Symbotic Inc. (SYM) on Q1 2024 Results - Earnings Call Transcript
Operator: Thank you for standing by, and welcome to Symbotic's First Quarter Fiscal 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentations, there'll be a question-and-answer session. [Operator Instructions] Please be advised that today's call is being recorded. At this time, I'd like to turn the call over to Jeff Evanson, Vice President of Investor Relations. Please go ahead. Jeff Evanson: Thanks, Val. Hello, everyone. I'm Jeff Evanson, Symbotic's VP of Investor Relations. 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 the factors described in 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 also on file with the SEC. These non-GAAP measures may not be comparable to measures used by other issuers. Today, we'll provide guidance for the first quarter, including revenue and adjusted EBITDA. We're not providing guidance for net loss today, which is the most comparable GAAP financial measure to adjusted EBITDA. We're 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 provision for stock-based compensation. On today's call, we'll be joined by Rick Cohen, Symbotic's Founder, Chairman and Chief Executive Officer; and Carol Hibbard, Symbotic's Chief Financial Officer. These executives will discuss our first quarter fiscal ‘24 results and our outlook followed by Q&A. With that, I'll turn it over to Rick. Rick? Richard B. Cohen: Thank you, Jeff. Good afternoon, everyone. Thank you for joining us to review our most recent results and discuss the year ahead. In our first quarter, we reported strong financial results and posted equally impressive operational results. Our team set a new deployment record, completing the full build, installation, and commissioning process for an entire Symbotic system in only 20 months. While we can't currently deploy all systems this quickly, this reflects the deployment speed improvements we are making, and we are focused on further reductions in deployment time as we build capacity to support growing customer demand. One such improvement is SymBot. The mobile bot is now well established as our platform workhorse. SymBot has the newest NVIDIA chips with an enhanced version of our automation software that is powered by artificial intelligence. While SymBot can perform more transactions per hour and has improved the liability over our previous generation bot, SymBot will also improve our ability to deploy systems more quickly and efficiently with even higher customer ROI. SymBot also helps extend the capability of our system and sets the stage for our entry into new markets such as non-ambient food. Turning to BreakPack. Our development of BreakPack progressed faster than expected over this past quarter and has advanced beyond the prototype stage. While we are always refining all our products, BreakPack is now ready for general availability to our full range of potential customers. Turning to our joint venture, GreenBox is receiving a lot of inbound interest. So like Symbotic, GreenBox is being selective in choosing the right customers to work with. GreenBox will share more about their roadmap for they announced their first customer, but we expect to be recognizing our first revenue from GreenBox in fiscal 2024. So in summary, our story is unchanged. We will continue to innovate, execute and scale to deliver for our customers as we grow and drive increased profitability in a capital efficient way. Now, Carol will discuss our financial results and outlook. Carol? Carol Hibbard: Thank you, Rick. I've enjoyed an exciting first 90 days here at Symbotic. During that time, we've enhanced the capability and scope of the entire Symbotic to scale for the future. For example, we successfully implemented SAP software across the company, which helps with everything from scaling to Sarbanes-Oxley compliance. Our first quarter revenue grew to $369 million up nearly 80% compared to the same quarter last year and reflects an accelerated pace of growth from last quarter's 60% year-on-year growth. This was driven primarily by scale and the increasing number systems we have in deployment. During the first quarter, we initiated five new system deployments and completed three as we continue to add both new customers and additional projects for existing customers. So at the end of Q1, we had 15 fully operational systems and 37 systems in the process of deployment. This is an increase from 12 operational systems and 35 deployments in progress last quarter and eight operational systems and 22 deployments in progress in the first quarter of last year. We have temporarily stabilized the pace of system deployment starts. Our future revenue growth is really driven by our ability to scale deployments and progress. Continued reductions in system deployment time as demonstrated by the system we recently deployed in just 20 months, leaves us well-positioned to support customer demand. It is important to note that as we scale, our customer base is becoming more diverse. The 37 deployments in progress are with six of our nine customers. We continue to standardize our system platform and identify opportunities to further streamline our deployment processes. To that end, our network of outsourcing partners is executing well. We continue to see significant opportunities to gain efficiencies over time and to build capacity as we continue to add partners to our outsourcing network. Our backlog remains stable at $23.2 billion and now reflects the addition of