Q4 2024 Symbotic Inc Earnings Call
Thank you very much.
Speaker Change: Some of the statements that we make today regarding our business operations and financial performance may be considered forward looking statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties actual results could differ materially. Please refer to our Form 10-K within the risk factors, we undertake no obligation to update any forward looking statements.
Speaker Change: In addition, during this call we will present, both GAAP and non-GAAP financial measures.
Speaker Change: Conciliation of GAAP to non-GAAP measures is included in today's press release, which is distributed and available to the public.
Speaker Change: Our Investor Relations website, located at IR at <unk> Dot com.
Speaker Change: On today's call. We are joined by Rick Cohen, Semiotics, founder, Chairman and Chief Executive Officer and Carol.
Speaker Change: <unk> Chief Financial Officer. These executives will discuss our fourth quarter and full year fiscal 2020 of our results and our outlook followed by Q&A with that I'll turn it over to Rick to begin Rick. Thank you Charlie Good afternoon, and thank you for joining us to review our most recent results.
Speaker Change: A strong finish to the year delivering on our commitment to quickly return to high growth and historical gross margin levels. This was highlighted by completing a record number of system deployments in the fourth quarter.
Speaker Change: Collecting solid project execution.
Speaker Change: <unk> also re accelerated to a record level.
Speaker Change: For the full year, we grew revenue, 55% more than doubled the number of sites in operation and more than doubled our software revenue, reflecting our ability to convert our backlog and scale.
Speaker Change: Importantly, we expect to maintain a high rate of year over year revenue growth, while continuing to stabilize our gross margin in our first quarter.
Oral: Oral will expand on this in the guidance.
Oral: On the customer front, we recently announced a new customer walnuts by expanding into a new geography, Mexico. We are now officially executing on all five of the growth vectors laid out at our Investor day in may, namely customer penetration and expansion new verticals new products.
Oral: And now new geographies.
Oral: Working with wall mix drives home the point that our solution can deliver significant.
Oral: ROI for customers in new geographies and further expands our addressable market. We believe customers in these geographies see the value of our Pelletizing and transportation savings on top of labor savings.
Oral: The bottom line is that the number of opportunities we see for our technology portfolio continues to expand and I'm excited by what that means in both the short and long term for my fellow shareholders.
Oral: Turning to Green box I am pleased to report Green box continues to make progress building out his team customer pipeline insight network. This quarter, we began deployment on our second Green box location. This time in the state of Georgia.
Oral: On the innovation front, we highlighted last quarter that we added vision capabilities December at customer sites. Among other features vision gives our customers the ability to perform tele ops, which enables remote control for enhanced productivity.
Oral: We have now successfully demonstrated this capability at multiple sites and view it as a key differentiator.
Oral: Last we are making targeted investments in both people and products given the expanding opportunities we see in both new products and new geographies to augment our growth in.
Oral: In summary, this quarter, we delivered on our commitment to quickly return to higher system gross margin strong topline growth and Reaccelerate system starts.
Our key objectives for 2025 are scaling for growth and investing in our innovation engine, all while maintaining a focus on delivering high quality systems for our customers.
By doing so we look forward to another year of strong top line growth a significant rise in completed sites as our deployment process improves and expanding profitability.
Oral: I want to thank our entire team for their efforts our customers for their trust and our investors for their support.
Oral: Now Carol will discuss our financial results and outlook Daryl. Thank you Rick before I discuss our financial results I wanted to address the restatements quarterly financial statements included with the earnings press release.
Carol: As we were reviewing our business processes and preparing our full year financial statements. We identified occurrences during fiscal year 2020 plan for repentance services, primarily relating to specific milestone achievements were expense prior to the time that the corresponding milestones were achieved.
Carol: And that result is essentially timing differences between the quarters within fiscal 'twenty 'twenty four and has no impact on our full year results since the appropriate expenses were properly recorded in the fourth quarter.
Carol: Our earnings press release describes the restatements in greater detail and we have also posted a supplemental presentation with the variances to our Investor Relations website, which is also included as an exhibit to the 8-K, we filed today.
Carol: As a result of the restatement of the financial results for the previously reported quarters well be filing amended Form 10-Qs for fiscal year 2024 to reflect the amounts that are included in the earnings press release, We also plan to timely file our 10-K next week with that let me turn to our financial results.
Carol: Third quarter revenue grew to $577 million with strong revenue growth driven by solid progress across our three <unk> systems in the process of deployment.
Carol: Our exceptionally strong fourth quarter results reflect the favorable alignment of symbiotic vendor and customer collaboration and help contribute to $1 8 billion of full year revenue.
This quarter. We also recorded our first quarter net income as a public company.
Carol: We also delivered on our commitment to increase system start sequentially. We began nine new system deployments and completed four systems, bringing us up to a total of 25 operational systems.
