains unchanged given current market conditions. However, as the supply markets improve, we will pull those dates in. In addition, as we continue to qualify multiple alternatives to assure sufficient capacity and mitigate supply risk, we can reduce safety stock targets. On the right-hand side, we have an example of strengthening our supply resiliency through dual sourcing. 3%, approximately 50 items of all of our electrical and mechanical components are considered high risk. What is high risk? For us, it's determined by either single or sole source status, combined with a software compliance requirement that would require a lengthy qualification period. We see that anything requiring more than six months fall into that category. Nearly half of those high-risk items are completed, and the remainder are in process, meaning alternatives have been identified and the internal teams are taking the necessary steps to achieve formal qualification. To date, the supply chain and R&D teams have introduced 25 new suppliers and 75 components to mitigate production line down events, given the current supply constraints and material allocations. As you can see, we've taken significant steps to not only mitigate supply chain known headwinds, but also position ourselves to combat future unforeseen risks. Okay, so let's switch gears. The second big rock is growth. At this point in our investor day series of presentations, I'm sure you're as excited as we are with our strategy to get and grow our customer revenues, specifically through our direct-to-consumer channel. Here I will share exciting transformation of our North American fulfillment network to enhance our business and support our growth prospects. It's important for everyone tuning in here today to understand we can drive and deliver supply chain actions for both mitigation and growth in parallel. The iRobot regional fulfillment networks have evolved over time in an incremental fashion to address one-off needs, retail requests, and/or through acquisition. The North American fulfillment network is no exception. This slide captures the current North American network on the left and our transformed North American network on the right. Our current network has the following characteristics and capabilities. It's primarily retail-focused, 24-hour turnarounds for DTC orders. It's fragmented with functional based facilities that result in single points of potential failure, space challenges to support existing business at peak times. Orders are printed and picked on paper. Locations result in excess transit times, miles traveled, and therefore increased costs. In order to enable the launch and scaling of our direct-to-consumer channel activities, our network must evolve to include reduced cycle times, improved visibility, and location redundancy or flexibility. We have started that evolution in a company-wide effort we have called Project Mammoth, based on the size of the effort across many iRobot functions. We are playing offense with this initiative and not allowing a good crisis to go to waste. Where are we going? By 2024, our North American fulfillment network will be transformed and have the following characteristics and capabilities. An omnichannel focus, same-day turnaround for DTC orders. There'll be multi-use facilities with three locations that can do it all, the redundancy we need. Space to grow, orders picked with automation, real-time order status and inventory updates for customer care, and locations optimized for our customers' transit times and cost. We strongly believe this initiative will result in improved customer service, reduced transportation costs, and an overall reduction of supply chain risk. While the North American network is first, steps have already started to bring the EMEA and APAC networks through the same process. Historically, iRobot delivered productivity in an opportunistic manner, and typically those efforts were focused on COGS. In May of 2020, iRobot launched a company-wide and global initiative to begin building an ongoing productivity process focused on continuous improvement in all cost pools. We use the concept of bullet trains to jumpstart this effort. On the left side of this chart, we highlight the use of a productivity funnel we call the Productivity Project Pipeline, or I like to call it the P3. The idea here is to build a healthy funnel of ideas, assess the ROI of each project idea, prioritize and create a roadmap of projects, and then the most important part, a commitment to deliver 3%-5% of productivity on the total annual cost base. Our initial target was to deliver $30 million-$50 million of benefit in 2021. In ramping efforts, our five teams delivered $11 million of cost savings in 2020. I'm pleased to note that we will end 2021 having exceeded the top end of that $30 million-$50 million range of benefit. In addition, we've recharged the P3 funnel with opportunities and ideas to deliver a similar result in 2020, and that funnel will continue to improve month-over-month. We see this annuity of productivity as a reliable method to accelerate investment for growth, offset any unanticipated cost headwinds, or potentially delivering profit upside. In summary, this section was about our logistics network transformation for improved fulfillment and how we have changed the mindset at iRobot to drive year-over-year productivity, all in support of growth. Finally, the third big rock is disrupt. In this