Irobot Reality
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100 167 11 75 125 8 iRobot 89 Driving Growth and Value for Shareholders 89 April 26, 2016 89 166 166 166 Forward-Looking Statements Certain statements made in this communication that are not based on historical information are forward-looking statements which are made pursuant to the safe harbor provisions of the Private 100 Securities Litigation Reform Act of 1995. Such forward-looking statements may be identified with 167 words like “believe,” “may,” “could,” “would,” “might,” “should,” “expect,” “intend,” “plan,” “target,” “anticipate” and “continue,” the negative of these words, other terms of similar meaning or the use 11 of future dates. This communication contains express or implied forward-looking statements relating 75 to, among other things, iRobot’s expectations regarding future financial performance, future operating performance and growth, our strategic actions to continue revenue growth, demand for 125 our robots, strategic investments to diversify Home revenue, the impact of the divestiture of our 8 Defense & Security business, the impact of our strategic actions to enhance stockholder value, and anticipated revenue, earnings per share and Adjusted EBITDA for fiscal year 2016. These statements 89 are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of 89 which are beyond our control, which could cause actual results to differ materially from those 89 contemplated in these forward-looking statements. In particular, the risks and uncertainties include, among other things: our ability to operate in an emerging market, the financial strength of our 166 customers and retailers, our ability to enhance stockholder value through our strategic actions, 166 including the sale of our Defense & Security business, general economic conditions, market acceptance of our products, and competition. Existing and prospective investors are cautioned not to 166 place undue reliance on these forward-looking statements, which speak only as of the date hereof. iRobot undertakes no obligation to update or revise the information contained in this communication, whether as a result of new information, future events or circumstances or otherwise. For additional disclosure regarding these and other risks faced by iRobot, see the disclosure contained in our public filings with the SEC. 2 Important Stockholder Information iRobot Corporation (“iRobot”, or the “Company”) will hold its 2016 Annual Meeting of stockholders on May 25, 2016. The Company has filed with the Securities and Exchange Commission (the “SEC”) 100 and mailed to its stockholders a definitive proxy statement and form of WHITE proxy card in 167 connection with the 2016 Annual Meeting. The definitive proxy statement contains important information about the Company, the 2016 Annual Meeting and related matters. 11 75 COMPANY STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ THE DEFINITIVE PROXY STATEMENT, THE ACCOMPANYING WHITE PROXY CARD, AND ANY OTHER RELEVANT SOLICITATION 125 MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THESE DOCUMENTS CONTAIN IMPORTANT 8 INFORMATION. 89 The Company and its directors and executive officers may be deemed to be participants in the 89 solicitation of proxies from the stockholders of the Company in connection with the matters to be 89 considered at the 2016 Annual Meeting. Information regarding the Company’s directors and executive officers is contained in the Company’s annual report on Form 10-K filed with the SEC on 166 February 19, 2016, and definitive proxy statement filed with the SEC on March 29, 2016. 166 The proxy statement and other relevant solicitation materials (when they become available), and any 166 and all documents filed by the Company with the SEC, may be obtained by investors and security holders free of charge at the SEC’s web site at www.sec.gov. In addition, the Company’s filings with the SEC, including the proxy statement and other relevant solicitation materials (when they become available), may be obtained, without charge, from the Company by directing a request to the Company at 8 Crosby Drive, Bedford, MA 01730, Attention: Investor Relations. Such materials are also available at www.irobot.com. 3 Executive Summary • iRobot is The Leader in Consumer Robotics – Leading share of robotic vacuum market segment 100 – Over the past five years, iRobot's consumer product revenue has grown 2.5x the rate of its peers 167 – IP moat: 1,200+ patents & patents pending – Outstanding growth prospects 11 • iRobot’s Management and Board Have Thoughtfully and Proactively Transformed Business 75 – Acquisition of Evolution Robotics (2012), Roomba 880 (2013), Roomba 980 (2015), and Braava jet (2016) 125 – Hired an investment bank to sell Defense & Security in 2014 – Updated Board to add software and consumer technology products expertise 8 • iRobot Has Superior Shareholder Returns Versus Its Peer Group, S&P 500, NASDAQ, and 89 S&P Technology Hardware & Equipment Industry Indices Since 1/1/2013 89 • iRobot is Shareholder-Friendly, with World-Class Board and Corporate Governance 89 Best Practices – Have returned > $100 million (including current ASR program) of excess capital since 2015 166 – Refreshed Board composition: five independent directors added in last five years 166 – Updated governance under leadership of new Lead Independent Director 166 • Red Mountain Has Offered No New Ideas and Would Not Add Value to iRobot – Before Red Mountain bought stock, iRobot was already executing on the items in Red Mountain’s “plan” – Red Mountain has demonstrated a poor understanding of iRobot’s business and market – Red Mountain rejected offer to add Lawrence Peiros to the Board and refused to settle unless Willem Mesdag is added to the Board. Willem Mesdag’s demand for a Board seat appears to be personally-driven – Willem Mesdag brings no new operational or investment expertise 4 Table of Contents I The Leader in Consumer Robotics 6 100 167 11 Management and Board Have Thoughtfully and Proactively II 15 75 Transformed Business, Driving Superior Shareholder Returns 125 Shareholder-Friendly with World-Class Board and Corporate 8 III 24 Governance Best Practices 89 89 Red Mountain Has Offered No New Ideas and Would Not 89 IV 31 Add Value 166 166 Recommendation: VOTE The WHITE Proxy Card FOR iRobot’s 166 V 37 Highly-Qualified Nominees VI Appendix: Red Mountain’s Assertions Versus Reality 40 5 100 167 11 75 125 8 I. The Leader in Consumer Robotics 89 89 89 166 166 166 iRobot: Consumer Robotics Leader with an Outstanding Growth Track Record and Future Growth Prospects 100 167 11 25 1,200+ 4x 75 YEARS OF GLOBAL NEAR-TERM U.S. HH 125 ROBOTIC-TECHNOLOGY PATENTS & PATENTS PENDING PENETRATION 8 MARKET LEADERSHIP POTENTIAL 89 Consumer Product Growth 89 (2009 – 2015) 89 6.1x >60% Mashable BostInno International 2015 Choice Award 50 on Fire Houswares Association 166 2.5x Winner Technology Winner Innovation Winner 166 (Roomba 980) (2014) (Roomba 880) 166 GREATER REVENUE GREATER REVENUE SHARE OF THE GLOBAL AWARD-WINNING GROWTH RATE GROWTH RATE ROBOTIC VACUUM TECHNOLOGY & THAN PEERS THAN S&P 500 MARKET SEGMENT (1) PRODUCTS The leading global consumer robotics company, focused on bringing practical, affordable robots to the connected home market 7 (1) Segment of Vacuum Market with retail prices over $200. iRobot is Poised for Continued Growth and Success Sustained Market Segment Leadership 100 167 11 Portfolio of Innovative Robots from Disciplined R&D Investment 75 125 8 Software Development Widening iRobot’s Competitive Moat 89 89 89 166 Actionable Near-Term Revenue Growth Opportunities 166 166 Strategic Focus to Achieve 3-Year Financial Targets 8 Sustained Market Segment Leadership 2015 Market Segment Leadership North America EMEA 100 Others 167 11% Others 11 Dry Floor Care 28% 75 125 8 iRobot iRobot 72% 89 89% APAC 89 89 iRobot 37% 166 166 166 Others 63% iRobot has maintained > 60% global market share of RVC segment over last 4 years, despite increased competition Source: 2015 NPD, Gfk, and iRobot Internal data; Robotics Vacuum Cleaners >$200 retail prices, includes China online. 9 Disciplined Research and Development Allocation Process Rigorous Process to Allocate Capital to R&D Disciplined Investing in R&D • R&D is allocated against key technologies and specific product development within bounds of profitability targets 13% 13% 12% 12% 12% 100 11% 11% • New product opportunities assessed for revenue, margin, 10% 167 profitability, and return • Expected cash flows are risk adjusted based upon each specific 11 program’s characteristics • Roadmaps designed to have regular new product 75 introduction cadence • Management and Board regularly review performance of 125 major programs 2012 2013 2014 2015 8 (1) IRBT R&D Spend % of Revenue Peer R&D Spend % of Revenue SW Development Competitive Enabler 89 4x Increase in Software Developers to 89 Roomba 880 Roomba 980 Enable Focus Shift to Consumer Market 89 83 166 52 166 38 166 22 50,000 Lines of Code 500,000 Lines of Code 2013 2014 2015 2016 Management has focused the Company’s R&D efforts to drive topline growth and build on iRobot’s history of industry-leading technology Source: Company filings, Capital IQ. (1) Peer set is comprised of 3D Systems, AeroVironment, Alphabet, Apple, Cognex, Dolby, Electrolux, Fitbit, Garmin, Intuitive Surgical, InvenSense, Koninklijke Philips, Logitech, 10 Microsoft, Nautilus, Netgear, Plantronics, TiVo, Trimble Navigation, Universal Electronics, and Whirlpool. Continuous Innovation Drives Sustained Market Leadership Roomba 100 167 11 2002 2007 2011