Q1 2025 Symbotic Inc Earnings Call

Hello, and welcome to symbiotic first quarter 2025 financial results Conference call.

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After the speaker's presentation, there will be a question and answer session.

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Speaker Change: I would now like to turn the conference over to Charlie Anderson, Vice President of Investor Relations you may begin.

Speaker Change: Thank you Hello, and welcome to <unk> first quarter 2020 financial results webcast.

Speaker Change: Charlie Anderson, Vice President Investor Relations some of the statements that we make today regarding our business operations and financial performance may be considered forward looking.

Speaker Change: Such 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, including 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 a reconciliation of GAAP to non-GAAP measures is included in today's earnings press release, which is distributed and available to the public through our Investor Relations website located at IR dot symbolic dot com.

Rick Cohen: On today's call. We are joined by Rick Cohen, <unk>, founder, Chairman and Chief Executive Officer, and Carol Hibbard symbiotic Chief Financial Officer.

Rick Cohen: These executives will discuss our first quarter fiscal 2025 results and our outlook followed by Q&A with that I'll turn it over direct to begin Rick.

Rick Cohen: Thank you Charlie.

Speaker Change: Good afternoon, and thank you for joining us to review our most recent results and.

Rick Cohen: In the first quarter, we continued to deliver high growth while it.

Speaker Change: He is saying that our technology position.

Speaker Change: Last quarter I highlighted that our key objectives for our fiscal year 2025, we're scaling for growth and investing in innovation engine, while delivering high quality systems to our customers and.

Speaker Change: And that by doing so we would look forward to another year of strong topline growth and expanding profitability.

Speaker Change: On the scaling front, we believe we have made good progress building out the team and support growth in deployments deploy.

Speaker Change: Deployment and execution is critical for our company and we are seeing progress from the change we made last year, bringing more of the deployment functions in house and in addition, we continue to focus on project execution and schedule.

Speaker Change: In terms of investing in innovation, we recently brought onboard a new CTO James <unk>.

Speaker Change: James brings a wealth of experience and robotics and software with relevant leadership experience at Toyota and global.

Speaker Change: James and the team are working on several exciting initiatives, notably new simulation tools intended to allow us to deploy new features more rapidly.

Speaker Change: This capability was bolstered by our acquisition of R&D labs during the quarter, which allowed us to add software assets and tools that accelerate our stimulation efforts companywide.

Speaker Change: Having a strong technology position is at the core of our acquisition of walnuts advance systems, and robotics business and the related commercial agreement to automate Walmart store level accelerated pickup and delivery centers or <unk>.

Speaker Change: As I noted a few weeks ago, when we announced the deal we see this acquisition as giving somebody arguably the industry's strongest collection of products.

Speaker Change: Lynn and intellectual property for supply chain automation.

Speaker Change: Our goal is to help customers automate all the way from the manufacturing plant to the store and eventually to the consumer.

Speaker Change: We closed this transformative acquisition last week and have already begun our integration efforts.

Speaker Change: As a reminder.

Speaker Change: We will first be in a development phase, which will include the building of prototypes.

Speaker Change: This is a logical extension of our core technology and Walmart is committed to deploying our technology in 400 stores over a multiyear period, representing over $5 billion of future backlog, providing we made key performance criteria entering this space.

Speaker Change: Stepping back we've closed three acquisitions in the last seven months, which we believe sets us apart as a leader in this space.

Speaker Change: Further all of our selection of us to automate their apd's as a strong acknowledgement of our capabilities. Our technical talent continues to grow and we remained focus on expanding our profitability.

Speaker Change: I'll close my remarks by thanking our team for their hard work this quarter our customers for their continued trust and our investors for their support of our company.

Speaker Change: Carol will discuss our financial results and outlook Cheryl.

Carol: Thanks, Breck first quarter revenue grew 35% year over year to $487 million.

Carol: Revenue growth driven by solid progress across our 44 systems in the process of deployment.

Carol: Long with 80% plus year over year growth from our recurring revenue, which includes software and operations services.

Carol: In the quarter, we began for new system deployments and completed four systems, bringing us up to the total of 29 and operation.

Carol: As more systems go operational we are seeing a more noticeable contribution from software.

Carol: Our software revenue in the first quarter more than doubled year over year, and we delivered softer margins over 65% for the first time in a partner.

Carol: In terms of backlog our backlog of committed contracted orders of $22 4 billion remained consistent with last quarter. As the addition of the wall next contract plus final pricing on contracts was offset by revenue recognized during the quarter.