Southern Glazer's, who became a customer in November. Our recurring revenue streams grew 5% sequentially and 45% year-on-year. Adjusting for our 53-week year in 2023, recurring revenue streams reflect nearly a 12% sequential growth, but still below the 25% sequential increase in completed systems, because these systems were completed in the back half of the quarter. So we expect accelerating recurring revenue growth as we head into our second quarter. Gross margin increased sequentially by 90 basis points to 20%, driven primarily by improvement in system gross margin. While we do not expect gross margin to improve every quarter, we do expect it to improve each year well into our future. Our first quarter non-GAAP system gross margin increased 110 basis points from last quarter. As a reminder, these results still reflect significant costs associated with lower margin innovation projects like BreakPack, the burden of pass through costs to protect gross profit dollars, but can weigh on a reported gross margin percentage and costs associated with rapidly scaling our operations. Our recurring revenue streams again contributed to positive gross profit. This demonstrates the high leverage in our business model showing that we can be profitable with such a small number of active sites with recurring revenue, while also being invested for the much larger number of systems still in deployment. We continue to expect that as we scale over time that recurring gross margins can trend to over 60%. Operating leverage improved again sequentially as we achieved a 3.8% adjusted EBITDA rate compared to a 3.4% rate last quarter. This is driven by a rapid revenue growth and gross margin expansion along with stable operating expenses. Our cash and equivalents including marketable securities and restricted cash grew $129 million sequentially to $677 million. During the quarter, Walmart exercised its last remaining warrants at $10 per share, adding $159 million to our cash balance. Excluding the warrant proceeds, this total would have been [$518 million] (ph) reflecting a $30 million use of cash in the quarter. As the working capital benefits of 2023 temporarily reset, we expect cash to decline slightly again in the second quarter before we return to working capital expansion in the back half of 2024. For the Second quarter of fiscal 2024, we expect revenue of $400 million to $420 million and adjusted EBITDA between $12 million $15 million which represents revenue growth of over 50% and improved adjusted EBITDA margin of over 700 basis points, both on a year-on-year basis. We now welcome your questions. Operator, please begin the Q&A. Operator: Thank you. [Operator Instructions] Our first question comes from the line of Piyush Avasthy. Your line is open. Piyush Avasthy: Good evening, guys. Richard B. Cohen: Hi, Piyush. Piyush Avasthy: Hi. I think for the second quarter guidance, the implied EBITDA margin is modestly below from what you did in 1Q, maybe some color on what is impacting margins in this quarter? I’m taking a step back, I know you don't give full year guidance, but when do you expect a more meaningful sequential improvement in margins? Carol Hibbard: Thanks for your question, Piyush. Our guide for the second quarter reflects our flexibility to accommodate increased spending, if needed, as we need to accelerate deployment schedules and ensure we have a high quality deployment with as little disruption as possible. Ultimately, the customer satisfaction of that quality system rests on Symbotic. And so as we continue to ramp, we're going to deploy resources as necessary to ensure we meet that schedule. So that's what we're seeing for the second quarter. And in terms of the longer term profitability, we continue to be on a trajectory to improve and you're going to see that start to improve in the second half of the year, and year-over-year continued improvement in our profitability. Piyush Avasthy: Got it. Helpful. And Rick, I think you talked about BreakPack being available as a standalone product now. Maybe like, talk about the target customers here and how have the initial conversations been? Richard B. Cohen: Yes. So, the target customers for a BreakPack operation like that would be typically, what you see in BreakPack is customers that are in the drugstore business, which is obviously a big market. And the original BreakPack that we designed for Walmart was really, if you think of it, there's 4,500 supercenters and there's 45 drugstores within a Walmart supercenters. So, these would be some of the customers that would logically look at a system like this, smaller store format, smaller customers would be interested in BreakPack, and also people with a long tail of slow movers that might be interested in shipping eaches as opposed to cases. So, we think it's a very big customer base. We're not actively selling that BreakPack right now, but we've finished the prototype. It's no longer a prototype. And so, as we get more and more comfortable with it, we will begin to market it as add-on product to our basic product. Piyush Avasthy: Got it. Very helpful. Appreciate the call, guys. Carol Hibbard: Thank you. Operator: Thank you. One moment, please. Our next question comes from the line of Ross Sparenblek of William Blair. Your line is open. Ross Sparenblek: Hi, guys. Thanks for taking the question. Richard B. Cohen: Hi, Ross. Ross Sparenblek: Hi. Maybe on the, the supplier network, I know you guys noted that, you're still adding suppliers. I