Carol: Turning to backlog our backlog of committed contracted orders of $22 4 billion remained largely consistent with last quarter as the revenue recognized during the quarter was partially offset by final pricing on contracts already in the backlog.
Carol: I will note that while Max was signed after the quarter end and it will be additive to the backlog next quarter.
Carol: As mentioned earlier system margins rebounded strongly returning to historical levels.
Carol: Gross margin on software maintenance and support eclipse, 50% for the quarter trending towards typical industry software margins as more systems cooperation.
Carol: And operations services, we did experience a slight negative gross margins as we added resources at certain sites, where we have large projects and are adding new capabilities.
Carol: Back to improve upon this performance and return to modest profitability in operations services as we move through the fiscal year.
Carol: We finished the year with cash and equivalents of $727 million, which declined sequentially from $870 million in the third quarter.
This was driven primarily by the timing of cash receipts that we have since received in the first week of October.
Carol: For the first quarter of fiscal 2025, we expect revenue of 495 million to $515 million and adjusted EBITDA between $27 million and $31 million, reflecting continued strong year over year growth stable gross margins and an uptick in opex student investments spreads.
Carol: Tim.
Speaker Change: In short we are making the improvements outlined this quarter and expect to realize strong EBITDA margin expansion as we scale.
We now welcome your questions operator, please begin the Q&A.
Speaker Change: Thank you as a reminder to ask a question you will need to press star one on your telephone to remove yourself from the queue. You May press Star one again, please standby, while we compile the Q&A roster.
Speaker Change: Our first question.
Speaker Change: Come from the line of Andy Kaplowitz Citibank Your question. Please Andy.
Speaker Change: Hi, Hello. This is <unk> on behalf of any capex from Citigroup.
Speaker Change: Our first question I'd like to ask the margin.
Speaker Change: First question I'd like to ask is the margins this quarter were pattern.
Speaker Change: Got it and for fiscal <unk> and for the first quarter your client growth stable gross margins with EBITDA margins sequentially lower can you help US bridge what is pressuring the margin in the quarter and as you think about the remainder of the year would you say that one could be the lowest margin quarter and that margins could inflect sequentially over the course of the year.
Speaker Change: Alright, good evening and thanks for the question.
Speaker Change: Our gross margin this quarter, you hit 19, 6%, which was a rebound back to historical levels.
Speaker Change: So we quickly returned to their historical gross margins. If you remember our <unk> margin was depressed due to the Monday long dated construction schedules and the implementation of several improvements that we put in place and we didn't see that same occurrence and for Q.
Speaker Change: As we think through our 125 guy.
Really reflects a continuation in a period of transition to higher gross margins as we focus on achieving several significant milestones across some of our larger system.
We continue to prioritize quality deployments.
Speaker Change: And then we're going to still be on a trajectory to continue to improve schedule and improved cost and expand those gross margins throughout the year.
Speaker Change: Okay helpful. And then if I could just ask one more question I think you've spoken about increasing sales penetration in Europe can you briefly touch on any updates on your comment in.
Speaker Change: In that region and then this quarter you announced an agreement in Mexico would you say that relatively lower cost geographies could potentially be either symbiotic orphan boxes customers or was it more of a one time opportunity opportunity with walnuts given your relationship with Walmart.
Speaker Change: Yes.
Speaker Change: We have nothing.
Speaker Change: New to report on Europe.
Speaker Change: We continue to have discussions, but nothing new to report there.
Speaker Change: On <unk>.
Speaker Change: Mexico.
Speaker Change: And new geographies.
Speaker Change: Certainly.
Speaker Change: It speaks highly of the relationships that we have with Walmart and the fact that they're happy with us but.
Working with Walmart on understanding these new geographies I think we are appreciating some other value creation opportunities.
Speaker Change: Creating and other markets other than just the U S where supply chains are different transportation is different wage rates are different but there are other things that we add value to so I don't think Mexico is a one off I don't think.
Speaker Change: South America Central America are one offs, but right now we have.
Speaker Change: Our first customer and we're very excited.
Speaker Change: Yeah.
Speaker Change: Got it thank you so much.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Jim Ricchiuti of Needham <unk> Company. Please go ahead Jim.
Hi, Thank you.
Speaker Change: I was wondering if we could just go back to the quarter end.
Speaker Change: The revenue coming in above guidance, maybe you could talk a little bit about what drove that and the follow up on that is we don't obviously have a lot of history with the company, but I don't recall, many instances, where we've seen sequentially down revenues. So maybe if you could just help us.
Speaker Change: What drove the Q4 revenue performance.
Speaker Change: Baked into the Q1 guidance. Thank you.
Speaker Change: Yes good.
