The company that completely changed the way you clean your floors is saying goodbye. Roomba, which brought the renowned iRobot vacuums to households, has filed for Chapter 11 bankruptcy.
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The move comes as the company faces not only tariffs but also increased competition from rivals who make similar products faster and cheaper. According to Reuters, the company announced that it would go private after being purchased by its primary manufacturer, Picea Robotics.
How Did This Happen?
According to court filings, iRobot generated over $680 million in total revenue last year. However, the company began raising concerns about its ability to stay in business as early as March 2024.
The Roomba has about 42% of the U.S. market share and 65% of the Japanese market share for robotic vacuum cleaners. But despite its continued dominance in the U.S. and Japanese markets, competition from companies like Ecovacs Robotics forced Roomba to lower its prices and make costly upgrades.
The company also manufactures its robots in Vietnam. Thanks to tariffs, there is a 46% levy on imports from that country. It has increased the company's costs by $23 million this year.
Amazon was going to buy out iRobot for $1.4 billion, but a European competition investigation stalled the deal. This left the company with $190 million in debt stemming from a 2023 loan to refinance its operations. iRobot began to fall behind on its payments to Picea.
Under the bankruptcy plan, Picea will cancel that debt, along with an additional $74 million owed to it under the manufacturing agreement it has with iRobot. Picea will also take all of the company's equity. Other creditors and suppliers will be paid in full.
Will My Existing Roomba iRobot Vacuum Still Work?
Despite the bankruptcy, customers can continue to expect a seamless experience with their Roombas. iRobot stated it does not expect any disruptions to the functionality of its app, customer programs, global partners, supply chain relationships, or its product support.
iRobot is located in Bedford, Massachusetts. It was founded by three former students of the Massachusetts Institute of Technology. The company's initial focus was on defense and space work before focusing on its vacuum in 2002.