thought we're kind of through that dual sourcing that would then begin to allow you to start, alleviating some of the inventory challenges and bringing down those lead times. Can you just provide any update as, we think of the timing around that? Richard B. Cohen: Yes. I've spent a lot of time with suppliers. What we're seeing is better inventory, higher quality products coming from our suppliers, which means that we're actually pushing the suppliers to do a lot more testing in their factories as opposed to on sites. And as a result, you'll see the implementation time our system is faster, which is why we mentioned the fastest that we've done yet. This was completed this past quarter. And when we turned it on, it was above customer expectations for quality. So, what we're seeing from suppliers now and what we're working at is the suppliers now understand how real we are. There's a lot of interest from suppliers. They're more price competitive. They're more willing to invest in quality. So, I think we're behind, we're past the struggle is to find good suppliers and now we're working with more good suppliers to be higher quality and more competitive. So, I think it's, I think we are in a good place with suppliers now. Carol Hibbard: Yes. So, Ross, I'll just add to that. If you think about 2023, it's really focused on getting those partners, and so there is probably a more substantial growth in terms of the number. Now we're tweaking because we do need to continue to scale. And as Rick indicated, we know are coming in with a lot greater scale and suppliers are more interested. And so in 2024, as we focus on that, we're also focused with our suppliers are ensuring we're gaining those efficiencies, and we're starting to see the benefit of that. Ross Sparenblek: Okay. Got it. And then maybe just thinking about, new customer mix, and mix of the year. Can you just, maybe help us, better understand what steel was? And then also, of the five additions, what would have been, kind of customers outside of Walmart? Carol Hibbard: Yes. So out of our new customers, so as we indicated, we had five new systems in this quarter, one of those was Southern Glazer's. So we announced in November, we had the addition of Southern Glazer's. So, that's our new customer out of that mix of five. The other four were additional statements of work for existing customers. I think that was your first question on the new customer mix. Ross, can you go, you had another part to that, can you? Ross Sparenblek: Yes. Just understanding what the, steel impact was. I know it's been pretty variable quarter-to-quarter here. Carol Hibbard: Yes. So in our contracts, we have pass through clauses that help us see that fluctuation of steel. We actually saw the benefit for steel fluctuation early in the year, now we're looking at headwinds as we head into 2024, and still seeing that fluctuate, but I will emphasize our contract structure allows us to have some of those costs as pass through, but we continue to monitor that and ensure that we're getting out ahead of it. Ross Sparenblek: Got it. So, maybe just real quick, we think about the 90 basis points of sequential margin expansion, we're steel maybe half of that? Carol Hibbard: No. Steel would not have been, that big of contribute to that margin expansion. Ross Sparenblek: Okay. Carol Hibbard: Yes. Ross Sparenblek: Thank you, guys. Carol Hibbard: Okay. Thanks, Ross. Operator: Thank you. One moment, please. Our next question comes from the line of Matt Summerville of D.A. Davidson. Your line is open. Matt Summerville: Thanks. Couple of questions. I was wondering if you can maybe take a second back to, some of your prepared remarks just regarding SymBot, can you maybe review with us some of the KPIs, if you will, around SymBot versus, prior, the next closest prior generation, trying to get an understanding for, you mentioned more transactions an hour. If you can kind of put some numbers around how, SymBot is differentiated versus your legacy, gen robots? Richard B. Cohen: So, the first thing that we did with SymBot is it can actually this may be one of the most important things. It can actually handle a tote, a tapered box and our original bot could not do that. So, that was one of the first things that forced us to relook at long-term flexibility of a SymBot. So, that part didn't actually help us go faster, but it gave us a much bigger universe of products that we could handle. Most of our competitors might do trays or something else. So, we have a lot more flexibility on what size and shape of packages we can handle. The second thing that SymBot did over what we call [BotX] (ph), it has vision. And in order to put in vision, we needed graphic interfaces. And so, we upgraded to NVIDIA chips, and their vision and graphic interface boards, and so that allows us to actually see boxes that in the past we couldn't see. Third thing is, we can pick and place packages 10 seconds faster than we could with the original bot. So, those are some of the other things that we did. And then the last thing is that we can now actually on this bot pick up on inbound, we always were able to bundle and deliver two or three cases at a time. Now for the first time on outbound, we can handle more than one box at a time. So, I won't give you a lot of numbers because some of the stuff is still proprietary, but you got a sense this bot is, I would say the upgrade for this bot would be from a motorcycle to an SUV. Matt Summerville: Super helpful