Q1 2024 Symbotic Inc Earnings Call

Operator: Thank you for standing by, and welcome to Symbiotics' First Quarter Fiscal 2024 Financial Results. At this time, all participants are on a listen-only basis. After the speaker's presentation, there will be a question and answer session. To ask a question at that time, please press stars 1 and 1 on your telephone.

Thank you for standing by and welcome to symbiotic first quarter fiscal 'twenty 'twenty four financial results conference call.

At this time all participants are in a listen only mode.

After the Speakers' presentation there'll be a question and answer session to ask a question at that time. Please press star one wanting your telephone.

Operator: 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 Investment Relations. Please go ahead.

Please be advised today's call is being recorded.

I'd like to turn the call over to Jeff Evanson, Vice President of Investor Relations. Please go ahead.

Jeffrey K. Evanson: Thanks, Val. Hello, everyone. I'm Jeff Evanson, Symbiotics' VP of Investor Relations. Our press release and discussion today will include forward-looking statements based on assumptions that are subject to risk and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statement, including as a result of the factors described in cautionary statements and risk factors in Symbiotics' Financial Release and Regulatory Filings with the SEC, by which any forward- In addition, during this call, we will discuss certain financial measures that are not recognized under U.S. generally accepted accounting principles, which the FCC refers to as non-GAAP measures.

Thanks, Bill and Hello, everyone, I'm, just having somebody who's VP of Investor Relations.

Our press release and discussed with gateway or looking statements.

Things that are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

These statements, including as a result of the factors described and cautionary statements and risk factors in <unk> 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 FCC refers to as non-GAAP measures.

Jeffrey K. Evanson: 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 non-GAAP measures may not be comparable to measures used by other issuers.

We believe these non-GAAP measures assist management in planning forecasting and evaluating 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 Investor Relations section of our website and is on file with the SEC.

non-GAAP measures may not be comparable to measures used by other issuers.

Jeffrey K. Evanson: 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 gap financial measure to adjust to do the top. We're not able to provide reconciliations of adjusted EBITDA to gap 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.

Today, we will 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 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.

<unk> cannot be reasonably predicted such as the provision for stock based compensation.

Jeffrey K. Evanson: On today's call, we'll be joined by Rick Cohen, Symbiotics Founder, Chairman, and Chief Executive Officer, and Carol Hibbard, Symbiotics Chief Financial Officer. These executives will discuss our first quarter and fiscal 24 results and our outlook, followed by Q&A, which I'll turn over to Rick.

On today's call, we'll be joined by recovering Symbolics, founder Chairman and Chief Executive Officer.

Carol hybrid <unk> Chief Financial Officer.

These executives who will discuss our first quarter.

Fiscal 'twenty four results and our outlook followed by Q&A.

With that I'll turn it over to Rick Rick Thank you Jim.

Rick Cohen: Thank you, Jim. 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 symbiotic 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 Symbiote.

Afternoon, everyone. Thank you for joining us to review our most recent results and discuss the year ahead.

And 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 symbiotic system and only 20 months.

We can't currently deployed all systems and is 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 Jim Bob.

Rick Cohen: The mobile bot is now well-established as our platform for, Simba 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 reliability over our previous generation bot, it will also improve our ability to deploy systems more quickly and efficiently with even higher customer ROI. CIMOD 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 BreakPak, our development of BreakPak progressed faster than expected this past quarter and has advanced beyond the prototype. While we are always refining all our products, BrinkPak is now ready for general availability to our full range of potential customers. As for our joint venture, Greenbox, it is receiving a lot of inbound interest. So like Symbonic, GreenBox is being selective in choosing the right customers to work with. Greenbox will share more about their roadmap when they announce their first customer, but we expect to be recognizing our first revenue from Greenbox in fiscal 2021.

Mobile Bot is now well established as our platform workhorse Simba as the newest Nvidia chips with an enhanced version of our automation software that is powered by artificial intelligence.

Well soon but can perform more transactions per hour and has improved reliability over our previous generation Bot Simba will also improve our ability to deploy systems more quickly and efficiently with even higher customer ROI.

<unk> 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 break pack or development or break pack progress faster than expected over this past quarter and has advanced beyond the prototype stage.

While we are always refining all of our products freight pack is now ready for general availability to our full range of potential customers.

Turning to our joint venture Green box is receiving a lot of inbound interest so like symbiotic remarks as being selective in choosing the right customers to work with.

Remarks will share more about the roadmap for they announced their first customer, but we expect to be recognizing our first revenue from green box and fiscal 2020.

Rick Cohen: 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. Okay, Carol?

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 Symbiotics. During that time, we've enhanced the capability and scope of the entire Symbiotic team 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 percent compared to the same quarter last year, and reflects an accelerated pace of growth from last quarter's 60 percent year-on-year growth. This is driven primarily by scale and the increasing number of systems we have in deployment. During the first quarter, we initiated 5 new system deployments and completed 3, as we continue to add both new customers and additional projects for existing customers. As a result, at the end of Q1, we had 15 fully operational systems and 37 systems in the process of deployment.

Thank you Rick I have enjoyed an exciting first 90 days.

During that time, we have enhanced the capability and scope of the entire symbiotic team the scale for the future. For example, we successfully implemented SAP software across the company, which helps with everything from scaling to Sarbanes Oxley compliant compliance our first quarter revenue grew to $369 million up nearly 80%.

Compared to the same quarter last year.

With an accelerated pace of growth from last quarter, 60% year on year growth.

This was driven primarily by scale and the increasing number of 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.

Carol Hibbard: 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, leave us well-positioned to support customer deployments. 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.

This is an increase from 12 operational systems and 35% deployments in progress last quarter and.

Eight operational systems, and 22 deployments and 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.

37 deployments in progress are with six of our nine customers.

Carol Hibbard: We continue to standardize our system platform and identify opportunities to further streamline our deployment process. 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 Glaciers, who became a customer in November.

We continue to standardize our system platform and identify opportunities to further streamline our deployment processes.

To that end our network about sourcing 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 remained stable at $23 2 billion and now reflects the addition of southern Glazers, who became a customer in November.

