Symbotic Inc. (SYM) on Q2 2023 Results - Earnings Call Transcript
Operator: Thank you for standing by and welcome to the Symbotic's Second Quarter Fiscal 2023 Financial Results Conference Call. . As a reminder, this conference call is being recorded. I will now turn the conference over to your host, Mr. Jeff Evanson, Vice President of Investor Relations and Corporate Development. Please go ahead. Jeff Evanson: Thank you, Valerie. Good afternoon, everyone. Welcome to Symbotic's second quarter fiscal 2023 results webcast. Our press release and discussion today will include forward-looking statements, based on assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements, including as a result of factors described in the cautionary statements and risk factors in Symbotic's financial release and regulatory filings with the SEC, by which any forward-looking statements made during this call are qualified in their entirety. In addition, during this call, we will discuss certain financial measures that are not recognized under U.S. Generally Accepted Accounting Principles, which the SEC refers to as non-GAAP measures. We believe these non-GAAP measures assist management in planning, forecasting, and evaluating our business and financial performance, including allocating resources. Reconciliations of these non-GAAP measures to their most comparable reported GAAP measures are included in our financial press release, which is available in the Investor Relations section of our website and is on file with the SEC. These GAAP measures may not be comparable to measures used by other issuers. Today, we will provide guidance for the third quarter, including revenue and adjusted EBITDA. We are not providing guidance for net loss today, which is the most comparable GAAP financial measure to adjusted EBITDA. We are not able to provide reconciliations of adjusted EBITDA to GAAP financial measures because certain items required for such reconciliations are outside of our control and/or cannot be reasonably predicted, such as the provision for stock-based compensation. On today's call, we are joined by Rick Cohen, Symbotic's Founder, Chairman, and Chief Executive Officer; and Tom Ernst, Symbotic's Chief Financial Officer. These executives will discuss our second quarter 2023 results, and our outlook followed by Q&A. Now, I'll turn it back to Rick. Rick Cohen: Thanks, Jeff. Hello everyone. As I think about how to talk about and get perspective on our second quarter, it's interesting to look back two years to see the progress we have made, since our second quarter of fiscal 2021. Back then, we were building individual prototype systems and, in that quarter, posted $23 million of revenue. We had a vision back then to radically transform the supply chain, and we had lots of challenges to overcome and we are successfully overcoming most of those challenges. Now just two years later, we have nine systems in full operation at multiple customer sites. We are currently deploying 28 additional systems and reporting over $0.25 billion of revenue in the quarter. So, in two years, we have grown from a company with a sub $100 million revenue run rate to one with a $1 billion-plus revenue run rate. In addition to our significant revenue growth, our quarterly results also reflect improving adjusted gross margin, improving operating margin, and additional liquidity. Our teams are working diligently to be more efficient as they keep our many deployment projects running on budget and on schedule and executing a new outsourcing strategy. We are now aggressively diversifying training and scaling up a network of supplier and contractor partners. We feel good about the progress so far and see many ways we can improve. As I said on our call last quarter, we are committed to building a team of world class talent to help us remain a leader in transforming the supply chain. During the quarter, we added several key team members, who are already making important contributions to operations. Scaling and execution are important in driving our near-term results, but we believe that constantly innovating, and sustained those results over the long-term. Thank you everyone for your support and interest in what we are doing. And for helping us as we realize our vision transforming the supply chain. It's exciting to see our plane coming together and we have a long way to go, but we are making great progress. Thank you. Now Tom will discuss our financial performance and outlook. Tom? Tom Ernst: Thank you, Rick. Second quarter revenue of $267 million grew 177% compared to a year ago, driven by incredibly strong deployment progress. We initiated seven new system deployments during the quarter and as planned, advanced one system to full operation. We now have 28 active system deployments in process with multiple customers, an increase from 22 systems last quarter and nine systems in the second quarter of last year. Our rapid revenue growth was driven by progress on deployments, with particular strength from physical installation