there. Thanks, Rick. And then as my follow-up, you kind of talking about BreakPack generally available not really actively selling it yet. I'll ask the same question along the lines GreenBox, do you expect BreakPack to start to contribute to revenue in fiscal ‘24? And then when do you see Symbotic starting to attack the non-ambient market per one of your other prepared remarks? Thank you. Richard B. Cohen: Yes. So, BreakPack may have impact in 2024, right at the end of the year. So, in the last quarter, if it does, because of just the cycle of selling, and so that would be one. Ambient, we're actually piloting some, perishable testing in a perishable warehouse as we speak. So, I think, that could be, I would say, probably not this year, but I would say 12 months from now just from the cycle. But we will be able to offer perishables and then after that would be frozen. But the first go around would be stuff like dairy, produce and meat, which is around 32 degrees. And then after that, we would develop a system for minus 20. Carol Hibbard: And then Matt, I'll just add to that. BreakPack, our proof of concept is already contributing to revenue this year, and has been over the past year. Matt Summerville: Yes. Carol Hibbard: And so our product mix that we have in flow is also is already a revenue contributor. Now, in terms of what we're able to add to that as we continue to offer it, you'll see that grow as we expand that at the end of ‘24. Matt Summerville: Yes. Understood. Thank you. I was aware of that, but thank you for, yes. Thanks for clarifying. Carol Hibbard: Yes. Matt Summerville: I should have stated it a little differently. Thanks, guys. Richard B. Cohen: Yes, you too. Operator: Thank you. One moment, please. Our next question comes from the line of Mark Delaney of Goldman Sachs. Your line is open. Mark Delaney: Yes, good afternoon. Thank you so much for taking the questions. If I heard correctly, Carol, you mentioned stabilizing temporarily the number of system starts. And if I heard that correctly, I'm hoping to better understand the thought process and how you're thinking about managing the company operationally, especially with the company adding more outsourcing and manufacturing partners, I would have thought there had been some potential to increase the number of starts the company was doing? Carol Hibbard: Yes. Thanks for the question, Mark. You'll see that by stabilizing. So last quarter, we introduced four new systems into the quarter, this quarter you're seeing five. By stabilizing, we indicated don't expect that continue to grow to six to seven to eight every single quarter, but we will see improved number of systems as we grow over the next couple of years. When you think about what we already have in our backlog, the other comment related to that stabilizing is you're going to start seeing us delivering on our systems with the backlog that we currently have. And so we're going to continue to ramp the number of systems that we turn operational every quarter, and then the number that we continue to add from either new customers expect a new customer one to two every year as we've indicated in the past, there's really no change to that. And then as we expand into GreenBox, in the ‘24 and ‘25, I think that's when you'll really start seeing the additional ramp. Mark Delaney: Understood. That's very helpful context. And then in the first question about the EBITDA guidance, you mentioned the guidance, assuming the ability and flexibility to deploy resources to support customers, So, I mean, to better understand what you meant by that, is there something with, just some of the more recent projects that's been more difficult? Or are you more alluding to you're supporting some newer customers and just wanting to make sure you have the capability to support them in the event, that is, necessary? Thank you. Carol Hibbard: Yes. Thanks for the follow-up. So, in terms of our guide, when we talk about wanting the ability to, deploy on schedule, we are now in the stage where we have 37 different projects in deployment. So that's up from 22 a year ago. And so, we are scaling right now. And what we want to make sure we do is that we adhere to schedule and that we're able to deliver that high quality. So if that means providing a few additional resources or taking a week or two longer, to go ahead and deliver, that's what you're going to see in some of what I'll call the lumpiness, in the next quarter around both revenue and in our margin. Mark Delaney: Okay. Thank you. Carol Hibbard: We don't want to do anything short sighted to save a few points on margin that will help us in the long-term. Mark Delaney: Understood. Thank you very much. Operator: Thank you. One moment, please. Our next question comes from the line of Nicole DeBlase of Deutsche Bank. Your line is open. Nicole DeBlase: Yes. Thanks for the question, guys. Good evening. Maybe just starting with R&D, it's been on a bit of a declining path for the past few quarters. I guess, why is that? And then, what is the outlook for R&D expense over the next several quarters? Carol Hibbard: Thanks, Nicole. So, on R&D, I think what you're seeing when you compare fourth quarter to first quarter, is that additional week that we talked about. So, in the fourth quarter last year, we had a 14-week quarter versus the 13-week quarter. So, we had an extra week contributing to R&D. So, that's a little bit of a fluctuation from fourth quarter to first quarter. I would expect our R&D to