Carol Hibbard: 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 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. Gross margin increased sequentially by 90 basis points to 20%, driven primarily by improvement in system growth. While we do not expect gross margins to improve every quarter, we do expect them to improve each year well into our. Our first quarter non-GAAP system growth margin increased 110 basis points from last quarter. As a reminder, these results still reflect significant costs associated with lower margin innovation projects like BrightPak.

Our recurring revenue streams grew 5% sequentially and 45% year on year.

Adjusting for a 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.

So we expect accelerating recurring revenue growth as we head into our second.

Gross margin increased sequentially by 90 basis points to 20%.

Driven primarily by improvement with system gross margin.

While we do not expect gross margin to improve every quarter do you 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 reflect significant costs associated with lower margin innovation projects like brake pack.

Carol Hibbard: The burden of pass-through costs that protect gross profit dollars but can weigh on a reported gross margin percentage and costs associated with rapidly scaling our operation, 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 in a much larger number of systems still in deployment. We continue to expect that as we scale over time, recurring growth 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 rapid revenue growth and gross margin expansion, along with stable operating. 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.

The burden of pass through costs to protect gross profit dollars, but can weigh on our 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 over 60%.

Operating leverage improved again sequentially as we achieved a three 8% adjusted EBITDA rate compared to a three 4% rate last quarter.

This was 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 for $129 million sequentially to $677 million.

During the quarter Walmart exercised its last remaining warrants at $10 per share, adding a $159 million to our cash balance.

Operator: Excluding the warrant proceeds, this total would have been $518 million, reflecting a $30 million use of capital. 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. For the second quarter of fiscal 2024, we expect revenue of $400 to $420 million and Adjusted EBITDA between $12 and $15 million, which represents revenue growth of over 50% and an 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. Thank you. Again, ladies and gentlemen, if you'd like to ask a question... Again, to ask a question, please press star 1-1 on your touch-tone telephone. One moment for us. Our first question comes from the line of Payush Abbasi.

Excluding the warrant proceeds totaled would've been $518 million, 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 return to working capital expansion in the back half of 2020.

For the second quarter of fiscal 2024, we expect revenue of $400 million to $420 million.

And adjusted EBITDA between 12, and $15 million, which represents revenue growth of over 50% and.

An 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.

Thank you again, ladies and gentlemen, if you'd like to ask a question. Please press star one one on your Touchstone telephone again to ask a question. Please press star one mine.

One moment for our first question.

Okay.

Our first question comes from the line of <unk> of Etsy.

Carol Hibbard: Good evening, guys. I think. Hey, I think for the second quarter guidance, you know, the implied EBITDA margin is modestly below what you did in 1Q. Maybe some color on what is impacting margins in this quarter. And taking a step back, I know you don't give full guidance, but when do you expect a more meaningful sequential improvement in margins? Thanks for your question, Piyush.

Your line of evening guys.

Okay, I think for the second quarter guide.

The implied EBITDA margin is modestly below from what you did in <unk>, 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.

Thanks for your question for Us.

Carol Hibbard: 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 with Symbiotic. And so as we continue to ramp up, we're going to deploy resources as necessary to ensure we meet that schedule. And that's what we're seeing for the second quarter.

Our guide for the second quarter reflects our flexibility to accommodate increased spending if needed as we need to accelerate the <unk>.

Maintenance schedules and ensure we have a high quality deployment with as little disruption as possible ultimately the customer satisfaction of that quality system restaurants symbiotic.

So as we continue to ramp we're going to deploy resources as necessary.

For the second quarter.

<unk>.

And in terms of the longer term profitability, we continue to be on a trajectory to improve and youre going to see that start to improve in the second half of the year.

Rick Cohen: And in terms of 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.

Year over year continued improvement in our profitability.

Rick Cohen: Helpful. And, Rick, I think you talked about RITPAC being available as a standalone product now. Maybe, like, talk about the target customers here and how have the initial conversations been? Yeah, so the target customers for a break pack operation like that would be, Um, Typically, what you see in BrightPak is customers that are in the drugstore business, which is obviously a big market, and the original BrakePak that we designed for Walmart was really, if you think of it, there's 4,500 super centers, and there's 45 drug stores within a Walmart super center, 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 BrakePak, and also people with a long tail of slow movers that might be interested in shipping eachs as opposed to cases, so we think it's a very big customer base, we're not actively selling the BrakePak 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 an add-on product to our basic product. Got it.

Got it helpful and Rick I think you talked about great pack being available as a standalone product now maybe like.

Ill talk about the.

The target customers here and how have the initial conversations been.

Yes so.

The target customers for a break pack operation like that would be.

Typically what you see right pack is customers that are in the drugstore business.

Which is obviously a big market and the original break pack that we designed for Walmart was really if you think of it Theres 4500, Supercenters and Theres 45 drug stores within a Walmart supercenter. So these would be.

Some other customers that would logically look at a system like this smaller store formats smaller customers would be interested in a brake pad and also people with a long tail of slow movers that might be interested in shipping issues as opposed to cases. So we think it's a very.

<unk> customer base.

We're not actively.

Selling the brake pad right now, but where we finish the prototype it's no longer a prototype and so.

As we as we get more and more comfortable with it we will begin to market it as a.

Yes.

And then add on product to our basic product.

Operator: Very helpful. I appreciate the call today. Thank you. One moment, please.

Got it very helpful. I appreciate the Columbus.

Thank you Kim.

Please.

Operator: Our next question comes from the line of Ross Barenbleck of the William and Mary line of business. Hey guys, thanks for taking the question. Hey, Russ.

Our next question comes from line of Ross <unk> of William Blair. Your line is open.

Hey, guys. Thanks for the question.

Okay.

Rick Cohen: Hey, maybe on the supplier network. I know you guys noted that, you know, you're still adding suppliers. I thought we're kind of through that dual sourcing that would then begin to allow you to start, you know, alleviating some of the inventory challenges and bringing down the lead times. Can you provide any update as we think of the timing around? Yeah, I've spent a lot of time with suppliers. What we're seeing is, Battery Inventory, higher quality products coming from our suppliers 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 for our systems faster, which is why we mentioned the fastest that we've done yet.