section, I'd like to share a few strategies when taken together, will help to transform the current iRobot supply chain and allow for increased product flexibility, reduced time to market, and our ability to double down on industry-leading quality. The pivot of production to support North American sales in Malaysia started in 2019 and continues to accelerate at an accelerating pace, which you can see on the right-hand side of this chart. As we enter 2021, we had a single manufacturing operation, and today we have three manufacturing facilities with three distinct partners. We believe two partners is the ideal end state, and we will work to that goal within 2022. This is a tremendous accomplishment given the COVID-19 movement control restrictions that limited travel of our iRobotiers to those facilities and the limitations the local Malay governments instituted on the number of factory workers that could show up to work each day. Our focus now is making sure our new partners scale properly, and we continue to work all the levers to minimize and/or eliminate the cost premium for production in Malaysia as compared to China. In addition to all of these efforts discussed, we have launched several supply chain strategic initiatives that will enable our commercial teams to win. In concert with our product and R&D teams, we've initiated efforts to use modular architecture and design throughout our forward-looking product roadmap. The benefits here are meaningful, and they include allowing for rapid design cycles so we can bring products to market more quickly, purchasing leverage across platforms, countries, contract manufacturing partners, all in an effort to optimize cost. Also standardization of manufacturing processes across contract manufacturing partners and geographies, which will allow us to double down on quality as well as drive cost improvements. From a manufacturing footprint perspective, we look to further diversify our footprint beyond China and Malaysia. We remain committed long term to both countries, but look to provide additional geographic diversity in manufacturing with a higher level goal to shorten our supply chains. The platforming achieved with modularity, coupled with even more manufacturing flexibility and an improved fulfillment network, will allow us to achieve late-point identification benefits, and those include planning flexibility for our supply chain, more reactive SKU options for our commercial teams, improved working capital as finished good inventories can be reduced. With the acquisition of Aeris and potentially other targets that make sense, we see opportunities to drive synergies leverage with our manufacturing and logistics networks to improve margins, fulfillment rates across retail, e-tail, and DTC channels. Reminder, my goal in this presentation was to share the actions and plans to address my three big areas of supply chain focus. I affectionately call them big rocks. The first was mitigate. I wanted to show how iRobot is successfully navigating the current supply chain challenges. The second was grow. Here I shared how the supply chain team is supporting the get and grow elements of our strategy. Finally, the third was disrupt. In this section, I shared the disruptive supply chain strategies that will allow for increased product flexibility, reduced time to market, and our ability to double down on industry leading quality precision. In summary, we are successfully navigating through a very challenging 2021. We move forward with an offensive mindset across all of our operations. We will enter 2022 with greater supply chain continuity and resiliency, and the implementation of these disruptive supply chain strategies will support the execution and underpin a new era of profitable growth for iRobot. Thank you very much for listening, and I look forward to your questions. Good morning. My name is Julie Zeiler, and I'm iRobot's Chief Financial Officer. Thank you for joining us this morning. I hope that at this point in our day, you're as excited as I am about our vision, strategic direction, and the executive team that is leading iRobot forward. We are poised to enter a new era. As I recap the key points of our strategy, I will also tie them to our forward-looking financial model. In October, we reported our Q3 2021 performance. Those results were generally ahead of our plans, based primarily on the timing of orders. We also refined our outlook on the year, reflecting the Q3 results and our view on Q4. This was our outlook as presented on October 27, and we will not be providing any updates on our expected Q4 performance during this meeting. As I transition to speaking about our forward-looking financial model, there are a few major themes. We are carefully navigating challenging market conditions. As we work to refine our planning for 2022, we currently expect some of these will continue to impact our performance next year. We expect, however, that those effects will begin to stabilize and normalize as we enter 2023 and 2024. We're navigating these headwinds while also transforming iRobot in two major ways, by developing thoughtful software innovation and delivering that value to our connected customers through deep and rich channels. As we look forward, the fundamentals that underpin our revenue projections are strong. I'll touch on a few. Globally, household penetration remains low. There's plenty of headroom to grow this segment. We have strong and