at our customer sites. As Rick mentioned, we are gaining efficiency in our deployments by standardizing our systems, streamlining our deployment processes, and realizing the benefits of outsourcing. Our cash and equivalents including marketable securities and restricted cash grew $17 million sequentially to $465 million, due to favorable working capital performance. We believe we have more than enough -- more than adequate resources on hand to achieve our strong growth plans, and remain very well capitalized to execute our strategy. Recurring revenue continued to grow sequentially as deployments moved to production. We now have nine systems operating at customer sites. Overtime, as system completions cascade, recurring revenue should grow to have a much higher gross margin of systems revenue, as well as becoming an increasing share of our revenue mix to provide powerful operating leverage to our business. Our second quarter adjusted gross margin increased 100-basis points sequentially. These results still reflect significant costs associated with lower-margin innovation initiatives. The burden of elevated pass-through skill costs, and costs associated with rapidly scaling our operations. Adjusted system gross margin improved by 70-basis points sequentially, after excluding $5.2 million of the $8.4 million in severance and restructuring charges that flowed through cost of goods sold. This charge was related to discontinued manufacturing activities in Montreal, where we were manufacturing robotic inbound and outbound sales and curtailed manufacturing capacity in Wilmington, Massachusetts, where we manufacture bots. Our outsourcing success enables us to continue to drive strong deployment growth, while also setting the stage for long-term cost savings and margin expansion. In the second quarter, operating expenses excluding stock-based compensation increased sequentially, as we continue to invest in innovation that can drive sustained growth and margin expansion. Finally, operating leverage improved as we achieved a 4% adjusted EBITDA loss rate compared to 8% last quarter and 27% last year. This was driven by our revenue growth and expanding gross margin. Turning to our outlook. For the third quarter of fiscal 2023, we expect revenue of between $245 million to $265 million, and an adjusted EBITDA loss of between $11 million and $8 million. We are through the midpoint of our fiscal 2023 and are excited about the second half, as we continue to transform the supply chain. We are scaling our business and innovating rapidly to deliver for our customers. We look forward to speaking with you again next quarter to provide an update on our progress and now welcome your questions. Operator, will you please open the Q&A? Operator: Thank you. . Our first question comes from Andrew Kaplowitz of Citi. Your line is open. Andrew Kaplowitz: Good evening, everyone. Rick or Tom, can you give us more color into the transition outsourcing that you continue to see in terms of the restructuring charge you took? It looks like you expect to see maybe a slight improvement in losses and slightly lower revenue in Q3 than Q2. But are you experiencing in Q3 any of the impact of the restructuring? When would you expect to see the full impact of the restructuring benefit, and streamlining of manufacturing on your P&L and how much benefit could you see? Tom Ernst: Yes. Thanks, Andy for that question. So, and as you saw, we took an $8 million restructuring charge. This included both inventories and property plant and equipment as well as $3 million related to people-related severance. So that's a little bit over a hundred full-time employees, along with a little bit over a hundred contractors. That was executed in planned four at the end of the quarter. However, we really begin seeing the benefit of those savings as we get into our fiscal third quarter. Again, those restructurings were associated with the discontinued of sell manufacturing operations in Montreal, and then the significant curtailment of bot manufacturing in Wilmington, Massachusetts. This follows on the heels as Rick mentioned, of our successful transition of the manufacturer of all these goods to outsource partners. Andrew Kaplowitz: Thanks. And then, I think last quarter you talked about maybe being a little more predictable in your revenue ramp, but you just beat Q2, beat the street by $50 million, and now you're predicting $10 million lower in Q3 despite your deployments continuing to rise. So, did you just somehow pull forward any revenue in Q2 or should we begin after Q3 to see more of a steady sequential increase? And I also noticed you, didn't give us a backlog number if it's possible to give us that? Rick Cohen: No, sure, Andy. So, our backlog was $12.0 billion same number as last quarter. So, our contributions equal the outflows in the period and that will match our remaining performance obligation that we expect to disclose when we file our 10-Q. Andy, I do think that our -- as we're growing scale here and deploying more