Speaker Change: Good evening, Jim So our <unk> 24 of our operational performance resulted in the $577 million of revenue. This was a really strong quarter driven by several factors. So we've talked about significant progress being made on our 41 systems that are in deployment.
Speaker Change: We completed four systems, which was a record and we completed we started nine systems, which was also a record for somebody.
Speaker Change: And the schedule delays that we had in the third quarter that we talked about those elongated construction delays they corrected faster than we had planned which allowed us to complete additional milestones this quarter.
Speaker Change: And so as we think through the strong quarter, our fourth quarter tends to be very strong we pull in.
Speaker Change: <unk> tends to be similar to fourth quarter last year, our year ends we come in at a at a strong level our <unk> guide.
Speaker Change: They'll reflect continued strong growth, we're guiding to 40% year over year as we head into the first quarter.
Speaker Change: Got it and Rick you alluded to some vision technology that you're having I wonder if you could talk a little bit.
Speaker Change: About the technology acquisition you made.
Speaker Change: They are robotics, what it brings to us.
Speaker Change: In general how youre viewing the.
Speaker Change: The M&A environment.
Speaker Change: We could potentially see additional technology type acquisitions.
Speaker Change: Yes.
Speaker Change: So.
Speaker Change: <unk> is.
Speaker Change: A very unique company that has some really valuable IP on safety.
And access which is very important because our robots move very quickly and so the.
Speaker Change: The opportunity at <unk>.
Speaker Change: <unk> was really unique and we jumped on it right away the higher the whole company.
Speaker Change: Working here now great people so.
Speaker Change: And I think we are going to find.
Speaker Change: Even in the last quarter.
Speaker Change: But a lot more inbound.
Speaker Change: We're very focused on.
Speaker Change: On being a good acquirer and building good relationships with these companies that we're acquiring the vision technology that we're employing.
Speaker Change: Allows for safety and a bunch of other things to be used in applications that typically aren't used in mobile robotics. So we think we think there's lots of opportunities and we continue to get inbound for new technologies.
Speaker Change: Got it thank you.
Speaker Change: Thank you our next question.
Speaker Change: Come from the line of Ross aspiring black of William Blair. Please go ahead Ross.
Ross: Hey, good evening guys.
Ross: Yeah.
Ross: Hi, Ross.
Ross: Hey.
Speaker Change: Green boxes, Georgia announcement, I, maybe I missed it was that with CNS wholesalers as a new customer.
So the green boxes is R. R.
Speaker Change: As our first screen box of facility that we're building.
Speaker Change: And we're developing the market now to get customers in there. So we are building this.
Speaker Change: Without an anchor customer right now.
Speaker Change: But it will take about two years before or 18 months before the building actually come alive.
Speaker Change: So we're very actively recruiting.
Speaker Change: Customers and we're very focused on a multi tenant solution, which is where we think green box really offers a lot of opportunity.
Speaker Change: And we've had.
Speaker Change: A number of inbounds from both small and large.
Speaker Change: CPG companies.
Speaker Change: <unk>.
Speaker Change: Other e-commerce companies and so now that we have a building we're very excited.
Speaker Change: That we hopefully will be closing some deals with some customers in the next year or so, but but it'll take a while before the building is actually ready for deployment.
Speaker Change: You can imagine that's helpful. I mean, how should we think about the financing of that is it.
Speaker Change: Our capex or Opex decision with you and Softbank and this is all to asking Capex is starting to tick up a little bit.
Speaker Change: Late in the Green box or is it just more capacity expansion as you guys look to kind of double your ability to deliver its couple of years.
Speaker Change: Yes, it's both I mean, there is there will be capex that will be spent on on the.
Speaker Change: Getting the infrastructure in the Atlanta facility ready and we're also continuing to invest.
Speaker Change: And new R&D here at somebody.
Speaker Change: Perfect. Thank you guys.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Our next question.
Speaker Change: Okay.
Speaker Change: Comes from the line of Mark Delaney Goldman Sachs. Your line is open Mark.
Speaker Change: Thanks for taking the question you have will on for Mark Delaney and so for my first question in fiscal 'twenty for you guys had been targeting one or two new customers per year.
Speaker Change: So the right framework to think about for fiscal 'twenty, five and just kind of on that when you think about your go to market strategy and expanding into some of these new verticals and geographies do you need to expand your sales force as well.
Speaker Change: Okay.
Speaker Change: I was going to I'll start and then Rick.
Rick Cohen: You can talk to what we need today to potentially expand our sales force. So if I think about one to two customers per year for 2020 for our new customer settings lasers, we accomplished that in first quarter of the year. It seems like forever ago, and as we look forward to 2025, as we announced a few weeks ago, while next will be our first new <unk>.