deep partnerships with retail, and that's a great way to attract new customers. We'll deliver a premium experience to our connected customers, and our understanding of their needs and preferences will allow us to develop deeper, stronger relationships. Finally, we've taken an important first step in diversifying our product portfolio with the acquisition of Aeris. You know our past performance. From 2016 to 2020, we have enjoyed a 22% revenue CAGR. As we look forwards to 2024, we expect revenue to grow at 16%-18%. We anticipate that top line growth will accelerate in the second half of 2022 and will continue in 2023 and 2024. Retail will continue to generate the majority of our revenue. As we activate our 12.5 million existing connected customers with our CRM engine, we anticipate that D2C will grow faster than our average and end above 25% of total revenue. It's important to note that our view on 2022 is preliminary. We're working hard to improve production volumes and complete our planning processes, and we're optimistic that this current view will prove conservative. Even as we worked to finalize our Investor Day presentations, our volume assumptions for 2022 had already improved slightly. We'll be sharing our formal 2022 guidance in February at the end of our Q4 earnings call. Both Keith and JJ discussed the household penetration rate and our estimate that RVCs are still in the early majority phase of the adoption curve. Bringing new customers into the franchise is critical, and it will continue to propel our top line. By 2024, we estimate that approximately 60% of our revenue will come from first-time buyers. We will focus on getting with our retail partners, offering a compelling value proposition across a range of price points, and continue to learn with our Select programs, expanding our ability to win first-time value-conscious buyers. Widening the funnel and attracting more first-time customers will grow our base of connected consumers to over 30 million. Those customers will join us on a journey. As Kiran outlined, we know who they are. We know their preferences and needs. We can multiply the value of every consumer over the lifetime of their relationship with us. Colin used this slide earlier in the day to describe the customer economics over a multiyear period. The first column shows an average consumer at retail. The middle describes the potential of those multi-year economics. Finally, we have our subscription model. It reduces the barrier of entry to those value-based consumers and provides high white glove care and convenience. We believe that our focus on innovate, get, keep and grow will unlock the potential of these attractive customer-focused metrics over time. With keep and grow, we can build an extremely attractive existing customer revenue stream. As our connected customer base grows from 12.5 to over 30 million, we can present the right offers to the right customers at the right time. We expect that by 2024, approximately 40% of our revenue will come from existing customers as they purchase a new robot or an adjacent product, such as an air purifier, subscribe to a service offering, and buy the accessories that they need to keep their products running well. The fundamentals that drive our strong revenue growth are also tied to the framework for improving our gross margins over time. Transacting directly with our consumers through our D2C channels, offering creative programs and bringing new products and accessories to customers we already know will improve our gross profit. You heard Charlie talk about his strategies to disrupt the supply chain by driving scale, agility, and efficiency. Those efforts to drive cost out of our network will also result in improved gross margins over this period. The improvements to our gross margin will not be linear. We expect that the cost headwinds in 2021 will persist into 2022 before they start to dissipate. Nevertheless, we do expect some improvement next year. We expect to see modest savings and component costs in 2022, but haven't assumed any meaningful change in 2023 and 2024. We anticipate that transportation costs, particularly ocean freight, will be elevated throughout 2022, but we will anniversary those costs heading into Q4 of next year. Our transition to Malaysia will enable a meaningful drop in tariff expense in 2022, and we do not expect any significant tariff costs beyond 2022, and of course, we remain optimistic that we could be granted a tariff exclusion at some point, although there is no update to share at this time. These headwinds will limit gross margin improvement in 2022. We believe that the underlying assumptions for more substantial improvement in 2023 and 2024 are reasonable when you take into account our potential to generate a higher percentage of our revenue from our D2C channel, the prospect that these headwinds will subside, and the potential for us to benefit more from the cost optimization initiatives that Charlie shared. As a result, we expect to drive gross margins to approximately 43%. As revenue accelerates and we expand our gross profit, we will also drive operating leverage. Our spending plans will continue to be very focused on the strategies driving our transformation. R&D will accelerate investments in customer-centric innovation while driving efficiencies from platform opportunities and lower cost resources. Our commercial engine will scale to support our growing existing customer