systems, the revenue is becoming -- that quarterly variability is becoming smoother. However, we are still growing really fast and we're ramping new outsourcing partners. So, we clearly are still seeing some significant variability in terms of quarter-on-quarter growth. Maybe to give a sense for how this translates out. We do expect to grow rapidly and that's driven by the 28 systems in deployment. However, even as we look here into the second half, the strongest contribution in the second half is going to be driven from the nine systems that were started in the second half of 2022, for example. So, short minor timing differences in one or two, or three of those nine systems can have meaningful differences in terms of the actual quarterly revenue growth that we post. So, as we have more systems in concurrent deployment, we continue to expect that those sort of quarterly variabilities and revenue will begin to diminish over time. Operator: Our next question comes from the line of Matt Summerville of D.A. Davidson. Your line is open. Matt Summerville: First, Tom, can you maybe comment on based on the successes you're having out -- without sourcing and the versus just when you believe the company will be achieved EBITDA positivity on a sustainable basis? And then I have a follow up. Tom Ernst: Yes, thanks for the question, Matt. So, we are certainly encouraged with the successes we're having with our outsourcing partners, and continue to work that program. As I think Rick highlighted, and I emphasize as well, we do believe that that will begin to see benefits and leverage in the near to midterm. And we continue to believe that over the long term, that while certainly, it'll help us achieve our primary goal in outsourcing, which was the ability to scale this business to a much greater scale that we think it will result in the higher long-term profitability as well. So, while we're not giving guidance. I think that consensus expectations in the street, many, many analysts are looking for profitability in Q4. So, we're not looking forward to the full year. But what I can say is that we do believe that our operating leverage is quite high. As we're able to scale revenue, we believe that we'll continue to benefit from expanding gross margins and we'll continue to see OpEx growth be moderate. And in particular, in the near term, we think operating expense growth can be curtailed significantly through the benefits of outsourcing, restructuring the plan we just put in place at the end of this last quarter. Matt Summerville: And then maybe as a follow-up, can you talk a little bit about maybe some of the progress you're making with break pack and Symbotic and when you think those solutions will kind of be ready for game time, if you will? Rick Cohen: We're making, so we're really pleased with the progress we've made on the Symbotic. That was a big technology change for us, and though we are not realizing all the value that will come and we, and it's going to come over time, there's some software that we're still releasing and some AI sourcing and predictive maintenance, all good things. So, they'll be coming in the next year. But we're really pleased with two things. One, we have a great new product. Two, we successfully manage to prototype it and then move it to outsourcing partners. So that'll continue to improve. So that was a big deal in the last six months and nobody should underestimate successfully outsourcing without blowing up your supply chain. So, that's all I'll say about that. We're very happy with how it's gone. On the break pack, I'm probably there one day a week, sometimes two days a week. That's going to be a great product for us. It's still rough. It's our first prototype, but we would expect in the next -- certainly in the next six months, that we should see very good results out of that. Tom Ernst : I'll just add to that, Matt, that, we're still actively field testing Symbotic today too. So, we haven't announced the final general release of that product. But we have many, many of those units out actually running in product live production environments today at multiple sites, at multiple customers. Matt Summerville: Got it. Thank you, guys. Operator: Our next question comes from the line of Mark Delaney of Goldman Sachs. Your line is open. Mark Delaney: Good afternoon. Thank you, very much for taking the questions. The first one is on the bridge from the fiscal first quarter to the most recently completed fiscal second quarter revenue is up roughly $60 million sequentially. I think EBITDA improved about $5 million. Tom, I know you called out a number of pass-through that were impacting that such as steel. Could you elaborate a little bit more on how much that was impacting both revenue and EBITDA sequentially and any other key puts and takes? Tom Ernst : Yeah, thanks for the question Mark. So, you're right. We did see gross margin in particular improve by about a hundred basis points sequentially. So, let me address it maybe in two points versus gross margin, then