Carol: System gross margin improved on a sequential basis as we continue to improve our execution.

Carol: Gross margin on software maintenance and support also improved sequentially continuing its trend toward typical industry software margins as we gain scale.

Carol: And operation services, we posted a negative gross profit as we continue to support certain sites by investing in additional resources to ensure customer success.

Carol: We would expect the impact of this increase in resources to moderate going forward and see no change to our long term model of operation surfaces as a beneficial contributor to overall margins we.

Carol: We see our focus on reliability and ease of use for our customers as enabling long term benefits that we believe will far exceed any short term expense associated with these efforts.

Carol: Operating expenses were up sequentially as expected due to the investments we are making to support our growth.

Carol: Overall, our net loss in the quarter with $19 million.

Carol: Thanks to improving gross margins on systems and software adjusted EBITDA in the quarter of $18 million came in above our forecast.

Carol: We finished the quarter with cash and equivalents of $903 million, which increased from $7 27 in the fourth quarter, primarily due to cash from operations of $205 million in the quarter, which was driven by the timing of cash receipts.

Carol: Now turning to our outlook for the second quarter of fiscal 2025, we expect revenue of 510 million to $530 million and adjusted EBITDA between $26 million and $30 million, reflecting another quarter of at least 30% year over year revenue growth and a sequential increase in overall gross.

Carol: Margins, while accommodating a sequential increase in operating expenses associated with recent acquisitions.

Carol: We note that our guidance reflects only a modest contribution from the acquisition of the Walmart advanced systems, and robotics business, given the partial quarter and the fact that it is the early days of our development program.

Carol: As a reminder, you should not expect our revenue for our development program to track Walmart's Frontloaded payments.

May end up deferring a portion of the revenue to the store deployment period.

Carol: In summary, we look forward to another quarter of high growth with a continued recovery in our margins.

Carol: With that we now welcome your questions operator, please begin the Q&A.

Carol: Thank you ladies.

Carol: Ladies and gentlemen, as a reminder to ask a question. Please press star one on your telephone and wait for you.

Carol: Name to be announced to withdraw your question. Please press star one again.

Carol: We ask that you limit yourself to one question and one follow up please standby, while we compile the Q&A roster.

Carol: Oh.

Carol: Our first question comes from the line of Nicole <unk> with Deutsche Bank. Your line is open.

Yes, thanks, good afternoon guys.

Speaker Change: Hi, Nicole.

Speaker Change: So maybe just starting with the Opex in <unk>.

Speaker Change: You mentioned that we should see another Q on Q increase can you talk a little bit about the magnitude of that Opex increase expected in.

Speaker Change: At what point do you get to kind of run rate.

Speaker Change: Opex, maybe you can split it between SG&A and R&D. Thank you.

Speaker Change: Okay. Thanks to call, yes, so we saw a step up in our Opex This quarter and we would expect second quarter Opex to increase about $5 million to $10 million. This is primarily driven by the investments we're making in the long term for the business as well as what you're seeing from the acquisition. So the step up this.

Speaker Change: Quarter, one quarter that we're posting you saw a step up in SG&A some of that was our overall infrastructure.

Speaker Change: I'm getting ready for acquisitions and are scaling of our program management function.

Speaker Change: As we moderate going forward you should expect that opex.

Speaker Change: To moderate between R&D and SG&A similar to the levels youre going to see it.

Speaker Change: Got it. Thank you and then just maybe if we could dig into the operations services.

<unk> loss in the quarter, a little bit more I think you guys had expected that to return to maybe positive growth. So can you talk a little bit more about what happened and then how should how should we think about.

Speaker Change: Gross profit for that business for the rest of year things.

Speaker Change: Yeah, So when I think about operation services and what that includes so there and you see a little bit of the lumpiness in terms of revenue from quarter over quarter as well and so there are different intensities at different sites based on what we're providing from a training and resources perspective, what you saw this quarter as we alluded to.

Speaker Change: We're supporting several of our customers and the resources needs that they need is some of our large systems go live.

Speaker Change: I would expect you'll likely to see this continue in the near term, but not at the same level.

Speaker Change: That depends on what we're focused on for the long term, which is focus on reliability and support for our customers as they deploy and bring our systems online.

Speaker Change: Thank you I'll pass it on.

Speaker Change: Okay. Thanks.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Andy Kaplowitz with Citigroup. Your line is open.

Hey, good afternoon, and good evening everyone.

Speaker Change: Yes.

Speaker Change: Hi, Andy.

Speaker Change: Carl I think you said that your move to more infill in sourcing is on track and Youre forecasting higher adjusted EBITDA margin again in Q2.