base and deliver working media efficiencies through our direct CRM connected customer engagement. The administrative functions will deliver leverage as we continue to scale. While 2022 operating income margin will be impacted by cost headwinds, we anticipate meaningful operating income expansion in 2023 and 2024 as improvements in gross margin combined with operating leverage underpinned by healthy revenue growth. We expect significant EPS expansion in the second half of 2022, with revenue acceleration resulting in strong EPS expansion in 2023 and 2024. We're proud of the strength of our balance sheet and our strong cash flow generation. We expect that many of these fundamentals will continue to provide the dry powder necessary to execute our strategy. We'll use our balance sheet to prioritize investments to fund growth, repurchase shares, and evaluate opportunities to optimize our capital structure. I'll close with our view of the future. We believe that 2022 will represent a major turning point in our efforts to transform iRobot into a more defensible, profitable enterprise. As I mentioned at the start of my presentation, our view on 2022 is preliminary. We're working hard to improve production volumes and complete our planning processes. We will be sharing our formal 2022 guidance in February at our Q4 earnings call. We're excited about our strategic direction and believe that we are creating a compelling value proposition that resonates across a growing global base of loyal, connected customers. By executing on our strategy, we believe that we are entering a new era of value creation. Thank you. Now I'll turn the meeting back to Andy to open us up for questions. Great. Well, hopefully everybody enjoyed the presentations and found them to be informative. Reminder, for those of you who wanna submit a question, you can email it to investorrelations@irobot.com or use the questions tab in the webcast viewer. I know that there is at least one person ready for Q&A. That's John Babcock. John, if you want to take your phone off mute and ask your question, hopefully we'll be able to get that going. Hi. Can you guys hear me? We can. All right, great. Apologies for the technical difficulties earlier. That was on my side. I guess, to start out, you know, with regards to the supply chain first, what are you seeing in the market that suggests the supply chain will remain challenging through 2022 and into 2023? Charlie, why don't you take that? Sure, no problem. A couple things. You know, typical lead times for us were in the 12-18-week timeframe. Those are extended, in some cases up to 72 weeks. Most are at 52 weeks, and these are with our big macro level chip and IC suppliers. We've taken a strategy of providing 18 months of visibility and those lead times are not starting to come down. They're kinda staying where they are now, and that's one of the reasons why we're diversifying our options with respect to components. When those lead times start to come down, we'll start to feel a little bit better about the prospects. Charlie, do you also wanna comment on ocean transportation? Sure. From an ocean transportation perspective, you know, just a couple facts. You know, as you probably know, on the West Coast, that's about 45% of all the trade that comes in from APAC. Those ports are scaled to do anywhere from 25-40 container ships a week. You know, there's roughly 100 out there. It's taking a long time for them to get through that process, and you might even have read that there's now the thought of imposing some container dwell times for the containers that are not moving in the port. We see that as a bit of a log jam for a little more timeframe just based on the ability to get the throughput through the actual terminals. We're monitoring, just as leading indicators, we're monitoring the times these ships are at anchor, the time it takes to unload the ship in the terminal, and then also how long does it take for the containers to leave the terminal and come back. I think we're looking at it from a lot of different perspectives and all those things kinda underpin our position and our view on 2022. Gotcha. Just quickly while I have you, Charlie, you talked about exploring additional manufacturing locations. What are some of the locations under consideration, if you can provide that? What I'd like to say is in general, I'm looking to shorten our supply chains. I'm exploring a variety of different options. There's some very logical ones that you could think about yourself, but we're not really in a position to say where we're going yet. There's still a full analysis going on, but we're really trying to take a look at total landed cost, right? Especially with what's happened in such a rapid fashion with ocean freight. You know, I'm really overweight looking at that part of the supply chain. That's really what's underpinning where we're going and what we're exploring. Gotcha. Thanks. The last question before I'll turn it over to everybody else, so apologies for this. What have you all learned about the opportunity for the subscription service from the three markets in which you're currently operating in the U.S., obviously, Japan and Germany? Keith, you wanna jump in on that one? Yeah. I would open with it's early days. We believe there's a lot of potential in services, and it's a little bit different what we're doing in each region. We've got the Select offerings in the U.S., where we see, like I