Rick Cohen: Customer in 2025 that will bring our customer set to 10. So I think we're still on that trajectory of one to two new customers per year, we always wanted to make sure. We're prioritizing the build out of our $22 billion backlog with our existing customers.
Rick Cohen: And make sure that we're deploying and executing to the systems, we have in our backlog as we create capacity going forward to identify additional new customers.
Rick Cohen: And we also made the decision this year that we will be expanding our sales force and where we're in the process of designing what that Salesforce would look like and how big it will be but we will be expanding our sales force.
Speaker Change: Okay. Thank you for the color there and just from a follow up on the wall mix deal I believe you said it was two new systems.
Speaker Change: Pardon me, if I missed it but how much does that add to the backlog and then on the pricing side for those.
It's a preferential pricing summer to Walmart given the relationship there or is it similar or is it closer to the southern Glazers. Thank you. So Walmart Mexico will add about $400 million to the backlog and again, we will do that in first quarter. So thats pretty site. So the two first sites that we have in Mexico.
Speaker Change: <unk> are much larger than what we have seen in what we used to play so far and they're also greenfield sites and so the timeline in terms of when you'll actually see revenue contributing for first symbiotic will be a little bit different timeframe, but the sites are large we're excited that they are green greenfield because it also.
Speaker Change: Says that we have the capability not only do a brownfield site, but it is a greenfield.
Speaker Change: Walmart Mexico is not part of the existing contract geometry, and so that's why it's a new customer and a new opportunity for us going forward. We believe that Walmart has a clear ambition to deploy further than the two but we're excited to get started on the first two.
Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question.
Speaker Change: Comes from the line of Ken Newman of Keybanc capital markets. Your question. Please Ken.
Ken Newman: Hey, Thanks, Good evening guys.
Ken Newman: Okay.
Ken Newman: Hey, maybe just to start on the Opex side.
Speaker Change: Carl sorry, if I missed it but can you just give a little bit more color on sizing the opex increases and <unk> just relative.
Speaker Change: Relative to the tech innovation versus maybe some of the EPC in sourcing initiatives you highlighted last quarter.
Speaker Change: Just to clarify is the enforcing Donald just how far are we into it before that's all settled.
Speaker Change: Yes, so I'll start on the EPC. So EPC is not going you're not going to see increases in our opex because that actually flows through our cost of goods sold so by bringing in the EPC that is contractual that that is part of our build out of our system. So that's not what you are seeing go on in terms of the Opex.
Speaker Change: Just to pull on that thread a little bit.
Speaker Change: As a reminder, we will have a phase transition for bringing the EPC back in house and so we continue to phase out our prior and somebody is taking over incrementally several sites we have.
Speaker Change: Can the resourcing and hiring associated with the sites that we are taking over so that work is going well and we will continue to identify both schedule and cost improvements associated with bringing that in house.
Speaker Change: From the Opex perspective, what Youre seeing ticked up in <unk> 25 is primarily around R&D and then additional SG&A as we continue to scale and Rick highlighted a couple of things and in the overall script just related to we're going to continue to focus on bringing innovation and thats really what youre seeing in our tick up in op.
Speaker Change: Next in queue.
Speaker Change: Okay. That's helpful and maybe just thinking about the gross margin line, obviously, I think you're highlighting expectation for that to be stable <unk>.
Speaker Change: No steel prices have been a larger portion of your product and we've seen that rebound here since the end of September.
Speaker Change: Obviously, there's some debate on just how much higher that could go just given the tariff situation.
Speaker Change: Im just curious what are you embedding from a nominal gross margin impact from higher fuel costs and <unk>.
Speaker Change: Any early thoughts you have on what margins could be impact how they could be impacted from tariffs.
So the majority of our contract funds still have pass through clauses and so what we've focused on is making sure that we're identifying a short haired or turn once we're on contract going and turning on our steel contracts. So that we don't have any pricing issues, the worst maximizing that pricing power.
Speaker Change: And taking advantage of the fact that we've got pass through clauses in our contracts and that will that will continue so that will give us protection around steel and the event that there are tariffs and higher prices, we need to worry about.
Speaker Change: So just to clarify, though there I mean.
Speaker Change: Gross profit dollars are protected correct, but nominally margins could be impacted is that the right way to think I got it right, yes, correct thinks about it that way.
Speaker Change: Okay. Thanks.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line.
Speaker Change: Damian Karas of UBS. Your question. Please Damian.
Speaker Change: Hey, good evening everyone.
Speaker Change: Hello.
Speaker Change: So obviously.
Speaker Change: It seems like a fair amount has changed since you guys reported some three five months ago or so.
Last time around.
Speaker Change: There's been the removal of.
Speaker Change: Some uncertainties out there for investors.
Speaker Change: And the market and the economy, just thinking about kind of some of the uncertainty around the U S election.