continue to ramp modestly throughout the course of the year, but what we do want to make sure we do is we're looking at multiple innovation projects. And so we want to maintain the ability to ramp our R&D if those innovation projects come to light and we want to expand that at the back half of the year. So, I'd expect moderate growth, but we are looking at projects that not only drive innovation, but we're also looking at projects that drive improved efficiency that would help improve our cost structure as well as the operational efficiency on the end customer, for the systems that we deploy. Nicole DeBlase: Got it. Okay. That's really helpful. And then, when you spoke about getting to one deployment in the 20 month zone, I guess, what would be the long-term goal of the length of appointment, once you feel good about the whole process? Thank you. Carol Hibbard: Okay. So, I'll start and then Rick can chime in, in terms of long-term vision. As we've talked about in the past, we expect that 20-month cycle over the long-term to get down to 12-months or lower. So, we've talked about the things that we need to put in place to be able to go do that. So, that's from a long-term perspective. I think one of the other things to think through is what really enabled that 20-months, that might be one of the questions, so that we can make sure we're looking at how do you enable that going down to 18-months and then to 16-months. So, a couple of things enabled us hitting that achievement this quarter. One was, we now have continuous learning over multiple deployments. So, our outsourcing partners, they've now got multiple deployments under their belt and they're improving on each one. We've also got increased collaboration from our entire deployment team. So, our deployment team includes Symbotic resources, our suppliers, as well as our customer. And we've really seen an increase in that collaboration over the past quarter. And then the last one is the quality and standardization of what I'll call the build. So, our build instructions, our test procedures, we're standardizing that more and more from deployment to deployment, and that's really enabling the improvement from our partners. Nicole DeBlase: Thanks. That was super helpful. I'll pass it on. Carol Hibbard: Thanks, Nicole. Operator: Thank you. One moment, please. Our next question comes from the line of Chris Snyder of UBS. Your line is open. Chris Snyder: Thank you. I wanted to follow-up on the communication earlier around accelerating or picking up growth investment to drive or help facilitate the accelerated growth. And when we look at OpEx, over the last four quarters, OpEx has generally been sideways and the number of projects in process and the revenue has gone up 40%. So I guess, is there something that's happening now that's causing this, the OpEx meeting to pick up into Q2, because we've seen so much growth already without that. So, finally, I guess the question is why now? Carol Hibbard: Yes. We continue to modulate our OpEx because we're getting better on that spend. But I think you're going to see the improvement on that is where, we'll continue to grow OpEx, but it's not going to grow nearly at same level of our revenue because we're also getting improvements on our spending as we do that. Chris Snyder: Okay. Fair enough. And then I wanted to talk about or follow-up on about the non-ambient food opportunity. Specifically, if we think about, the existing customers that the company has, is there any way to frame the size of the opportunity from non-ambient food with those existing customers? And then also, when you see the Walmart backlog, does that include any revenue for, systems related to non-ambient food? Thank you. Richard B. Cohen: The Walmart backlog does not include any systems that are non-ambient. So, obviously and none of our other customers, whether it's C&S or UNFI, also, there's no -- we weren’t selling non-ambient. But in the future, we'll be able to and we think that's a big market. It's a slightly different market because there, this is a market where, and when we're focused on ambient, we're really focusing on one, we can obviously build pallets, but building in a perishable warehouse, the space is just so expensive. We're actually working on increasing the density of our system, which may help us across a number of areas. But it's, I can't give you a number for the market, but it's a big market. Chris Snyder: Thank you. Operator: Thank you. One moment, please. Our next question comes from the line of Jim Ricchiuti of Needham and Company. Your line is open. Jim Ricchiuti: Hi. Thank you. Rick, question just on BreakPack. You alluded to the drugstore business. How important is it to you to get a use case outside of your large customer for BreakPack in a market like that? Richard B. Cohen: Oh, it would be great. I mean, that's one of the things that I've spent a lot of time on is figuring out who are the best use cases, who are the logical customers for what we're doing. And one of the things that we find, and we've been pretty busy. So, we haven't been doing a tremendous amount of marketing because we're very focused on delivering for the customers we have in place. But one of the things that we do when we bring a new customer to the market just to see a site, is many times their response is, I didn't even know this was possible. So, that's why we're very, very focused on delivering on time, delivering with a braggingly happy customer expectation, and we're