Maybe on the other supplier network I know you guys noted that.

Youre still adding suppliers I thought we were kind of through that dual sourcing that we do.

Didn't begin allow you start alleviating some of the inventory challenges in bringing down those lead times can you just provide any update as you know we think of the timing around that.

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 the in their factories as opposed to on sites and as a result, you'll see the implementation time for our systems faster, which is why we mentioned the fastest that we've done yet.

Rick Cohen: 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 on is that the suppliers now understand how real we are. There's a lot of interest from suppliers. They're more price competitive.

This was completed this past quarter and when we turned it on and it was above customer expectations for quality. So what we're seeing from suppliers now and what we're working at is the.

The suppliers now understand how real we are there's a lot of interest from suppliers. They are more price competitive they're more willing to invest in quality. So I think we're behind we're past.

Carol Hibbard: 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 we are in a good place with suppliers. Yes, Ross, I'll just add to that. If you think about 2023, it's really focused on getting those partners.

But the the struggles 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're in a good place with suppliers now.

So Ralph I'll, just add to that if you think about 2023, it's really focused on getting those partners and so there is probably.

Carol Hibbard: And so there was 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 are now coming in with a lot greater scale, and suppliers are more. And so in 2024, as we focus on that, we're also focused on our suppliers ensuring we're gaining those efficiencies, and we're going to start to see the benefits. And then maybe just thinking about, you know, new customer mix for the year. Can you just maybe help us better understand what Steel is and then also, of the five editions, what would have been customers outside of Walmart? Yeah, so out of our new customers, as we indicated, we had five new systems this quarter. One of those was Southern Glaciers.

More substantial growth in terms of the number now were tweaking because we do need to continue to scale and as Rick indicated we now 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 I'm going to start to see the benefit of that.

Okay got it.

And then maybe just thinking about new customer mix and move through the year can you just maybe help us better understand what steel was and then also of the flight additions what would have been kind of customers outside of Walmart.

Yeah, so out of our new customers. So as we indicated we had five new systems in this quarter. One of those was southern Blazers. So we announced in November we had the addition of southern Glazer. So that's our new customer out of that mix of five.

Carol Hibbard: So we announced in November that we had the addition of Southern Glaciers, 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 about the new customer mix. Ross, can you go? You had another part to that. Can you?

Therefore 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 just understanding what the steel impact wise I know, it's been pretty variable quarter to quarter here.

Carol Hibbard: Yeah, just understanding what the steel impact was. I know it's been pretty variable quarter to quarter here. Yeah, so in our contracts, we have pass-through clauses that help us see that fluctuation in steel. We actually saw the benefit of steel fluctuation early in the year.

Yes, so in our contracts we have pass through clauses that help us see that fluctuation of scale, we actually saw the benefit for steel fluctuation early in the year and now we're looking at headwinds as we head into 2024 and still seeing that fluctuate, but I will emphasize our COO.

Carol Hibbard: And 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 pass-through. But we continue to monitor that and ensure that we're getting out. Yeah, so maybe just real quick, we think about the 90 basis points, and sequential margin expansion was still maybe half of that. No, it would not have been that big of a contribution to that margin expansion.

Contract structure allows us to have some of those costs as past group, but we continue to monitor that and ensure that we're getting out ahead of it.

Got it so maybe just real quick when you think about the 90 basis points of sequential margin expansion with steel maybe half of that.

Now steel would not have been that big a contributor to that margin expansion.

Carol Hibbard: Thank you, guys. Thanks, Rob. Thank you. One moment, please.

Thank you guys.

Okay. Thanks, Rob.

Thank you one moment please.

Operator: Our next question comes from the line of Matt Summerville of BA-Davidson, the line of... Thanks. A couple questions.

Our next question comes from the line of Matt Summerville of D. A Davidson your line is open.

Thanks couple of questions I was wondering if you could maybe take a second and back to.

Rick Cohen: I was wondering if you could maybe take a second back to some of your prepared remarks just regarding SimBot. Can you maybe review with us some of the KPIs, if you will, around SimBot versus, you know, prior generations? Try and get an understanding of how SimBot is differentiated versus your legacy generation. So the first thing that we did with SimBot is, and this may be one of the most important things, it can actually, and this may be one of the most important things, it can actually handle a tapered box, and our original bot could not do that.

Some of your prepared remarks, just regarding <unk> can you maybe review with US some of the Kpis if you will.

Around skim bought versus.

Prior the next next closest prior generation.

Trying to give them understanding for you mentioned more transactions an hour. If you can kind of put some numbers around.

Somebody is differentiated versus your legacy Gen robots.

So the first thing that.

We did with <unk>.

Is it can actually this maybe one of the most important things that can actually handle a towed a tapered box and our original bot could not do that so that was one of the first things that forced us to relocate long term flexibility of assembler. So.

Rick Cohen: So that was one of the first things that forced us to relook at the 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 in what size and shape of packages we can handle. The second thing that SimBot did over what we call BotX was that it had vision.

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's 10 months did over over what we call bought X was it has vision.

Rick Cohen: And in order to use InVision, we needed graphic interfaces. And so we upgraded to NVIDIA chip and their Vision and Graphics Interface Boards. And so that allows us to actually... pick and place boxes that in the past we couldn't. The 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 this stuff is proprietary. But you get a sense this bot is, I would say that the upgrade for this spot would be from a motorcycle to an SUV. Super helpful there.

And in order to put envision we needed graphic interfaces and so we upgraded to Nvidia chips and their vision and graphic interface boards and.

So that that allows us to actually.

C boxes that in the past, we couldnt see.

Third thing is we can pick and place packages 10 seconds faster than we could with the original bought so those are some of the other things that we did and then the last thing is that we can now actually on this spot pickup on inbound we always were able to bundle.

<unk> delivered 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 spot is.

I would say that.

The upgrade for this spot would be.

From a motorcycle to an SUV.

Super helpful. There. Thanks, Rick and then as my follow up you kind of.