Speaker Change: It seems like you're starting to get down on the cost curve again as you increase the number of deployed systems, but maybe you could update us on where you are in the process of in sourcing whether you feel good about more let's call. It limited noise in margin from here.

Speaker Change: And thanks for the question Andy So in terms of our engineering procurement and construction contract, we're making good progress and so as we talked about this is going to be a multi quarter transition.

Speaker Change: Over the course of the last several months we have.

Speaker Change: Brought all of that work in house and the sourcing that we had.

Speaker Change: Brought that we brought in <unk> from the contract or they have completed their work ahead of schedule and so all of that work is now in the hands of symbiotic. We continue to scale and we will have our first couple of systems, where somebody was performing the EPC work.

Speaker Change: Behind us in the next quarter or so so that's certainly one of the contributors in terms of managing overall schedule. We know we have work to do in terms of overall systems gross margin schedule is one of those elements and then we're focused on how we continue to improve our cost as well.

Speaker Change: Got it that's helpful. And then maybe related I think you said you had four new system starts this quarter you had nine last quarter.

Speaker Change: It's going to be a bit lumpy is the run rate's still higher the overall are you still expecting.

Speaker Change: More over the next few quarters as you sort of stabilize as you just talked about in sourcing and what have you like how do you think about sort of new starts while balancing execution as you've talked about.

Speaker Change: Yes said the four new starts this quarter was not unexpected given the fact that we were coming off of the last quarter at nine and so we've also talked about every quarters, it's going to be lumpy and we'll have some quarters that are higher some are lower but we should expect that number to continue to increase throughout the year as we.

Speaker Change: We build out our $22 billion backlog.

Speaker Change: I appreciate it.

Speaker Change: Hey, guys.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Damian Karas with UBS. Your line is open.

Damian Karas: Hey, good evening everyone.

Speaker Change: They love it.

Speaker Change: Hi, Yeah, maybe just taking a step back from kind of your current deployments I was wondering if you could just maybe give us a sense on any indications or discussions from.

Speaker Change: The the potential target pool of customers out there and how they're <unk>.

Speaker Change: Thinking about.

Speaker Change: Budget this year.

Speaker Change: Are you, possibly seeing any changes in those discussions or from from last year.

Speaker Change: Where there was a more tempered capex backdrop, or what kind of business as usual.

Rick Cohen: Yes. So this is Rick so.

Speaker Change: <unk>.

Speaker Change: It's Ben.

Speaker Change: It's been an interesting year I think as we.

Speaker Change: The investments we're making in.

Speaker Change: Running these sites better and better and operationally.

Speaker Change: They have come to fruition. So we've had all along.

Speaker Change: <unk> inquiries across multiple categories.

Speaker Change: And the last.

Speaker Change: I would say the end of last year. The end of 2024, where people are starting to think about spending money and 25. So we've had obviously we've had.

Speaker Change: Bunch more orders from Walmart, but also we've had.

Speaker Change: Manufacturers and different suppliers, a bunch more incoming.

Speaker Change: As well as.

Speaker Change: More international inquiries. So I think I think what's happening is that I think people are more.

Speaker Change: We're concerned about the labor situation than they were before.

Speaker Change: I think the people that have the capital are interested in deploying their capital now versus maybe waiting and watching to see how some of our bigger customers were handling things. So we're pretty encouraged by what we see with the new customers and the new inquiries coming in.

Speaker Change: Great that's really helpful color.

Speaker Change: And obviously.

Speaker Change: The subject matter of tariffs has been quite topical in the industrial world of late so.

Speaker Change: I don't think I think you've said in the past you don't depend too much on China, but maybe you could just give us a sense thinking about these three countries, China, Mexico, and Canada and whats your exposures might be there.

Speaker Change: Yes.

Speaker Change: Can start and then Rick chime in.

Speaker Change: We have immaterial impact for China.

Speaker Change: We continue to work closely with our supply chain team because as you indicated it's rather volatile at the moment.

Speaker Change: Our contracts are varied as well by customer and by project, but typically these types of costs are pass throughs for us.

Speaker Change: And so from the other jurisdictions, we're looking at we do have bought assembly in Mexico, and so that's one we'll keep our eye on but as you said the what's included in terms of value add as well as what the final tariffs are going to end up being.

Speaker Change: Remains pretty volatile.

Speaker Change: And most of our products are actually made in the U S. There's some assembly that we do in Mexico.

Speaker Change: I think I think the more interesting things so people are focusing on tariffs.