going to focus on that for the rest of this year. And as we get better, then we'll have braggingly happy customers and then the stuff that we're doing that people said I've never seen this before gives us instant credibility. And I think that makes it very easy for us to expand our market. Jim Ricchiuti: Okay. Follow-up question is just going back to that 20-month deployment, that you, you achieved. As you bring on more partners, outsourcing partners, it sounds as though there some fits and parts and that we're going to see this move around. It's not going to be or tell me if we're going to see, yes, consistent progress on this front. It just seems like as you bring on new partners, it's going to bounce around a bit. Richard B. Cohen: No, I don't think that's, we don't think that's going to happen. We are now -- when we started the outsourcing process, I think our team was smart enough to say if there's a better way to do this than show us. What we've been doing for the last year now is we are asking people to build to print is what is the expression they use. So, you don't change our design. If you want to talk about an improvement that may happen a year from now, but we're really working very hard to standardize our design, which speeds up the implementation, which simplifies the programming, the programmable logic, they call PLC code that goes into our machines. So, the ability to replicate what we do at the very highest level is what we're focused on. So no, I don't think you will see I mean, I think we had a lot of learnings last year and I think we talked about that openly. I don't think you're going to see that again in the future. Jim Ricchiuti: Good. Thank you. Operator: Thank you. One moment, please. Our next question comes from the line of Ken Newman of KeyBanc Capital Markets. Your line is open. Ken Newman: Hey, good morning. Hi, good afternoon, I should say. Carol Hibbard: Good afternoon, Ken. Ken Newman: Yeah. Thank you. Carol, curious if you can just dig down the comment about the increased spending to service the higher growth in the second quarter. I mean, when you think about that, is the biggest bottleneck there the service of deployment, is that just in house engineers? Is it the third party supplier base? Just any color there to kind of help us pocket that that headwind. Carol Hibbard: Yeah. It's a mix. Thanks, Ken. It's a mix of I wouldn't say it's mostly engineering because our engineering folks are focused on the R&D part of the business, and less of that goes into our COGS, but it's the operators and it's the folks we're putting on-site for that final stage of commissioning and deployment to ensure we're hitting the reliability. That includes some of our outsourced you referred to it as suppliers. So that would be their spend as well. Ken Newman: Okay. And then of course, just wanted to get a little bit more color, I think you mentioned working capital expansion in the second half. Obviously, we saw a big ramp in accounts receivable and maybe prepaid expenses this quarter, I'm guessing that's from Southern Glazier, but just any color on what drives the working cap expansion to the second half and just how confident you are about top cash or free cash getting better into the back half of this year? Carol Hibbard: Yeah. So as most of you know, over the course of our deployment our cash inflows tend to be very front loaded, and so that's driven our favorable cash flow as we've ramped. But then in any particular quarter depending on the maturity of that particular deployment, we might see a higher cash outflow. So as we're ramping to having 37 different deployments in flow, now as we're heading into this quarter, we're going to see higher cash outflow in the second quarter similar to the Q1. What we're expecting for the year, excluding the warrant exercise, I'd expect our cash to be flat. Ken Newman: Got it. Thanks. Operator: Thank you. One moment please. Our next question comes from the line of Joe Giordano of TD Cowen, your line is open. Joe Giordano: Hey, guys. Can you hear me? My phone seems to break up a second there. Carol Hibbard: Yeah. We can hear you, Joe. Joe Giordano: Okay. Great. So I preface this by saying it's a high class problem, but, and you guys delivered revenue at like the high end basically of what you said you would. But it's to be fair, it's the first time you haven't like pretty easily gone considerably ahead of the high end. And I just want to like it's a little bit of a tough question, Carol. I know you haven't been there for those prior quarters. But is it -- was there a need to be more conservative with guiding back then because you had fewer projects under that were in deployment and more variable by nature and now you have more kind of precision around the guide because you have more projects to like limit the inherent volatility there? Carol Hibbard: Yeah. You're exactly right, Joe. So as we scale and we have more and more systems in progress, the variance on a single project, we're not going to see that have as much contribution to an individual quarter's revenue. So before when we had fewer projects, if you had one Project either completed month 30 earlier or complete month later or even a week here and there, it was really driving the variation in the revenue. And as I indicated just in the opening remarks as well, we've deployed SAP and some of the controls we're putting in place should help us standardize and, drive our ability to tighten up that prediction range. Joe