Rick Cohen: Thanks, Rick. And then, kind of, talking about BreakPak, generally available, not really actively selling it yet. I'll ask the same question along the lines of GreenBox.

Talking about break pack generally available not really actively selling it yet I'll ask the same question along the lines of.

Rick Cohen: Do you expect BreakPak to start to contribute to revenue in fiscal 24? And then when do you see Symbiotic starting to attack the non-ambient market, as per one of your other prepared remarks? Thank you. Yeah, so it, Wright-Page, 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, um, and so that would be one. Ambient, we're actually piloting some perishables, testing in a perishable warehouse as we speak, so I think that could be. I would say, um, and probably not this year, but I would say 12 months from now, just from the cycle, but we will be able to have, we will be able to offer perishables, and then after that, they would be frozen. But the first go around would be stuff like dairy, produce, and meat, which is around 32 degrees.

Of Green box do you expect to break part to start to contribute to revenue in fiscal 'twenty four and then when do you see a symbiotic starting to attack the non ambient market per one of your other prepared remarks. Thank you.

Yes so.

It is.

Freight pack.

May have impact in 2024 right at the end of the credit 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.

I actually piloting some perishable.

Testing in.

In our perishable warehouse as we speak so I think.

That could be.

I would say.

It probably probably not this year, but I would say 12 months from now just from the cycle, but we will be able to we will be able to offer <unk>.

<unk> and then after that would be frozen, but the first the first go around would be stuff like dairy produce and meat, which is which is around 32 degrees and then after that we would we would develop a system for minus 20.

Carol Hibbard: And then after that, we would develop a system for minus 20. And then, and then Matt, I'll just add to that, BreakPak, our proof of concept, is already contributing to revenue this year and has been for the past year. And so our prototype 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. Yeah, I understand. Thank you. I was aware of that.

And then Matt I'll, just add to that break pack or a proof of concept is already contributing to revenue.

This year.

And has been over the past year and so our prototype that we havent 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 youll see that grow as we expand that at the end of 'twenty four.

Yeah understood. Thank you I was aware of that but thank you for your thanks for clarifying that showed a state of the OIBDA for me. Thanks, guys.

Operator: But thank you for Yeah, thanks for clarifying. I should have stated, Thanks, guys. Thank you. Thank you. One moment. Our next question comes from the line of Mark Delaney of Goldman Sachs. Your line is open. Yes, good afternoon.

Thank you Kevin.

Thank you one moment please.

Our next question comes from a line of Mark Delaney of Goldman Sachs. Your line is open.

Yes, good afternoon, and 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.

Carol Hibbard: Thank you so much for taking the questions. If I heard correctly, Carol, you mentioned temporarily stabilizing 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. Yeah, and you'll see that, 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.

Manufacturing partners I would've thought there'd been some potential to increase the number of starts the company was doing.

Yes, and Youll see that thanks for the question Mark you will see that stabilizing so last quarter, we introduced four new systems into into the quarter. This quarter Youre seeing five bye bye stabilizing where indicated don't expect that to continue to grow to 6% to 7% to eight every single quarter, but we will.

Carol Hibbard: By stabilizing, we're indicated, don't expect that to continue to grow to six to seven to eight every single quarter, but we will see an 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 that you're going to start seeing us delivering on our systems with the backlog that we currently have. So we're going to continue to ramp up the number of systems that we turn operational every quarter, and then the number that we continue to add from 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 the green box, into 24 and 25, I think that's when you'll really start seeing the additional. Understand that that's a very helpful context.

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.

Your comment related to that stabilizing as youre 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 Theres really no change to that and then as we expand into green box in the 2425 I think that's when you'll really start seeing the additional ramp.

Understood that's very helpful context, and then.

Carol Hibbard: In the first question about the EBITDA guidance, you mentioned the guidance assuming the ability and flexibility to deploy resources to support customers. I was hoping to better understand what you meant by that, and is there something with 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 that is necessary? Yeah, thanks for the follow up.

First a question about the EBITDA guidance you mentioned.

Guidance assuming.

The ability and flexibility to deploy resources to support customers to better understand what you meant by that and is there something with.

Yes, there is a more recent projects that has been more difficult or are you more alluding to you're supporting some newer customers and just wanted to make sure you have the capability to support them in the event that is.

Necessary. Thank you.

Yes, thanks for the follow up so in terms of our guide when we talk about running the ability to deploy.

Carol Hibbard: So in terms of our guide, when we talk about wanting the ability to deploy on schedule, and we are now in the stage where we have 37 different projects in deployment, so that's up from 22 years ago. And so we are scaling right now, and what we want to make sure we do is that we adhere to the schedule, and that we're able to deliver that high quality. So if that means providing a few additional resources takes 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 margins. We don't want to do anything short-sighted to save a few points on margin that will help us in the long term. Thank you very much.

Deploy on schedule and we are now in a stage, where we have 37 different projects and deployment. So that's up from 22, a year ago and so we are scaling right now and 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.

Providing a few additional resources are taking a week or two longer.

To go ahead, and deliver and Thats, what youre going to see in some of what I'll call. The Lumpiness in the next next quarter around both revenue and in our margin.

Okay. Thank you if we don't want to do anything short sighted the save a few points on margin that will help us in the long term.

Understood. Thank you very much.

Operator: Thank you. Thank you, partner. Our next question comes from the line of Nicole DeBlasio of Deutsche Bank. Yeah, thanks for the question, guys. Good evening.

Thanks, Brian.

One moment please.

Our next question comes from the line of Colin The Plaza of Deutsche Bank. Your line is open.

Yes. Thanks for the question guys good evening.

Carol Hibbard: 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? Thanks, Nicole. So, on R&D, I think what you're seeing when you compare the fourth quarter of last year to the first quarter is that extra week that we talked about. So, in the fourth quarter last year, we had a 14-week quarter versus a 13-week quarter, so we had an extra week contributing to R&D. So that's a little bit of the fluctuation from the fourth quarter to the first quarter.

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.

Yes.