I'll talk about OpEx. There is a few factors that benefited the expansion in gross margin. First recurring revenue. Margins are improving and recurring revenue is increasing as new deployments are water falling in. Still while it's still significantly above the 10-year average, it was actually a modest sequential benefit, so that actually was a part of the 100-basis point expansion as well. And finally, while we are still experiencing 700-basis points of impact from rapid growth and innovation projects in our gross margin that are actually headwind when we have talked about consistently. Quarter-on-quarter, those are our dimension as well. So, all three of those factors were directionally moving in the right way. OpEx increased by about $7 million which goes counter to the overall EBITDA contribution margin. And as we think about OpEx, a couple of factors there. First, the restructuring plans we put in place really didn't have a material financial impact in the fiscal second quarter. Those will begin betting for this and earn interest in 3Q. Also, if you recall, when we talked about the second quarter, we had a lot less project and other favorable work in the quarter. We had some more of that, just projects and variable types of activity in the fiscal second quarter. We are also continuing a long-term plan upgrade to transform our talent overall. And so, we are seeing a little bit higher average cost per employee, in particular as we look at the transformation of our workforce, we have had a material shift towards technical talent, and that was particularly strong in the second quarter. So those are things that we think will materially benefit over the long run. And while we are not disclosing headcount numbers in detail, net, we actually saw an over 20 headcounts increase in our engineering force, despite the total company in terms full time employees being down 20 headcounts, for example. Mark Delaney: Thank you for all the helpful color, Tom. My second one was on the backlog. And thank you for giving the update on where it stands in total. Could you comment anymore on the composition of it in terms of what kind of gross margin, you might think is embedded in the backlog or relative to where you are running? And when you think about the backlog, how much is coming from hardware relative to some of these subscription elements and software? Thanks. Tom Ernst: Sure. Thanks, Mark. And as you know Mark, our backlog disclosure, we tied to our accounting remaining performance obligation disclosure. So therefore, our backlog only includes contractual commitments, which means that it's heavily populated by systems revenue, as some of our recurring revenue sources will have annual or only partial 10, 15-year type of contributions. And first part of your question, Mark? Mark Delaney: Yes. It's a couple of things, Tom. But anything you can share on the gross margin embedded in the backlog relative to where the company is currently running, if you are able to comment there? Tom Ernst: Yes, thank you. So overall gross margin is 18.3%. We continue to expect that the structural gross margins implicit in that backlog are much closer to 30%. And the difference between that 18% and the high 20% is really the three factors that I talked about in relative to your first question, in particular, the biggest of which is the financial impact in our COGS of our rapid growth and our shift to outsourcing along with our innovation projects that are heavily weighted in upfront revenues in that backlog. That close to 30% structural gross margin is structural for the systems revenue only. As we think about structural gross margins for the recurring component of that backlog, we see them well north of 50% into the 60% range. So, you blend those two together to get something that's in the mid to higher 40 -- high 30s. Operator: Our next question comes from the line of Nicole DeBlase of Deutsche Bank line is open. Your line is open. Nicole DeBlase: Maybe just starting on the restructuring. So, with the continued focus on outsourcing, should we expect more of these restructuring charges to come, or do you think this was more of a one-off, and any color at all on quantifying the benefit that we should see from what you spent in the quarter over the next several quarters? Thanks. Rick Cohen: Yes, thanks for the question, Nicole. So, as I said, my prepared remarks, we -- the restructuring includes the complete discontinuation of manufacturing of our cell, cells in Montreal, and a significant curtailment in Wilmington. So, while we don't have any others to talk about today, that's a significant portion of the manufacturing activity we had to date. Obviously, we're continuing to advance our outsourcing initiatives across the range of things that we do. So, there may be more in the future. But we'll talk about those as it's time to talk about them. Nicole DeBlase : Got it. Thanks. And then, just shifting to the steel dynamic. So steel inflation has continued to take a bit higher year-to-date. Is the expectation