Speaker Change: And obviously kind of we're moving forward in this said.
Speaker Change: Rate cutting cycle, just curious if that's.
Speaker Change: Changed our help advance any of your conversations with customers at all or not really just yet and it's kind of still slow and steady.
I'm thinking about some of the expansion opportunities with newer customers.
Speaker Change: Yes, I think we we always look at the macro economic trends and I'd fall back on one of the advantages are.
Several of the advantages of our system.
Speaker Change: Paul around the benefits in terms and the return that for our customer in going ahead, and making the capex commitment the returns around labor that returned around availability of resources.
Speaker Change: Inventory reduction all of that will continue as we go into any macro uncertainty in the environment.
Speaker Change: Okay understood.
Speaker Change: And then a follow up question on wall Max So beyond the two Dcs.
Speaker Change: You spoke to.
Speaker Change: Whats a good way to think about.
Speaker Change: The potential timing of.
Speaker Change: Winning further opportunities with wall Max beyond those two sites and how that potentially plays out over time.
Speaker Change: So.
Speaker Change: How we're thinking about while Max we're excited to start with that customer and we're going to focus on the two to five minutes that we have in front of US. There is an opportunity there are several thousand stores across.
Speaker Change: <unk>, Mexico for Walmart. So we do believe there is expanding opportunities there, but first and foremost we have to perform on the existing sites that we've we've just contracted for and that's what's going to be awesome.
Speaker Change: Thanks very much.
Speaker Change: Thank you.
Speaker Change: Our next question.
Speaker Change: Comes from the line of Matt Summerville of D. A Davidson. Please go ahead Matt.
Matt Summerville: Thanks, Carol in your prepared remarks, you mentioned.
Speaker Change: 44 systems ongoing a record four completed a record nine started.
Speaker Change: Should we think about those metrics those kpis if you will.
Speaker Change: Now the move over the course of 'twenty five I mean, the jump from 39 as an example to 44.
Speaker Change: Ongoing deployments I think that's the biggest jump or four equal to the biggest jump obviously off of a larger jumping off point, but just help me understand how I should think about those three kpis evolving over the course of the year and then I have a follow up.
Speaker Change: Yeah. Thanks, Matt So certainly into jumped from 39 to 44 and deployment is our biggest one we've seen and that is driven by the fact that this quarter. We started nine new projects, which is a record for us and I think we've talked about before that we're not going to see a level of nine every single quarter.
Speaker Change: Incineration around starting a project are.
Speaker Change: A collaboration between ourselves and our customers, we've got to be ready to start as well as they have to be ready to start I think what we saw this quarter is the port completes.
That's also the highest number we've seen we've been ticking up from two per quarter to three per quarter and now we hit four I think youre going to see that continue in that neighborhood of four and then we've got a lot in progress and the more we focus on making sure. We are hearing the schedule I think youre going to see that consistent throughout the year, we don't.
Speaker Change: Died on number of new starts, which I think we've talked about before now.
Speaker Change: <unk> is an unusual amount for the quarter a lot of things pulled together for us to be able to start nine the confidence from our customer as well as we were ready to start.
Speaker Change: So I think if you think about 2025 from an annual perspective Youll see additional starts than what we had in 2024, but it's certainly not going to be <unk> every quarter.
Speaker Change: Got it.
Speaker Change: I appreciate that and then maybe just a little color on.
Rick you had mentioned the remote bought capability as part of your prepared remarks can you help me understand how that drives more efficiency or more transactions per hour or whatever the right metric is and then can you also comment on where you're at with your non ambient system development. Thank you.
Speaker Change: Yes, so the vision the vision really helps us with.
Speaker Change: The reliability of the robots so.
Speaker Change: The packaging that we deal with one of the reasons.
Speaker Change: What we do is difficult is lids Bob Bowman.
Speaker Change: All of those leak and so in the past when we started on this journey our robots had sensors, but essentially they were blind. So now what's happening is that the robot actually sees where there is a problem.
Speaker Change: And communicate with the operator, and so there is a process of machine learning.
Speaker Change: Are we actually teach the robot how to handle these situations.
And actually one these robots now remotely from anywhere in the world.
Speaker Change: And so that has made the systems more reliable and has given our customers a lot more confidence on our ability to scale and to do bigger systems.
So that's that's the real value of vision and the vision.
Speaker Change: As is complicated because these are.
Speaker Change: These are non controlled environments, it's not like a fab.
You made any changes there is dust theres different products they lag so the ability to see.
Speaker Change: And to us.
Speaker Change: The vision and to change the bond how to do better.
Speaker Change: Is very very important to us and it's been a long journey, but.
Speaker Change: But we've made huge progress there.
Speaker Change: As far as non <unk> work, we continue to get.
Speaker Change: Discussions with our customers, we're continuing to work on that as far.