Thanks, Nicole so on R&D I think what youre seeing from 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 a 13 week quarter. So even though we had an extra week contributing to R&D. So thats a little bit of a fluctuation from fourth quarter to first.

Carol Hibbard: 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 up our R&D if those innovation projects come to light, and we want to expand that in 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 of the end customer for the systems that we deploy. I got it. Okay, that's really helpful.

<unk> 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 <unk>.

Back half of the year, so I wouldn't I would 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 can.

Point.

Got it Okay. That's really helpful and then.

Carol Hibbard: And then when you spoke about getting to one deployment in the 20-month zone, I guess what would be the long-term goal for the length of deployment, you know, once you feel good about the whole process? Thank you. So I'll start and then Rick can chime in in terms of the long-term vision.

And when you spoke about getting to one deployment and the 20 months zone I guess, what would be the long term goal of the length of deployment.

Once you feel good about the whole process. Thank you.

And 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 months cycle over the long term to get down to 12 months are lower so and 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.

Carol Hibbard: 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 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 you enable that going down to 18 months and then to 16 months. So a couple things enabled us to hit that achievement this quarter.

Other things to think there is what really enabled that 20 months that might be one of the questions. So that we can make sure. We're we're looking at how do you enable that going down to 18 months and then the 16 months. So a couple of things enabled us hitting that achievement. This quarter. One was we now have continuous learning over multiple deployment. So our outsourcing partners they've now gone.

Carol Hibbard: One was that we now have continuous learning over multiple deployments. So our outsourcing partners, they've now got multiple deployments under their belts, and they're improving on each one. We've also got increased collaboration from our entire deployment team, which includes Symbiotic Resources, our suppliers, as well as our customers. 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 improvement from our partners. Thanks. That was super helpful. I'll pass it on. Thanks, Nicole. I'm on a plane.

Multiple deployments under their belt they are improving on each one we've also got increased collaboration from our tire deployment team. So our deployment team includes symbiotic 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 <unk>.

Standardization of what I'll call them build so our build instructions are test procedures, we're standardizing that more and more from deployment to deployment and that's really enabling the improvement from our partners.

Thanks that was super helpful I'll pass it on.

Thanks Nichol.

Thank you one moment please.

Operator: Our next question comes from the line of Chris Snyder of UBS. Thank you. I wanted to follow up on the communication earlier around accelerating or picking up growth investment to drive or to help facilitate the accelerated growth. And when we look at OPEX, you know, over the last 4 quarters, OPEX has generally been sideways, and the number of projects in process, and revenue has gone up 40%. So I guess, you know, is there something that's happening now that's causing this, you know, the OPEX need to pick up in Q2? Because we've seen so much growth already without that. So, kind of. I guess the question is why now?

Our next question comes from the line of Chris Snyder of UBS. Your line is open.

Thank you I just wanted to follow up on the communication earlier around accelerating or picking up growth investments to drive or to help facilitate the accelerated growth.

When we look at Opex, you know over the last four quarters Opex has generally been sideways.

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.

Opex needs to pick up into Q2, because we've seen so much growth already without that so kind of I guess the question is why now.

Carol Hibbard: Yeah, we continue to modulate our OPEX because we're getting better at that spending. So what I think you're going to see improvement on that is where we'll continue to grow OPEX, but it's not going to grow nearly at the same level of our revenue because we're also getting improvements in our spending as we do that. Okay, fair enough. And then I wanted to talk about or follow up on the non-ambient food opportunity. Specifically, if we think about, you know, the existing customers that the company has, is there any way to measure the size of the opportunity from non-ambient food with those existing customers?

Yeah.

We continue to modulate our opex, because we're getting better on that spend so, but I think youre going to see any improvement on that.

Is where we'll continue to grow opex, but it's not going to grow nearly at the same level of our revenue because we're also getting improvements on our spending as we do that.

Okay.

Fair enough and then I wanted to talk about a 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.

Rick Cohen: And also, when we see the Walmart backlog, does that include any revenue for systems related to non-ambient food? Thank you. The Walmart backlog does not include any systems that are non-ambient.

Walmart backlog does that include any revenue for systems related to non ambient food. Thank you.

So all of our backlog does not include any systems.

That are not.

Non ambien.

Rick Cohen: So, obviously, And none of our other customers, whether it's CNS 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, that's a big market. It's a, it's a slightly different market, because this is a market where, and where we're focused on ambient, But, 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, it's. I can't give you a number for the market, but it's a big market.

So obviously.

And none of our other customers, whether it's CNS or UNFI also theres no we weren't selling non ambien.

But in the future, we will be able to.

<unk>.

It's a big market.

It's a slightly different market.

Because this is a market where.

And what we're focused on <unk>, we're really focusing on.

One we can we can obviously.

Pallets, but.

But building in a.

Perishable warehouse the space is just so expensive.

We are 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.

Operator: Thank you. Thank you. One moment, please. Our next question comes from the line of Jim Ruchuy of Needham and Company. Your line is open.

Thank you.

Thank you one moment please.

Our next question comes from the line of Jim Ricchiuti.

Needham <unk> company your line is open.

Rick Cohen: All right, thank you. Rick, a question on the break pack. You alluded to the drugstore business. How important is it to you to get a use case outside of your large customer for a break pack in a market like that?

Thank you.

Rick question, just not a great pack you alluded to the drugstore business.

How important is it to you to get a use case outside of your large customer appropriate pack in a market like that.

Rick Cohen: Oh, it would be great. I mean, that's one of the things that I spend a lot of time on: 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 to see a site, 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, and delivering with a braggingly happy customer expectation.

It would be great I mean, that's one of the things.

I spent a lot of time on is figuring out who 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 havent, we havent 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 when we bring a new customer to the market.

<unk> site.

As many times their responses I didn't even though this was possible.

So that's why we're very very focused on delivering on time, delivering where they brining me happy customer expectation and we're going to focus on that for the rest of this year and as we get better then we will have Brian we have the customers and then the stuff that we're doing that people said I've never seen this before.

Rick Cohen: 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 say, I've never seen this before, gives us instant credibility. And I think that makes it very easy for us to expand our market. Cat, the follow-up question is just going back to that.