alluded to in my presentation, it's pulling from lots of places we believe. But we managed to get to 50,000 subscribers in relatively short order, so we see potential there. What's going on in Japan, we've got a Robot Smart Plan going on where people can sort of try before they buy, and we've seen a lot of good traction there as well so far. But we're at the, I'll say medium-small scale piloting right now, so we're learning. When we get our data lined up, we will, I'll say, actively start to scale that. Thanks a lot, John. Why don't we go. Yeah. Thank you. Yep. Why don't we go to Mike Latimore? Great, thanks. Just on the, I was curious, is there an opportunity here in the business or commercial market longer term? I didn't hear much about that. I'm just curious if you considered that. Then also, wondering how the demand has been for the handheld vacuum you guys are selling. On the commercial and the light commercial side, this is a market that we don't actively target, but we do certainly see some reasonable amount of sales in that area. I think that the path to market is quite different from where we are focused. I wouldn't expect that you're gonna see iRobot developing a product strategy focused on support. Given the high level of performance and capability of our current products, I do see opportunities continuing where commercial entities will take advantage of what we're doing. On the handheld side, you know, that was our first foray into attachment services. It was meant to demonstrate and really check the plumbing for us to be able to execute that. On that, it is not particularly material part of 2021 revenue, but we're pleased that it did the job and has paved the way for more things to come, including what we're really excited about in air. Okay. Great. Thank you. Super. Why don't we go back to Jim Ricchiuti from Needham? Jim. Yes. Hi, thank you. You know, I know it's early days on subscribers, but you know, I'm wondering if we're talking about 2024, if you might be able to provide kind of a somewhat of a range of scenarios of how we might view that opportunity. You know, Jim, both the exciting and challenging dynamics of really a scaled subscription service is. It's very dependent on the cost of customer acquisition, on the churn rates. It will be dilutive to the model that we present for our lifetime, our LTFM in the near term as it scales up. That, based on what we know right now, we can convey we're excited. We can convey we have 50,000 subscribers, which is. It's a real number and, you know, we can do statistically relevant testing. We think there's tremendous value creation, but the LTFM, which Julie presented, did not anticipate substantial effects from a fully scaled subscription model being included. As we get confident in what our churn rate, what is our cost of customer acquisition on the subscription, we will bring our investors together for a real, a focused get-together on subscriptions. That is not today. Fair enough. Charlie alluded to the cost savings coming in at the high end, if I heard you correctly, Charlie. But Julie, I wonder if you could give us a little help in terms of the savings that you're realizing in 2021, how much of that came into COGS. Then as you think about a similar range of savings, I think if I heard Charlie correctly for 2022, how that is potentially concentrated in COGS versus OpEx. Charlie does a great job with his team of really making sure we're not focused just within COGS, but we're focused across the company and in finding opportunities to drive costs out. We have teams activated across all parts of our P&L to go after it. As we look forward in 2021, but also in 2022, 2023, and in 2024, we have productivity targets that are embedded in the gross margin estimates that we've provided today. I expect that we aren't done finding those opportunities. We've got good line of sight, but there is still some more work to do, and I feel confident about the team's ability to deliver those. The majority of those savings in 2022, are they in COGS or not? Or it sounds like it's dispersed somewhat. It's dispersed somewhat. There is a chunk that is in COGS, and that productivity is part of how we've built our gross margin assumptions for 2022. Great. Why don't we go to Asiya Merchant? On pricing and promotions, you know, as you walked us through your gross margin headwinds into 2022, the high ocean cost clearly there, as well as the inflationary components. How does pricing and promotion play in given that you've had, you know, from what we've understood from other OEMs, a relatively more benign environment in the current year, maybe partially even the prior year, given shortages and not enough products on the shelf? And then I have another follow-up on the competitive environment. You know, how should we think about the litigation that's going through? And generally, what are you seeing from some of your more aggressive competitors, Shark included, as well as some of the Asian competitors? Thank you. I'll say a couple of words and hand it over to JJ for more detail. You know, I think different markets have experienced different dynamics, and some markets may have felt benign. I would say that the competitive market or the competitive set in the rapidly growing robotic floor care market with our competition really looking to try to secure share. I would not use the term benign to describe the landscape right now. Maybe for some additional