Speaker Change: R R.
Speaker Change: R&D.
Speaker Change: Backlog, but nothing new to report on that at this time.
Speaker Change: Got it thanks guys.
Matt Summerville: Thanks, Matt.
Matt Summerville: Thank you our next question.
Speaker Change: Comes from the line of Derek Soderberg of Cantor Fitzgerald. Your line is open Derrick.
Speaker Change: Yes, hi, everyone.
Speaker Change: Just another question on walnuts Carol you mentioned that all mix you think has ambitions to go beyond those two facilities.
Speaker Change: I think Walmart has something like 40 or 50 distribution centers I'm wondering if you can quantify that opportunity should Walmart sort of rollout tabarrok across their distribution network is they have plans for Walmart U S and what does that opportunity look like.
Speaker Change: Yes, we don't.
Speaker Change: Wanted to get ahead of our customer and again.
Speaker Change: Excited to start with the first to prove that out.
Speaker Change: As we look at the overall.
Speaker Change: Contribution across Mexico Central America, South America in terms of the opportunity that's out there that has never been contemplated in our Tam or Sam and so we think theres billions of opportunity in that space certainly wouldn't attribute all of that to Walmart certainly not all of walnuts.
Speaker Change: We have not quantified what the total amount is I think you're right to think about it in terms of.
Speaker Change: They had a number of distribution centers serving servicing.
Speaker Change: The stores and we hope that we're part of that opportunity.
Speaker Change: Got it that's helpful and then.
Speaker Change: As my follow up just around Green box I'm wondering if you could talk a bit more about the Georgia facility I'm wondering if that facility.
Speaker Change: Point of that to be more of a profit center or a center to sort of prove as a proof.
Speaker Change: Proof of concept for the market and then just taking a step back the green box agreement.
Speaker Change: But you have with Softbank I think they're committed to 11 billion in orders by 2029 otherwise.
Speaker Change: Otherwise they have to pay you or does that still generally the framework of that agreement and do you think you're tracking.
Speaker Change: Well along to sort of hit that agreement.
Speaker Change: Yes, so the so the honestly the first question Atlanta is one of those places where.
Speaker Change: There's always opportunity to fill up a distribution center so Atlanta was.
From day one the.
The site that we wanted to go first we've got a good facilities over 1 million square feet.
Speaker Change: A lot of potential customers there.
Speaker Change: So.
Speaker Change: <unk> is will be a multi tenant facility.
Speaker Change: And in some cases.
Speaker Change: We're having discussions with people now is some people might say well instead of buying a whole system. Maybe I just wanted to run 100000 cases, a week through your system and it's a good test pilot. So we think Atlanta will be very successful and will create a lot of growth opportunities and some of the customers are already.
Speaker Change: Said, well, if we like Atlanta, where else are you going to go so we feel good about.
Speaker Change: <unk>.
The ability to build out multiple systems.
Speaker Change: To your second question nothing has changed between the relationship between Softbank.
Speaker Change: And symbiotic the way we've done this partnership with Green box and we're very we're very excited about where we are.
Speaker Change: Yeah.
Speaker Change: Got it really appreciate it thanks.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of.
Michael Anastasia: Michael Anastasia.
Michael Anastasia: TD Cowen. Please go ahead Michael.
Michael Anastasia: Hey, good morning, guys How're you doing.
Michael Anastasia: Okay.
Speaker Change: Great just wanted to dive a little bit deeper into the green box announcement.
Speaker Change: Initial headlines said it was about 150 million.
Speaker Change: So for 1 million square foot facility, so how does that.
Speaker Change: How should we be thinking about that from a sizing of a symbiotic content perspective, and then just looking at like the revenue margin opportunity for Green box, how does that compare to.
Speaker Change: Pure symbiotic custom.
Speaker Change: Customer sites. Thank you.
Speaker Change: So I'll start with that one Rick.
Speaker Change: Hi, I'm on top if you like.
Speaker Change: So the Green box Atlanta announcement, our GA announcement that I believe you are referring to $150 million of the press release that was out there think about that as the entire.
Speaker Change: Warehouse and facility so our green box side, similar to where we go in and build a system and with our other customers has a whole lot of other infrastructure associated with it of which somebody gets a piece of it.
You could consider symbiotic system similar to what our average.
Speaker Change: <unk> has been on our contracts that we've gotten flow right now for our symbiotic system. So it's no different.
Speaker Change: But that number that you saw that was out there includes more than just the symbiotically thats for the overall, how green box will operate that warehouse.
Speaker Change: In terms of Green box revenue and margin opportunity and so are our.
Speaker Change: Our systems that we are selling into green box or a symbiotic system and so they are similar in <unk>.