that this quarter is kind of the maximum benefit that you should see from steel? You talked about it being a sequential good guy, like does it then turn into a sequential bad guy in the second half of the year? Thanks. Tom Ernst : Yes. Thanks for the question, Nicole. And you're right, if you pull up the steel chart, it's shown quite a bit of volatility. So, based on what we've seen to date, our steel purchases tend to be dollar weighted in the 10 months to 12 months prior to actual installation where the revenue is concentrated, the installation phase. So, we would actually expect the max benefit quarter to be our fiscal Q4 before you begin to see some of the uptick that we've seen recently create some headwinds. So, it is hard to predict where these things going are going to go because of the nature. Which is one of the fortunate things that our business model allows us to pass these costs onto -- largely pass these costs onto our customers, making our profit dollars very predictable, even though it does have a gross margin impact in terms of what we report on a percentage basis. Operator: Our next question comes from the line of Jim Ricchiuti of Needham. Your line is open. James Ricchiuti : Just a important background noise, but question on gross margins. If sounds -- if you cited several there could be more of a tailwind to gross margins, but I'm also trying to understand where exactly you are in the ramp-up of your outsourcing partners, if you're making enough progress in the early days of this that we're going to continue to see that be a benefit in the next one to two quarters, or is there still additional costs that are -- you're incurring is these ramp these outsourcing partners? Rick Cohen: Thanks, for the question James. We do see more tailwinds as we look forward. Now we are still have -- we still do have a lot of work to do with our outsourcing partners. So, while we have significant outsourcing happening across our entire value chain, we are still working on acquiring more partners across each of those. So, manufacturing and we also expect that our work with these partners in terms of collaboration and communication is going to benefit our mutual operations together over time. And so, this is something that we think will provide opportunity to improve our efficiency over a multi quarter timeframe rather than just a multi-week timeframe. And then there's just some near-term benefits that now that we have the confidence and the capacity up and running these partners that we're able to do things like discontinue our own operations, that provides some immediate benefits. So, I'd say it's a mix, Jim, but we're -- we clearly have a significant roadmap of opportunity over many quarters. James Ricchiuti : And I don't know if you want to comment on this, but what I'm thinking also trying to understand is the rate at which you're scaling, how many system deployments would you anticipate advancing in the current quarter? Rick Cohen: Is the question, how many do we anticipate initiating in this quarter? James Ricchiuti : Initiating, I'm sorry. Yes, that's right. Rick Cohen: Yeah, so, we initiated seven system deployments in the last fiscal quarter. We just reported in our fiscal second quarter. We don't tend to guide for the one quarter four. I do think that there can be quarter-on-quarter variability in those numbers. So, as we think about multiple quarters over time, we look to grow that number. But Jim, you should assume that there will be some ups and downs in terms of quarters and we feel like the seven we did this quarter and the sixth we did last quarter is an exceptionally strong quarter relative to our growth plans. Operator: Our next question comes from the line of Mike Latimore of Northland Capital. Your line is open. Mike Latimore : Just in terms of supply availability is that improving, is there further improvement that could occur? Can you just give some tone around that? Rick Cohen: We do continue to believe that the supply chain environment is improving. It is still not a normal supply chain environment, so we are still clearly battling things that would've been atypical pre-COVID in terms of canceled orders and things like that. In addition to perhaps a supply chain environment getting better, we are a much more formidable buyer, so we're getting the attention of suppliers, we're getting the attention of partners, and so, those we think as well are continuing to improve our ability to execute. Mike Latimore : And then in terms of the future plans on outsourcing, is the main focus here adding more partners to current sort of functional categories or are there other functions you're looking that you will eventually outsource? Rick Cohen: No. It's -- we have pretty much picked the partners though. So, we have partners that will help us install sites, partners that will help us build the Symbotic's partners that will help us build the cells. So, we have pretty well executed our strategy on outsourcing, and those partners will get better. They'll