color, JJ, you could jump in. Yes. No, to the question of the promotions, that has been surely a focus of the team in making sure that we were accelerating the run rate and really carefully planning the promotional activity. The biggest focus for the team has been pushing out the premium and making sure that we were successfully launching J7 and deploying all the price premium we're having with the Genius features and really investing behind this part of the range, which is absolutely key. The promotional activity they have been constantly monitored, and we have been really dynamically managing an allocation process globally and regionally to make sure that we were doing, you know, thoughtful choices to participate or not, and sometimes to lower the frequency of discount and the frequency of promotion and the depth of discount, and making sure that we have the best decisions. We're focusing a lot on channel mix, which is absolutely key to kind of make sure that we were maximizing the output based on the constrained supply in terms of margin per unit and average price. We were talking about DTC. All the efforts have led to an increased percentage of sales in DTC. We have doubled down on, you know, selling premiums, selling bundles in DTC, and making sure that we were fostering also a handful of key markets where these are really the strongholds where we are holding a solid brand equity and market momentum. We were really kind of solidifying and protecting these markets. On the litigation side? You know, it's our policy not to comment on ongoing litigation. I can tell you that the trial will start on January 4th, so we eagerly await that near-term opportunity to actively defend in court our intellectual property. It is important to reiterate that IP creation is a significant part of iRobot's strategy, and we will vigorously defend our IP against all competitors who would improperly use it. Thank you very much, Asiya. Why don't we go to Ben Rose? Ben. Hi. Question, excuse me, either for Colin or for Julie. You know, due in part to the shift to DTC and the opportunity to move from mass marketing to more personalized, you know, messaging and marketing, can you talk about what kind of opportunities exist in 2022 and beyond to leverage, you know, your sales and marketing line? I think you're going to, you know, as we laid out our long-term financial model, one of the exciting things that I hope you take away is that it's not a hockey stick. You see continued strong growth, and then the substantial improvements in profitability really come from three factors. The first is the easing of the headwinds that Charlie described. The second is the growing immateriality of these CRM levers, where the ability to go back to our existing customer base and transact with them directly becomes increasingly material to improving our financials. Thirdly, the continuous leveraging of our OpEx. That taken together we see sustained steady revenue growth and then easing of headwinds, leveraging of this new model and leveraging of OpEx based on growth in revenue to really create tremendous value. No magic required. This is thoughtful, planful investments. The magic, if there is any magic, is just iRobot's continued leadership in innovation, giving us a unique and defendable opportunity to create the smartest robots and intelligent devices in the home, in the world. Be the guys for whom customers trust to hold that home knowledge and bring that home knowledge to bear on a growing portfolio of robots and other devices in the home. It's a very tight strategy. It yields pretty dramatic improvements in the profitability overall of the organization. Thank you. Great. Well, thanks, Ben. And thank you, everyone for your time and attention. The Q&A, we're gonna wrap that up. Before we close the event, I'll turn the virtual floor back to Colin for a couple of closing comments. Colin? Thank you, Andy. Thank all of you for attending our Investor Day. It has been a long time since we have been able to get together, even virtually, over three years. Especially thank you, Andy Kramer, for the Herculean task of pulling this together and making it possible to tell our story in a coherent and consistent fashion to you, and bringing in so many new faces to help tell the story that Julie and Andy and I have been doing with you over the years. I'm very excited to have an LTFM back out there demonstrating the power of the strategy that we have been building, the transformations that we have been investing in. It has been too long that we've been unable to speak definitively around the potential in the market, and I think you see there's even more to come as we're able to go talk about some of the things we hinted at in the future. As I just said, this is not a hockey stick LTFM. This is a steady growth LTFM unleashed in its value creation as supply chain headwinds ease, as our growth strategy continues to scale, and as we leverage OpEx. No magic required. Lastly, we are excited to be moving beyond floor care to more fully bring our technology to bear on the mesh smart home opportunity. My video turned off. So you have me again for my last comment. Lastly, we are excited to be moving beyond the floor care opportunity into the more, fulsome and much larger mesh smart home opportunity by leveraging our Genius Home Intelligence system to sustainably differentiate our robots as well as our intelligent home innovations. Thank you very much.