Speaker Change: Revenue and gross margin like we are selling to our other customers and so it's that our portion of that than we are a 35% JV partner in that and some of that comes back to product.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from the line of Rob Mason of Baird. Please go ahead Rob.
Rob Mason: Hi, yes, good afternoon.
Speaker Change: Carol I wanted to just circle back to gross margin at your <unk>.
Speaker Change: Expectation for the first quarter sounds similar to the fourth quarter in that regard but.
Speaker Change: How should we be thinking.
Speaker Change: In fiscal 'twenty five the ability to scale that from that level. If you work through.
Speaker Change: Some of the issues that you talked about last quarter that were.
Speaker Change: Pulling gross margin lower.
Speaker Change: Just where we are on that in terms of the progression.
Speaker Change: Yes. Thanks for the question Rob So we've worked through several of the issues that depressed our <unk> margin too.
Speaker Change: Two lower than historical levels.
Speaker Change: I'd say, what we've rebounded in the fourth quarter.
Speaker Change: Is a level, we will likely see as we head into the first half of next year, but we'll continue to focus on are what are those opportunities to improve as we look at the back half of 2025, and then into 2026.
Speaker Change: We recognize we're not at the gross margin we want to be so we're focused on what can we do to improve schedule, which we've talked about in the past the faster we can complete the more.
Speaker Change: Or we can save from a cost perspective, and we're continuing to look at ways that we maximize our cost performance as we are building a system.
Speaker Change: Okay.
Speaker Change: Very good and then.
Speaker Change: Next question is just maybe this is for Rick I noticed during the quarter you added a new leader.
Speaker Change: I mean with the title around transformation initiatives and I am just Q.
Speaker Change: To the extent you can speak to that role.
Speaker Change: What do you expect that person to.
Turning to symbiotic.
Speaker Change: Yes, So we've had a we've added quite a few new leaders.
Speaker Change: But I think you're talking about is.
Speaker Change: <unk> is a leader who.
Speaker Change: We expect to be able to help us develop new products faster.
Speaker Change: And as a champion for our R&D efforts, so not necessarily.
Speaker Change: R&D doing the R&D work, but actually helping us focus on which R&D projects would be the most valuable to our customers.
Speaker Change: Okay.
Very good thank you.
Speaker Change: Thank you.
Speaker Change: Our next question.
Speaker Change: Come from the line of Greg Palm of Craig Hallum. Your question. Please Greg.
Greg Palm: Yes, Thanks, I wanted to follow up on the Walmart if I could first I think what struck me as maybe most surprising is your first international win was was in Mexico or lower cost.
Greg Palm: Sort of labor wage region, which I guess kind of begs the question of what does that mean for your broader Tam and I'm thinking.
Greg Palm: Broadly speaking Asia.
Greg Palm: Does this maybe increase the Tam potential in terms of opportunities of deploying symbiotic in regions, maybe you thought one.
Greg Palm: Maybe at an appetite to you saw previously.
Greg Palm: Yes, thanks for the question Greg.
Greg Palm: Yes, that's why I'm really excited about this particular, one it does emphasize the ROI even in those lower cost geography, with a Rick alluded to it on an earlier question. It emphasizes.
Greg Palm: Sites in lower cost geographies are also valuing inventory improvement the transportation costs and just the overall quality of what we are able to deploy so we do think that opens up the geography.
And really gives another proof point that the system provides the Iowa, even in a low cost geography.
Greg Palm: In some ways, but what is so interesting and reassuring for us as well.
Greg Palm: As the U S is the hardest market because it really is one of the best supply chain in the world.
Greg Palm: But when you get to some other markets, where the supply chain is really not very sophisticated.
Greg Palm: There's lots of opportunity to take inventory out.
Greg Palm: Probably and labor in terms of inefficient labor and transportation in terms of getting all the right products in the right place at the right time so.
Greg Palm: We're very excited and we'll continue to learn about the opportunities that there are in these new markets.
Speaker Change: Got it yeah that makes sense.
Speaker Change: And then I guess my other question on gross margin, maybe it's a two part or you had a restructuring charge.
Speaker Change: In the quarter I think of 775000.
Speaker Change: Or was that what segment would that and you alluded to operation services by my math I think that was almost like a 100 basis point drag on total gross margin. So I don't know if the restructuring was in there as well, but like broadly speaking as you look to Q1, especially in operation.
Services.
Speaker Change: You said, it maybe rebounds, a little bit but can you just go a little bit more detail on exactly what happened in the quarter there.
Speaker Change: Yes, so the restructuring charge with actually a benefit and so what youre seeing there is the restructuring that we did around inventory two quarters ago.
Speaker Change: And we had obsolete inventory we are working to go sell some of that inventory and we had a pickup associated with settling that and so that's what that 800 K roughly was sitting in the restructuring charge it was actually a benefit.