Giordano: Okay. That's kind of what I figured. And your commentary suggested that you put in five into production this quarter sounds like it will be give or take that level for a bit here. I know like if you models have that ramping pretty large at some point. We could debate exactly when that starts. But I just want to make sure I understand like what is -- is there anything that's specifically not allowing that amount to be significantly higher right now? Or is it just subject to like the scheduling of your large customers? Like if your customers wanted that to be 15 next year, is that like theoretically possible right now? Carol Hibbard: So I'd say you're spot on. Our ramping of additional customers, we've indicated 1 to 2 a year and that is metered by our ability to want to provide excellent customer service and satisfaction to the backlog that we have. And so we don't want to continue to take on more and more statements of work and additional customers and not have the ability to deliver on the $23 billion backlog that we have. Joe Giordano: Okay. And then one for Rick, if I can. Rick, going through the SymBot characteristics there, I'm just curious, like, when you now have the ability to handle multiple boxes, at one time on the outbound, like, does this ultimately allow you to accomplish the system with fewer bots? And is that kind of going to be somewhat required as you move to non-ambient where, like, as you said, the facilities are smaller and you probably need to get, like, more bang for your buck from a square footage standpoint. And does that whole dynamic lead to like any sort of difference in margins that you think you'd be able to get? Or is it better, worse, equal versus what you've been doing on at scale? Thanks. Richard B. Cohen: Yes. So, I can honestly say everything we're doing is trying to increase our margins. We're not doing anything consciously to decrease them. But seriously, the journey that we're on with the SymBot, we expect that we will be able to run systems with less bots because they will be more capable, faster, be able to do more work and that's the journey that we're on and that will only increase margin. The other thing that that will do is it would allow us to do a smaller system because we could so we could use less bots because they're more capable. So that would allow us to, on the low end, hit a new price point, which is one of the things that I'm very focused on. I love having these big customers and I love having these big sales, but if we could sell a smaller system with a lower price point and still increase our margins, that's an even bigger market than we're talking about right now. Joe Giordano: Yeah. Absolutely. Okay. Great. I'll pass it along and jump back in queue. Thanks, guys. Operator: Thank you. One moment, please. Our next question comes from the line of Greg Palm of Craig-Hallum. Your line is open. Hey. Greg Palm: I think I heard my name, but something, cut out. In terms of GreenBox, I was hoping to dig into a little bit more on the deployment schedule. Rick, I think you said, deployments or maybe initial rev rec in fiscal ‘24. So I'd like you to confirm that if possible. But how do you think about the ramp up of deployments specific to GreenBox, and just in terms of, you know, aggressiveness, is it dependent on customer announcements or sign ons or how you're thinking about that over the coming years? Richard B. Cohen: I think that we well, the answer, we'll do it in parts. So, we've been talking to some large customers and large suppliers about the opportunity. And so, I think what will happen is that GreenBox will start off slowly and then go very fast. So there's a proving out concept where if we build a green box site and we have multiple vendors in that site and they test it, then logically, they're going to say, okay, I want 10 of these sites around the country because I need to cover a national network. So I think what we're doing is doing all our homework, putting in the foundation for GreenBox, and I think we expect to have some good news on GreenBox in 2024, but we're also doing a lot of diligence to make sure that we set the foundation correctly. Greg Palm: Okay. And just to be clear, you expect deployments or rev rec to start in this fiscal ‘24. Is that right? Richard B. Cohen: Yes. Greg Palm: Okay. And just from a follow-up question on the pace of deployments in general, obviously, a lot of progress, over the last year or so since the outsourcing strategy ramp up. But kind of as we sit here today, is there any constraints to not maintaining that current pace, but accelerating it further, whether it's bringing on additional partners, whether it's continuing to kind of reduce that timeline per the deployment, just trying to get a sense of anything that's changed internally where you're not trying to further accelerate deployments from current levels. I just want to make sure we're all kind of clear on what's changing, if anything, here. Richard B. Cohen: So I'll take this one. So the deployments we're doing now in this quarter were actually started a year ago. What we know a year later, which is now from where we were a year ago, we can go fast. We can go a lot faster. Greg Palm: Okay. I'll leave it there. Thanks. Operator: Thank you. One moment, please. Our next question comes from the line of Derek Soderberg of Cantor Fitzgerald. Your line is open. Derek Soderberg: Yes. Hey, everyone. Thanks for taking the questions. Just sort of piggybacking off the