Amazon (AMZN) has been both hinting at and yelling about its desire to delve further into the smart home technology space for years. The retail giant acquired smart doorbell maker Ring in 2018 and, in 2021, unveiled an Astro robot that moves around one's home with the Alexa voice assistant that the company has been making since 2014 for a retail price of $1,000.
Another major move came Friday, as Amazon announced plans to acquire the company that makes the popular Roomba vacuum cleaner for $1.7 billion, or $61 a share.
Launched in 2009 by Massachusetts Institute of Technology students, iRobot (IRBT) is a public company whose stock immediately soared by more than 20% to over $60 since the announcement despite reporting second-quarter results showing a 30% annual decline in revenue just a few days earlier.
iRobot (Not The Will Smith Movie)
While the company makes everything from robotic mops to regular handheld vacuum cleaners, its most popular product is the Roomba, a robotic vacuum cleaner that moves around the house on its own and comes back to a charging dock when it runs out of battery.
The first Roomba launched in 2002 and has had many iterations since. From personal experience, the cheapest $250 version is invaluable for getting rid of daily dust with minimal effort but will not get to larger messes or less accessible corners of the room.
"Over many years, the iRobot team has proven its ability to reinvent how people clean with products that are incredibly practical and inventive — from cleaning when and where customers want while avoiding common obstacles in the home, to automatically emptying the collection bin," Dave Limp, SVP of Devices at Amazon, said in a statement. "Customers love iRobot products — and I'm excited to work with the iRobot team to invent in ways that make customers' lives easier and more enjoyable."
Amazon's backing could make a big difference in the future of iRobot, which used the same Aug. 5 earnings call to announce that it would let go of 140 employees (10% of its workforce).
The company's revenue of $255.4 million was far below analyst expectations of $303 million.
This Is Amazon's Fourth Biggest Acquisition Ever. Why iRobot?
For Amazon, this acquisition would be the fourth biggest acquisition after in its history behind buying health food store chain Whole Foods for $13.7 billion in 2017 and film studio MGM for $8.45 billion in 2021.
The third place is currently taken by last month's announcement that it would be acquiring primary care provider One Medical for $3.9 million.
Given its popularity and high potential for growth, Amazon has been very vocal in its desire to be a frontrunner in the smart home tech space. Data from the Statista Technology Market Outlook finds that more than 130 million households around the world have at least one smart speaker, while the market is expected to reach $135.3 billion at a CAGR of 11.6% by 2025.
"Amazon shares our passion for building thoughtful innovations that empower people to do more at home, and I cannot think of a better place for our team to continue our mission," iRobot CEO Colin Angle said in a statement. "I'm hugely excited to be a part of and to see what we can build together for customers in the years ahead."