US instant credibility and I think that makes it very easy for us to expand our market.

Follow up question is just going back to that.

20 months.

Rick Cohen: 20-month deployment that you achieved. You know, as you bring on more partners, outsourcing partners, it sounds as though there will be 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, you know, consistent progress on this front. It just seems like as you bring on new partners, it's going to bounce around a bit. No, I don't think that's, we don't, we don't think that's going to happen. We are now.

More than.

You achieved.

As you bring on more partners.

Outsourcing partners.

It sounds as though there could be some.

And then we're going to see that smooth around it's not going to be or tell me, if we're going to see.

Consistent progress on this front.

It seems like as you bring on new partners, it's going to it's going to bounce around a bit.

No I don't think Thats.

No we don't think thats going to happen we are now.

Rick Cohen: When we started the outsourcing process, I think our team was smart enough to say, if there's a better way to do this, then show us. What we've been doing for the last year now is asking people to build to print, 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 we call PLC code that goes into our machine. 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 it. I mean, I think we learned a lot last year, and I think we talked about that openly. I don't think you're going to see that again.

When we started the outsourcing process.

I think our team was smart enough to say, if there's a better way to do this then show us.

What we've been doing for the last year now as we are we're asking people to build to print.

His expression they use.

So you don't change our design.

We 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 designed which speeds up the implementation, which simplifies the programming.

Variable logic, the Gala 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.

We had a lot of learnings last year and I think we talked about that openly I don't think youre going to see that again in the future.

Okay. Thank you.

Rick Cohen: Good. Thank you. Thank you. Our next question comes from the line of Ken Newman of KeyBank Capital Market. Hey, good morning or good afternoon, I should say.

Thank you one moment please.

Our next question comes from the line of Ken Newman of Keybanc capital market. Your line is open.

Hey, good morning.

Good afternoon, I should say.

Operator: Good afternoon. Yeah, thank you, Carol. Dig down into the comment about spending to service, you know, the higher growth in the second quarter. I mean, when you think about that, it's the biggest bottleneck, services deployment. Is that just in-house engineers? Is it the third-party supplier base? color there to kind of help us buffet that head.

Good afternoon.

Yes, Thank you Carol.

Could you just dig down into 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 to service those deployment.

Is that just in house engineers is it a third party supplier base, just any color there to kind of help us bucket that that headwind.

Carol Hibbard: Yeah, it's a mix. Thanks, Ken. It's a mix of I, 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 cause. But it's the operators, and the folks we're putting on site for that final stage of commissioning and deployment to ensure we're hitting reliability. And that includes some of our outsourcers, who refer to them as suppliers, so that would be their spend as well, and Bill Gates. Thanks for watching. I'm Jeffrey Evans. And then, of course, you know, I just wanted to get a little bit more colorful.

Yeah, it's a mix thanks, Ken it's a mix.

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 it goes into our Cogs, but it's the operators and the focus we're putting on site for that final stage of commissioning and deployment to ensure we're hitting the reliability.

Not including some of our outsourcing.

You referred to it as suppliers, so that would be their spend as well.

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.

Carol Hibbard: 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 Glacier.

Obviously, we saw a big ramp in accounts receivable and maybe prepaid expenses this quarter I'm guessing that's from southern Glazer, but just any color on what drives the working cap expansion into the second half and just how confident you are about.

Carol Hibbard: But just any color on what drives working capital, the second half, and just how confident you are about hopping cash or free cash getting better into the back half of the year. 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 up. 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 up 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 first quarter. What we're expecting for the year, excluding the warrants exercise, I'd expect our cash to be flat.

Op cash or free cash getting better into the back half of this year.

Yeah, so as far as most of you know over the course of our deployment our cash inflows tends 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 outflows. So as we're ramping to having 30.

Seven different deployments inflow now as we're heading into this quarter, we're going to see higher cash outflow in the second quarter similar to the first quarter, what we're expecting for the year, excluding the warrants exercised I would expect our cost to be flat.

Got it okay.

Carol Hibbard: Yeah. Thank you. One moment, please. Our next question comes from the line of Joe Giordano of TD Cowling. Hey guys, can you hear me? My phone seems to break up for a second.

Thank you one moment please.

Okay.

Our next question comes from the line of Joe Giordano of Cowen Your line is open.

Yes.

Can you hear me.

So if I break up a second there.

Operator: Yeah, we can hear you, Joe. OK, great. So I preface this by saying it's a high-class problem, but, uh, and you guys delivered revenue at like the high end, basically of what you said you would, but, to be fair, it's the first time you haven't, pretty easily, gone considerably ahead of the high end. And I just want to say, it's a little bit of a tough question, Carol.

Yeah, we can hear you Joe Okay great.

So I preface this by saying, it's a high class problem, but.

You guys delivered revenue at the high end basically of what you said you would but it's to be fair. It's the first time, you have and Mike pretty easily gone considerably ahead of the of the high end I just wanted 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.

Carol Hibbard: I know you're not been there for those prior quarters, but was there a need to be more conservative with guiding back then because you had fewer projects that were in deployment and were more variable by nature, and now you have more kind of precision around a guide because you have more projects to limit the inherent volatility there. 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 isn't going to have as much contribution to an individual quarter's revenue. So before, when we had fewer projects, if you had one project either complete a month 30 earlier, a complete month later, even a week here and there, it was really driving the variation.

Is there a need to be more conservative with guiding back then because you had fewer.

Projects under our in deployment and more variable by variable by nature and now you have more kind of precision around the guide I guess you have more projects to two like.

Limit the inherent volatility there.

Yeah, you're exactly right, Joe so as we scale and we have more and more systems and 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 we had fewer projects. If you had one project either complete among 30 earlier complete months later.

Or even a week here and there it was really driving the variation in the revenue and as I indicated just in the in the opening remarks is while we've deployed.

Carol Hibbard: 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 that prediction. Okay, that's kind of what I figured, and your commentary suggested that you put in five into production this quarter, which sounds like it'll be give or take that level for a bit here. You know, I know, like, if you've seen the models have that ramping, you know, pretty, pretty large at some point, we can debate exactly when that starts, but I just want to make sure I understand like, what is it? Is there anything specifically that's specifically not allowing that amount to be significantly higher right now?