continue to help us to innovate. But we have done -- we are pretty much -- this last two quarters were big quarters for us in getting this job done. Tom Ernst: And so, we have got the functions covered, Mike, and now our goal is to deepen the bench in broadens events. Mike Latimore : Perfect. Okay. Very good. Operator: Our next question comes from the line of Greg Palm of Craig-Hallum. Your line is open. Greg Palm: Yes. Thanks for taking the questions. Here., I wanted to follow-up on the outsourced commentary, now that you are several more months into that. Can you just comment on how that's translating the speed cost as you have shifted more of that to partners? And I guess I'm asking relative to maybe what your earlier prior expectations was? Rick Cohen: Greg, it has enabled us to continue to execute to our plan. So, we are seeing our targeted deployments set with a little bit faster timeframe than we were executing to the systems that we are just completing for example. And as we have engaged with these partners, and talked about the kind of structural improvements both in terms of processes and collaboration, but also in terms of technology, we are further encouraged to that the opportunity to compress deployment timeframe is real tangible. It's something that we are going to work on together over the coming multiple quarters to years. Greg Palm: Okay. And then just following up on an earlier question, about EBITDA profitability. Tom, you commented on, I guess consensus estimates for Q4, and I guess my question is, were you effectively blessing those or what was the rationale for commenting on those directly? Tom Ernst: Thanks for the question, Greg. No, we are not providing full-year guidance, but just -- I just wanted to say context for it. So, what we will say is, as the revenue is able to scale, we believe that we are in a strong position to have high operating leverage. Greg Palm: Okay. Fair enough. I'll leave it there. Thanks. Operator: . Our next question comes from the line of Joe Giordano of Cowen. Your line is open. Joe Giordano: Yes. Rick, just given your comments about break pack and you are making good progress there planning over the next six months, how should we think about, like, R&D levels post 2023? Like, could we see a step-down in spend now that you have kind of gone through Symbotic and you are going through break pack to a large extent now? Like, how should we think about the required levels to keep the organization on the cutting edge? Rick Cowen: Yes. I don't think you will see a reduction in R&D. I think we will look to pull money out by just being more efficient with the organization, but we are going to continue to fund R&D, simply because we have a lot of great products that we haven't talked about, that are in the works that are going to help us a lot. And so, this is just a great innovative lab here and we continue to recruit really great talent. So, the answer to your question is no, I don't think you should expect irony to drop. Tom Ernst: I'll add to that, Joe. You're right that, break pack along with Symbotic are very significant projects in our innovation budget. So, as we complete those projects, we have a big war chest to do some of the other things that we haven't talked about yet that Rick mentioned looking forward. Joe Giordano: And then like, how should I think about ancillary things like when you're, okay -- so the final output of Symbotic, do you have a pallet and then you talk about how to get that pallet onto a truck. Is it forklift drivers? Is it an automated forklift? Like when do you -- how do you evaluate like what stuff we should provide and what stuff we should have a preferred partner, like if it was an autonomous forklift or something like that. Like, not just that application, but just in general, how do you go about evaluating what stuff should be Symbotic and what stuff should be partners of Symbotic? Rick Cohen: Yes, so the way to evaluate it is we're trying to encourage people to be good partners to Symbiotic because we want to control all the software that we can within a warehouse. So, if we can find a partner that has a AGB or a AMR and we can interface our software with this software and load the truck, the customer wins, we create more value. That's a good thing. The things that we're really innovating on that we had to -- that's kind of the culture of the company from Symbotic from day one is a lot of the stuff that we innovated on Symbotic. I mean, I looked for partners. I couldn't find anybody, so I had to do it myself. And so, I think the real value add is there's a lot of things that we are working on that nobody makes a product that would meet our standards. And so those are the things that we'll continue to innovate on. And obviously, I'm not going to tell you what they are, but there are some really interesting products that would allow us to create some really interesting systems. Joe Giordano: And last for me, just to clean up, are there any lockups left at this point? Stocks been over 12 bucks