last question, just around turning on the live systems, with deployment timelines where they're at, it sounds like around 20 months or so. I think a year and a half ago, you're at 13 systems in progress, a year ago, 22. I guess, I'm wondering if you think you can bring maybe those 13 systems to live operation this year, maybe last. Can you share what expectations you have you know, the number of systems you think you can turn on this year? Carol Hibbard: Yes. So we typically don't guide on the on the number of systems we've got in deployment. But as was pointed out, we had gone quarter-over-quarter for four quarters in a row where we were deploying one system a quarter. We accelerated that to two last quarter and now you saw that accelerate to be deployed three this quarter. I would expect to see continued improve that throughout -- continued improvement on that throughout the year. And as you said, that 20 month deployment, but what we also pointed out is that 20 month deployment, that's for what I'll call an average system, so there will be variability. Not every system will deploy in 20 months depending on the size of the system. We have some systems that we're implementing, which will be significantly larger, and those will take additional time to go ahead and deploy. But overall, the average we're looking to continue to reduce that time deployment and that does enable, clearly the ramp of how many we deploy in a given quarter. Derek Soderberg: Got it. And then as my follow-up, just trying to work out some of the math on the recurring revenue. I'm wondering how we should think about the recurring fee, from a percentage standpoint, and is that moving higher as new systems are turning online? And should we really think about recurring revenue to more or less grow at a similar rate, as these live systems come online? Thanks. Carol Hibbard: Yeah. And so the recurring revenue stream, and I'll start with software. So you saw our second profitable quarter, 430 that's up from where we were. So in terms of profitability, we're seeing progressive, improvement to the software margin. From a recurring revenue perspective, when you look fourth quarter to first quarter, you're not seeing as big of a ramp. Those three systems that we brought on live hit live in the last month of the quarter. And so you're really going to see a much steeper ramp on that recurring revenue. It was in a not we had we went from 12 systems in deployment to 15 in deployment, but those last three happened, in December, so we didn't see the real benefit. So, I think you're going to continue to see that revenue grow. But in terms of your question on the attach rate, we still have, I'd say, a third of the 15 systems that we've got deployed or really early proof of concept systems where our attach rates were significantly lower. So you're seeing the impact of that. New customers that we're signing on, we're looking to improve that, recurring attach rate as we've talked about in the past. Derek Soderberg: Perfect. Thank you. Carol Hibbard: Thanks, Derek. Operator: Thank you. One moment, please. Our next question comes from the line of Rob Mason of Baird. Your line is open. Rob Mason: Yes. Thank you. Just to circle back to GreenBox a moment, there were some costs, it looked like in the quarter, small costs, just related to the JV formation. I'm just curious how you expect Those in the call on cash to trend, through this year. And if, Rick, you could speak to any major milestones as we work towards their first customer announcements, I guess maybe just structurally internally at GreenBox, major milestones, that still need to happen just in the formation of that entity. Carol Hibbard: Yes. So Rob, I'll take the first part of that question that, additional small amount of joint venture fees, that is trailing costs associated with all the work we did last year. So you should not expect to see that continue. And that was a one-off trailing expense from last quarter. So your second part in terms of GreenBox, as we've indicated, we expect our first customer, this year, and we've got a lot of inbound as Rick addressed, and we're on the trajectory we had planned for GreenBox. I don't know if that answers the second part of your question, Bob, or not. Rob Mason: I mean, is the management in place? Or again, I'm just trying to think is that that any comes to be, you know, what are what are the other, you know, milestones that we're looking forward to there. Richard B. Cohen: Yes. So the management is we're recruiting, we're interviewing management to put that in place, but there's also from the outside, they may have different skills than we have, whether it's at SoftBank or Symbotic. But right now, we have, between the SoftBank talent team and what we're doing at Symbotic, we can actually sell systems into GreenBox, but we expect to expand the management team over the next period of time fairly quickly to build a bigger sales force at GreenBox and so that's the process that we're on. Rob Mason: Excellent. Thank you. Operator: Thank you. I'd like to turn the call back over to Jeff Evanson for any closing remarks. Jeff Evanson: Thank you, Val, and thank you everyone for joining our call tonight. We appreciate your interest in Symbotic. We look forward to seeing many of you at investor conferences or warehouse tours or when we talk next quarter. Have a great night. Operator: Thank you. Ladies and gentlemen, this does conclude 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.