And some of the controls we're putting in place should help us standardize and drive our ability to tighten up that prediction range.

Okay, that's kind of I figured and your commentary suggested that you put in five into production this quarter. It sounds like it'll be give or take that level for a bit here.

I know like if you.

Models have have that ramping pretty pretty large at some point, we could debate exactly when that starts but I just wanted to make sure I understand like what is is there anything thats, 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.

Carol Hibbard: Or is it just subject to like the scheduling of your large customers? If your customers wanted that to be, you know, 15 next year, is that theoretically possible? So I'd say you're spot on with our ramping of additional customers. We've indicated one to two 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. And then one for Rick, if I can, Rick, going through the SimBot characteristics there, I'm just curious, like, when you now have the ability to handle multiple boxes at one time on the outbound, does this ultimately allow you to accomplish the system with fewer bots

15 next year is that like theoretically possible right now.

So I'd say youre spot on our ramping of additional customers. We've indicated one to two a year and that is needed 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, but that we have.

And then one for Rick if I can.

Rick you going through the symbolic 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.

<unk> with fewer box and is that kind of going to be somewhat required as you move into non ambient where you like as you said the facilities are smaller and you probably need to get more bang for your Buck from a square footage standpoint.

Carol Hibbard: And is that kind of going to be somewhat required as you move into non-ambient, where, 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? Is it better or worse, equal versus, you know, what you've been doing on a scale?

Does that that whole dynamic lead to like any sort of difference in margins that you think you'd be able again or is it better worse equal versus what you've been doing on that scale.

Rick Cohen: Thanks. Yeah, so I can honestly say everything we're doing is trying to increase our margins. We're not doing anything consciously to decrease them.

Yes so.

I can honestly say everything we're doing is trying to increase our margins.

Anything like <unk>.

Decrease somewhat.

Rick Cohen: But seriously, the journey that we're on with CIMBOT. We expect that we will be able to run systems with less bots because they will be more capable, faster, and be able to do more work. And that's the journey that we're on, and that will only increase the market. The other thing that that will do is it will allow us to do a smaller system because we could sell it; we could use less bots because they're more capable. So that would allow us to, on the low end, get 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.

Seriously the.

The journey that we're on with the Simba.

We expect that we will be able to run systems with less spots.

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 see.

So we could use less but because they are 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 big customers and I love, having these big sales, but if we could so smaller system with a lower price.

Rick Cohen: 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. Yeah, absolutely. Okay, great. Thank you. One moment. Our next question comes from the line of Greg Palm on behalf of Craig Halem. Hey, I think I heard my name, but there was something cut out.

Point and still increase our margins.

That's an even bigger market than we're talking about right now.

Absolutely, Okay, great I'll pass along and jump back in queue. Thanks, guys.

Thank you one moment please.

Our next question comes from the line of Greg Palm of Craig Hallum. Your line is open.

Yeah.

Hey, I think I heard my name, but something cut out.

Operator: 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.

In terms of Green box I was hoping to dig into a little bit more on the deployment schedule. Rick I think you said.

Deployments or maybe the initial Rev. Rec in fiscal 'twenty four so I'd like you to confirm that if possible, but how do you think about the ramp up of deployments specific to green box and just in terms of aggressiveness is it dependent on customer announcements or sign ons or how you're thinking about that over.

Rick Cohen: 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, you know, customer announcements or sign-ons, or how are you thinking about that over the coming years? I think that we, well, the answer. Do it in parts.

<unk>.

I think that we.

Well the answer.

<unk> parts.

Rick Cohen: So we've been talking to some large customers and large suppliers about the opportunity, and so I think what will happen is the green box 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 the foundation for GreenBox.

So we've been talking to some.

Large customers and large suppliers.

About the opportunity.

And.

And so I think what will happen is the green box will start off slowly and then go very fast.

So theres a proving out concept, where if we build a green box side and we have multiple vendors in that site and they tested then logically they are 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 of our Green box.

Rick Cohen: And I think we'll, 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. Okay, and just to be clear, do you expect deployments of RevRec to start in this fiscal year? Is that right?

And I think we will we expect to have some good news on Green box.

2024, but we're also doing a lot of diligence to make sure that we set the foundation correctly.

Okay, and just to be clear you expect deployments or Rev. Rec to start in this fiscal 'twenty four is that right.

Rick Cohen: Yes. Okay. And, and just, you know, from a follow up question on the pace of deployments, in general, Obviously, a lot of progress, you know, over the last, you know, year or so since the outsourcing strategy, you know, ramp up, but kind of as we sit here today, is there any constraints to not maintaining that current pace, but accelerating it further, you know, whether it's, you know, bringing on additional partners, whether it's continuing to kind of reduce that timeline per deployment, just trying to get a sense of anything has 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. So I'll take this one.

Yes.

Okay.

And just a follow up question on the pace of deployments in general.

Obviously, a lot of progress over the last year or source since the outsourcing strategy ramp up but.

As we sit here today is there any constraints to not maintaining that current pace, but accelerating further whether it's bringing on additional partners, whether it's continuing to kind of reduce that timeline per deployment.

To get a sense if anything has changed internally.

You're not trying to further accelerate deployments from current levels I just wanted to make sure. We're all kind of clear on on what's changing if anything here.

So I'll take this one so.

Rick Cohen: 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. Okay, I'll leave it there.

Deployments, we're doing now in this quarter.

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.

Okay I'll leave it there thanks.

Operator: Thanks. Thank you. One moment.

Thank you one moment please.

Operator: Our next question comes from the line of Derek Fraterberg of Cantor Fitzgerald. Yeah. Hey, everyone.

Our next question comes from the line of Derek Soderberg of Cantor Fitzgerald. Your line is open.

Yes, hi, everyone. Thanks for taking the questions.

Carol Hibbard: 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 were at 13 systems in progress. A year ago, you were at 22.

Just sort of piggybacking off the last question.