Speaker Change: From an operation services perspective, we did have a significant drop in terms of the margin on that what we what we saw this quarter as we added resources at a couple of sites, where we have some large projects in deployment and we expect that run rate going forward will improve over time, we don't expect to see.
Speaker Change: That negative run rate, we had a few sites, where we provided additional resources to ensure our projects are moving forward.
Speaker Change: Okay.
Speaker Change: Thanks for that clarification.
Speaker Change: Yep. Thanks.
Speaker Change: Thank you.
Speaker Change: Our next question.
Speaker Change: It comes from the line of Mike Latimore of Northland Capital markets. Your line is open mic.
Alright, great. Thanks very much.
Speaker Change: In terms of cash flow from operations.
Speaker Change: Should we think about that over the course of the year should that maybe as a percent of EBITDA.
Speaker Change: So.
Speaker Change: We really don't have any change to our fundamentals of our working capital our cash inflows continue to be front loaded.
Speaker Change: What you saw in our cash for this quarter was really focused on timing of receipts.
Speaker Change: And we expect that to rebound as we head into 2025.
Speaker Change #100: Got it great. Thanks, and then on the.
Speaker Change #101: Obviously on the EPC investments I guess you are hiring basically project managers. There can you just maybe tell us how many project manager that you've hired how many you expect to hire over the course here.
Speaker Change #102: Yes, so I won't quantify the number of people, but we.
We have hired the resources for the first five to seven sites, where we're ready to go deploy we've got program managers in place as well as a couple of the other resources for each of those sites and we're moving forward and taking that work on as we indicated last quarter.
Speaker Change #103: Okay. Thanks very much.
Speaker Change #103: Thanks.
Speaker Change #103: Thank you.
Speaker Change #104: Next question comes from the line of Guy Hardwick, Our freedom capital markets. Your question. Please sky.
Guy Hardwick: Hi, good evening.
Guy Hardwick: Hello.
Speaker Change #106: Hi, Karl just wanted to understand your comments on the backlog a little bit I think you said the backlog with staples.
Speaker Change #107: I assume youre talking sequentially, there, even though those over 500 million of revenue burn from.
Speaker Change #107: Excellent quarter, you had in systems revenue. So can you kind of explain a little bit more happened I think you said something about contracts being revised upwards to borrow a phrase from another industry. It sounds like there's some sort of plus ups could you explain that a little bit further please.
Speaker Change #107: Yes.
You got it it's that simple.
Speaker Change #107: Last quarter, we were at 22 eight from backlog and now we're at $22 four and Youre going to see our backlog.
Speaker Change #107: Just as we continue to place systems and so that reflects the revenue of 575 for this quarter were 577.
Speaker Change #107: And then every time, we sign and individual product project, there are pluses and minuses puts and takes around what our final.
Speaker Change #107: Configuration might look for that particular project and so thats, what youre seeing as the offsets to the reductions from revenue this quarter.
Speaker Change #107: There were no no other specific customers additive to the backlog in this court.
So the 19 projects that all came from backlog.
Speaker Change #108: And I just was trying to reconcile your what you said about our systems and the 44 systems at the end of the year.
Speaker Change #107: What you said about completions and starts going forward.
Speaker Change #109: I'm kind of struggling to you. It seems like your revenue guidance is quite conservative given what you said about where you're at year end and where you should be intensive potentially further completions and starts throughout the year. St looks like Q1 guidance implies that you have quite a big step down in revenue per average system, whether you're looking on.
Speaker Change #109: Just the system is deployed at the end of the year and deployment at the end of the year was taking the average of the last eight quarters is.
Speaker Change #109: Is there a particular reason why that would be the case that revenue steps down on average system and.
Speaker Change #109: And deployment.
Speaker Change #109: Yes.
So our <unk> guidance reflects strong year over year growth and what Youre seeing is fourth Carter was.
Speaker Change #109: A unique quarter in which we had the highest number of starts that we've seen as well as the highest number of completes and really achievement of significant milestones in this quarter. So our revenue in an individual quarter is more driven by the amount of systems that we have in deployment at a time.
Speaker Change #109: And just to the nature of the timing of the milestones and where they're at in their lifecycle.
And so as we look forward to one one Q and we've looked at what we have out in front of us in terms of what's in deployment and that's what our guide reflects.
Speaker Change #110: Okay. Thank you.
Speaker Change #111: Alright. Thank you I would now like to turn the conference back to Charlie Anderson for closing remarks, Sir.
Charlie Anderson: Yes. Thank you and we appreciate everybody for joining our call Tonight and your interest in symbiotic and we look forward to seeing many of you during the quarter at the various investor conferences that will attempt thank you and goodbye.
Speaker Change #113: This concludes today's conference call. Thank you for participating you may now disconnect.
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