for the required time. Now I'm just curious if any, if there are any lockups remaining inclusive of like you guys on the senior team. Tom Ernst: There are. So, some of the affiliated shares are still locked. But everything is unlocked saved for board members, Rick and family trusts and myself and we're our lockup is in effect until a year post the public listing. Operator: Our next question comes from the line of Rob Mason of R.W. Baird. Your line is open. Rob Mason: Good evening. Thanks, for taking my question. I wanted to ask a question just to clarify on the backlog, you noted that it was flat quarter-to-quarter and clearly you booked $267 million in revenue. So, is -- I'm just curious what the offset was? Was there a new customer in there or did you additional systems out of -- from existing customers? What would've accounted for holding a flat? Rick Cohen: Yes, thanks for the question, Rob. So, no new customers booked in the quarter. What we're seeing is a higher variable consideration than what we contemplated when we entered the period. Rob Mason : And that variable consideration relates to is that productivity or… Rick Cohen: It relates to the business that's now under deployment and execution. So, the variable component's higher than what it was when -- before we had that component added to the started deployments. Rob Mason: Okay. And just as a follow-up, you've brought on a lot of partners as you've outlined here over the last two quarters. Has any of your partners have you observed them basically start to finish on projects or deployments to be able to assess the timeline that they're working from initial start, I guess, you just speak to the -- about their ability to commission and get projects over the finish line, how you feel about that in the timeframe. Rick Cohen: Thanks, Rob. And this highlights something so, while we made comments about a year ago that we wanted to put our foot on the gas and our outsourcing initiatives and we did so, and since then are now have fully outsourced across our value chain, most of what we do. That wasn't the starting of our outsourcing initiative. So, we've had some significant components outsourced from the start, such as is our lift systems, for example. So, our experience in those first waves have gone from start to finish with a high degree of success and teamwork with those partners. So, this latest wave -- we have completed an extensive part I'd say of the outsourcing life cycle with them. But we do have a long-demonstrated track record of being successful with outsourcing from start to finish and then for a year or two to follow that. Operator: Our next question comes from the line of Derek Soderberg of Cantor. Your line is open. Derek Soderberg: Thanks for taking my questions. Sort of related to the question just asked, just as regarded, just looking at the system deployments initiated this quarter is the expectation that those deployments today will sort of reach live production faster than maybe those initiated six months to 12 months ago? Just curious if you can update us on your progress shrinking those deployment timelines and if you can quantify any of that progress, that'd be great. Rick Cohen: Just to give you a sense, Derek, so, as the supply chain environment got tighter looking backwards, we actually extended the timeframe a bit. So, we got an earlier start on procurement. Since that timeframe, we've been able to pull in a couple of months. Part of that's related to partners and part of that's just the efficiencies that we're able to gain in getting new systems out in the field. So short answer to your question is yes, the systems we're initiating in this period we're targeting a shorter deployment than the ones we initiated say six months to 12 months ago. Derek Soderberg: Got it. That’s helpful. And then I was wondering if you could talk a bit about your ability to add another large customer this year. Lot of progress on concurrent deployment. Sounds like you're happy with the outsourcing partners. Do you think you guys have the ability to add sort of another say multi-billion-dollar customer this year and are those some agreements? Are you actually actively pursuing those agreements right now? Tom Ernst: Thanks, for the question, Derek. So, as, we added UNFI as a customer and discussed that that last period, our business plan continues to be here in the near term to add new customers by the ones or twos per year. So, we are con continuing to evaluate. We didn't add one in this quarter, we're reporting now. But we are continuing to look at that and do expect that here in the near-term one to two customers per year. Derek Soderberg: Great. Thanks. Operator: Thank you. . Our next question comes from the line of Chris Snyder of UBS. Your line is open. Chris Snyder: Thank you. When we see the implied improvement in fiscal Q3 margins, is this primarily driven by better gross margin? And with that, how far do you think the business is from hitting that 30% target gross margin level for systems? Because