Just around turning on the light systems with deployment timelines, where they're at it sounds like around 20 months or so I think a year and a half ago Youre at 13 systems in progress a year.

A year ago 22, I guess I'm wondering if you think he can bring maybe those 13 systems to live operation This year maybe laughs.

Carol Hibbard: I guess I'm wondering if you think you can bring maybe those 13 systems to live operation this year, maybe less. Can you share what expectations you have for the number of systems you think you can turn on this year? Yes, so we typically don't guide 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 we deployed three this quarter. I would expect to see 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 is for what I'll call an average system, so there will be variability. Not every system will be deployed in 20 months, depending on the size of the system.

Can you share what expectations you have on the <unk>.

Number of systems do you think you can turn on this year.

Yes, we typically don't guide on the number of systems, we have gotten deployment, but but as pointed out we had gone quarter over quarter for four quarters in a row, where we replaced one system a quarter, we accelerated that to two last quarter and now you saw that accelerate to redeploy three this quarter I would expect.

With the continued improve that throughout continued improvement on that throughout the year.

And as you said that 20 months deployment, but we also pointed out is that 20 months deployment, that's for what I'll call. An average system. So there will be variability not every system, we 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 also take additional additional.

Carol Hibbard: We have some systems that we're implementing, which will be significantly larger, and those will take additional, additional time to go ahead and deploy. But overall, the average, we're looking to continue to reduce that time for deployment. And that does enable, clearly, the ramp of how many we deploy in a given year.

Time to go ahead and apply but.

Overall, the average we're looking to continue to reduce that time appointment and that doesn't enable.

Clearly the ramp of how many we deploy in a given quarter.

Carol Hibbard: 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 coming online?

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.

Is that moving higher as new systems are turning online in <unk>.

Carol Hibbard: And should we really think about recurring revenue to more or less grow at a similar rate as these live systems come online? Yeah, so the recurring revenue stream, and I'll start with software. So it's our second profitable quarter, 435th higher from where we were. So in terms of profitability, we're seeing progressive improvement in the software market. From a recurring revenue perspective, when you look four quarters to the first quarter, you're not seeing as big of a ramp. Those three systems that we brought 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. 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.

Should we really think about recurring revenue to more or less grow at a similar rate as these large systems come on line.

Yeah. So the recurring revenue stream and I'll start with software space, our second profitable quarter 430 steps up from where we were so in terms of profitability, we're seeing for <unk>.

Dresses improvement to the software margin from a recurring revenue perspective, when you look fourth quarter to first quarter youre not seeing as big of a ramp.

Those are the three systems that we brought on live.

It 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 it or not we had we went from 12 systems and deployment to 15 and deployment, but those last three happened in December. So we didn't see the real benefits I think youre going to continue to see that revenue grow but in terms of your question on <unk>.

Carol Hibbard: 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, you know, a third of the 15 systems that we've got deployed are really early proof of concept systems where our attach rates were significantly lower. So you're seeing the impact of that.

The attach rate we still have.

I'd say a third of the 15 systems that we've got deployed are really early proof of concept systems, where our attach rates were significantly lower so you are 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 the test.

Carol Hibbard: New customers that we're signing on, we're looking to improve that recurring attach rate, as we've talked about. Thank you. Thanks, Derek. Thank you. Our next question comes from the line of Rob Mason of Bayard, the line of. Yes, thank you. Just to circle back to Greenbox for 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.

Perfect. Thank you.

Thanks Derek.

Thank you one moment please.

Our next question comes from the line of Rob Mason of Baird. Your line is open.

Yes. Thank you just to circle back to Green box a moment there were some cost 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.

Carol Hibbard: 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 in the formation of that entity. So, Rob, I'll take the first part of that question, that additional small amount of joint venture fees. That has trailing costs associated with all the work we did last year, so you should not expect to see that. And that was a one-off trailing expense from last quarter.

Through this year.

You could speak to any major milestones as we work towards their first customer announcements I guess, maybe just structurally internally green box major milestones.

That still need to happen just in the formation of that entity.

So Rob I'll take the I'll take the first part of that question that.

A 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 on.

And that was a one off trailing expense from from last quarter.

Carol Hibbard: So your second part, in terms of the green box, 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 great. I don't know if that answers the second part or not.

So your second part in terms of Green box 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 that trajectory, we had planned for greenbacks.

Okay.

I don't know if that answers the second part of it or not.

Rick Cohen: I mean, can you tell me what the, is the management in place, or, again, I'm just trying to think, is that, that any comes to be, you know, what are the other, you know, milestones that we're looking forward to? Yeah, 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 Symbiotic. But right now, between the SoftBank talent team and what we're doing at Symbiotic, 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.

Can you.

Is the is the management in place or again I'm just trying to think is that that any comes to be.

The other.

Milestones that.

We're looking forward to there.

Yes, so so the management.

Is.

We're recruiting we're interviewing management to put that in place, but theres also.

And from the outside they may have different skills than we have whether it's at softbank are symbiotic but.

Now we have.

When the Softbank talent team and.

<unk>.

And what we're doing at symbiotic we can actually we can actually sell systems integrating box, but we expect to expand the management team over the next period of time fairly quickly.

To build a bigger sales force a green box and.

Rick Cohen: And so that's the process that we're on. Excellent, thank you. Thank you. I'd like to turn the call back over to Jeff Evanson for any closing remarks.

And so that's the process that we're on.

Okay.

Excellent. Thank you.

Thank you I'd like to turn the call back over to Jeff Evanson for any closing remarks.

Jeffrey K. Evanson: Thank you, Val. Thank you everyone for joining our call tonight. We appreciate your interest in Symbiotic. We look forward to seeing many of you at investor conferences, our warehouse tours, or when we talk next quarter.

Thank you Bill.

Thank you everyone for joining our call today, we appreciate your interest in Savannah.

Forward to see many of you at investor conferences or warehouse tours, but when we talk next quarter.

Operator: Have a great night. Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect.

Great night.

Thank you ladies and gentlemen, this does conclude today's conference. Thank you all participating you may now disconnect have a great day.

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