Ben Axler
August 21, 2017
"Hedge fund manager specializing in forensic financial research"

Spruce Point Research Into iRobot's Distribution Deals Raises Concerns

Spruce Point Capital Management wants to alert our readers it has published a critical update to our research on iRobot (Nasdaq: IRBT) as a result of our deep forensic analysis into the Company's recent distributor acquisitions in Japan and Europe.

Based on the primary statutory filings on Robopolis in France, and credit research obtained about Sales on Demand (SOD) in Japan, we cannot reconcile iRobot's financial guidance. Recall, that iRobot has already revised guidance and sales commentary in Japan. We believe the guidance attributable to Robopolis appears even more troubling. Investors should carefully evaluate why iRobot has paid nearly 4x the price for Robopolis vs. SOD when each distributor sells identical iRobot products and achieve comparable margins. Furthermore, iRobot says that Japan is growing at 2x the rate of Europe.

Our detailed research report is available on our  website . We continue to believe there is 20% - 50% downside risk potential.

Please review our disclaimer at the bottom of this email. We also encourage all of our readers to follow us on Twitter  @sprucepointcap  for regular updates.

About Spruce Point Capital Management

Spruce Point Capital Management, LLC is a New York based investment manager founded in 2009. The firm focuses on short-selling and special situations opportunities. The firm conducts in depth forensic fundamental research and takes an activist approach to investing. Our research challenges conventional thinking with deep fundamental analysis, analytical rigor, and conclusions rooted with our unique viewpoints. For more information visit our  website , and follow us on Twitter  @Sprucepointcap

Disclaimer

This research expresses our investment opinions, which we have based upon interpretation of certain facts and observations, all of which are based upon publicly available information, and all of which are set out in our complete research presentation report on our website. Any investment involves substantial risks, including complete loss of capital. Any forecasts or estimates are for illustrative purpose only and should not be taken as limitations of the maximum possible loss or gain. Any information contained herein may include forward looking statements, expectations, pro forma analyses, estimates, and projections. You should assume these types of statements, expectations, pro forma analyses, estimates, and projections may turn out to be incorrect for reasons beyond Spruce Point Capital Management LLC’s control. This is not investment or accounting advice nor should it be construed as such. Use of Spruce Point Capital Management LLC’s research is at your own risk. Any historical performance achieved from any idea or opinion from Spruce Point Capital Management should not be considered an indicator of future performance. You should do your own research and due diligence before making any investment decision with respect to any of the securities covered herein. Spruce Point Capital Management, subscribers and/or consultants shall have no obligation to inform any investor or viewer of this report about their historical, current, and future trading activities

You should assume that as of the publication date of any presentation, report or letter, Spruce Point Capital Management LLC (possibly along with or through our members, partners, affiliates, employees, and/or consultants) along with our subscribers and clients has a short position in all stocks (and are long/short combinations of puts and call options of the stock) covered herein, including without limitation iRobot Corporation ("IRBT" or "the Company"), and therefore stand to realize significant gains in the event that the price of its stock declines. Following publication of any presentation, report or letter, we intend to continue transacting in the securities covered therein, and we may be long, short, or neutral at any time hereafter regardless of our initial recommendation.

This is not an offer to sell or a solicitation of an offer to buy any security, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction. Spruce Point Capital Management LLC is not registered as an investment advisor, broker/dealer, or accounting firm.

To the best of our ability and belief, as of the date hereof, all information contained herein is accurate and reliable and does not omit to state material facts necessary to make the statements herein not misleading, and all information has been obtained from public sources we believe to be accurate and reliable, and who are not insiders or connected persons of the stock covered herein or who may otherwise owe any fiduciary duty or duty of confidentiality to the issuer, or to any other person or entity that was breached by the transmission of information to Spruce Point Capital Management LLC. However, Spruce Point Capital Management LLC recognizes that there may be non-public information in the possession of iRobot or other insiders of iRobot that has not been publicly disclosed by iRobot. Therefore, such information contained herein is presented “as is,” without warranty of any kind – whether express or implied. Spruce Point Capital Management LLC makes no other representations, express or implied, as to the accuracy, timeliness, or completeness of any such information or with regard to the results to be obtained from its use. All rights reserved. This document may not be reproduced or disseminated in whole or in part without the prior written consent of Spruce Point Capital Management LLC.

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