it seems like price cost pressure is going way over the next couple of quarters, but I'm not sure if a higher level of scale is needed to get to that number. Thank you. Rick Cohen: Yes. Thanks for the question, Chris. So, we think that we will continue to see gross margin expansion, as we look forward over quarters. And that is consistent to improving gross margins is implicit in our outlook. But we also do expect that we will see some efficiencies in our OpEx primarily from the benefit of the restructuring program that I discussed in my prepared remarks. So that's the real fundamental basis we are seeing the bit of operating leverage on slightly lower revenues implicit in our guide. Thinking about structural gross margins, we think that, that's an effort that will take us several quarters to a couple of years to really get the benefit. Here in the near-term what we are focused in on is, driving strong long-term profitability. And so, where we think that we can drive the greatest present value of our business by achieving scale and getting in and penetrating the market. And while we are doing that, we are focused on smart execution and ramping profitability over the course. So, we want that balanced approach of maximizing long-term profitability and scale, while being executing with expanding margins. Chris Snyder: Thank you. I appreciate that. And then for a follow-up, maybe something a little bit higher level. You guys have quite the blue-chip customer base. So, with that, I was just wondering, is there any color or commentary you could provide around the level of existing automation within these customer facilities. Just given that they are big customers, I would imagine there is some level of automation in there. So just trying to get a sense for kind of the rate of change on the upgrade. Thank you. Tom Ernst: Yes, Rick can comment too at a high level for these large customers. Every distribution center we go into is fully mechanized with conveyance-based automation. So generally, we go in and we are replacing a highly functioning world class conveyance system. Rick Cohen: I mean most of the systems we are replacing are 20 years old. And so most of the customers we have look at everything in the world. And so, they have had some type of automation. What of course is exciting for us is that, we believe we are the next generation of that automation and these systems have a long life once installed. So, the focus has really been making sure these customers are just frankly happy with what we are selling. And then we think we can sell a lot more. Chris Snyder: Thank you. Operator: Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to Jeff Evanson for any closing remarks. Jeff Evanson: Thank you, Valerie, and thank you everyone for joining our call this afternoon. We appreciate your interest in Symbotic, and we look forward to seeing you at our Investor Day on May 18th in Tampa or when we are out visiting with investors. Thank you. Have a good day. Operator: Thank you. Ladies and gentlemen, this concludes today's conference. Thank you all for participating. You may now disconnect. Have a great day.SYM Ratings Summary
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Symbiotic's Upcoming Quarterly Earnings: A Detailed Preview
- Analysts predict an EPS of $0.05 and revenue of $470.28 million for Symbiotic (NASDAQ:SYM).
- The company's revenue growth is attributed to the deployment of 39 new systems.
- Symbiotic faces challenges with a negative P/E ratio of -46.66, but maintains a reasonable liquidity with a current ratio of 1.31.
Symbiotic (NASDAQ:SYM) is preparing to announce its quarterly earnings on November 18, 2024. Analysts predict an earnings per share (EPS) of $0.05, with revenue expected to reach $470.28 million. Symbiotic is known for its innovative systems and solutions, and it competes with other tech companies in the industry.
The anticipated revenue growth is linked to the deployment of 39 systems, which are currently being implemented. This expansion is expected to positively impact Symbiotic's top-line results, as highlighted by the company's strategic initiatives. Despite this, Symbiotic faces challenges with a negative price-to-earnings (P/E) ratio of -46.66, indicating current negative earnings.
Investors are paying attention to Symbiotic's price-to-sales ratio of 1.85, which suggests they are willing to pay $1.85 for every dollar of sales. This ratio provides insight into how the market values the company's sales. Additionally, the enterprise value to sales ratio of 1.34 offers a perspective on the company's valuation relative to its sales.
Symbiotic's enterprise value to operating cash flow ratio stands at 26.26, reflecting its valuation in relation to cash flow from operations. This ratio is crucial for understanding how the company is valued based on its ability to generate cash. Despite a negative earnings yield of -2.14%, Symbiotic maintains a current ratio of 1.31, indicating a reasonable level of liquidity to cover short-term liabilities.