Speaker Change: But if immigration.

Speaker Change: As a result of tariffs has slowed down.

Speaker Change: Deportations or accelerated I would expect the demand for our products to continue to accelerate.

Speaker Change: Yes that makes sense.

Speaker Change: And just thinking about your own supply chain, though.

Speaker Change: Hypothetically.

Speaker Change: There is a Mexico tariff it gets tacked on.

Speaker Change: Would you lean towards.

Speaker Change: Some price adjustments or.

Speaker Change: Kind of a.

Speaker Change: The shift in the footprint just any any thoughts on where you blayne.

Speaker Change: Yes contractually.

Speaker Change: We contemplated tariffs we've contemplated.

Speaker Change: I don't know, it's not necessarily a force majeure, but government taxes and regulations.

Speaker Change: All of our contracts allow us to pass that along.

Speaker Change: Great. Thanks for the color.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Joe Giordano with P. D. Cohen Your line is open.

Speaker Change: Hi, guys. Thanks for taking my questions.

Speaker Change:

Speaker Change: Carol.

Speaker Change: I'm wondering if you can give us an update on like the control procedures implemented related to the issues you guys found that as part of the year end audit and how thats kind of informing your guide and giving kind of changing confidence in what youre seeing and how it relates to.

Speaker Change: Planning future planning.

Speaker Change: Yeah. So.

Speaker Change: All of our deficiency remediation controls into those included adding compensating controls over how we do in goods receipt as well as adding compensating controls over how we're recording revenue for non billable cost growth.

Speaker Change: Provided training, we've provided enhancements to our ERP system. So all of those have been deployed.

Speaker Change: And the results of our testing are encouraging we've had known deficiencies that were noted as part of that testing and I believe that as we've noted before it will take several sequential quarters of testing to remediate, but we are encouraged by the progress.

Speaker Change: Great and then if I could one more follow up there and then if I could sneak one in for Rick, but I'm just curious the four that you completed.

Speaker Change: How long did those systems generally take to do and what's how does that compare to the expected timeline for the four that you just started and then Rick just if I can ask you on.

Speaker Change: On the M&A side, you've done some of these interesting opportunistic deals here how are you balancing.

Speaker Change: Complexity of the organization at an early stage, where youre trying to dial it in and get get more efficient versus taking advantage of some of these things that are out there, but that kind of widens the scope of it. Thanks.

Speaker Change: So in terms of our timeline. So we started our remediation process immediately after the identification of our material weaknesses. So.

Speaker Change: Its controls we put in place and we've tested them over the course of this quarter.

Speaker Change: Okay.

Speaker Change: On the acquisition side.

Speaker Change: The.

Speaker Change: Acquisitions have been.

Speaker Change: They've been small and so.

Speaker Change: Two of the companies.

Speaker Change: We knew the people there and one of the companies was actually doing some consulting for us.

Speaker Change: And so when we've done the acquisition. These are typically the first two outside of the.

Speaker Change: All of our robotic systems or 20 person companies and so not very significant increases and actually we have replaced some of our people with some of the technology with some of the new folks. So so not no no significant cost changes.

Speaker Change: On the <unk>.

Speaker Change: On the Walmart robotics and systems piece, it's been a week or two we are still evaluating everything.

Speaker Change: There is some talent there.

Speaker Change: And we'll we'll figure the integration, but that that building is just I don't know, it's like 10 minutes from here. So we think the integration of work very smoothly.

Speaker Change: Yeah.

Speaker Change: Thanks, guys.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Ross <unk> with William Blair. Your line is open.

Ross: Hey, good evening guys.

Speaker Change: Hi, Rob.

Rob: Hey, Carol can you update us on what the lead times look like in the quarter and just given the work on in sourcing and how should we think about the internal expectations for driving that progress as we move through the year.

Speaker Change: For lead times.

Speaker Change: We've shortened our over the course of.

Speaker Change: 2024, I'll say.

Speaker Change: Post COVID-19, because when we tightened up our lead times from the majority of our supply chain.

Speaker Change: And we have not had significant changes over the course of the last quarter or two we continue to focus on what we can do upstream. So that we can shorten that lead time as well as simplified the deployment once our material arrives on site.

Speaker Change: Okay, I mean are we.

Speaker Change: Getting close to closing in on kind of the <unk>.

Speaker Change: 18 months with a path to 12, I mean is that really kind of the framework for the next 12 to 24 months.

Speaker Change: Or is there something yes.

Speaker Change: So the systems that we're deploying right now we're still averaging 24 months or in a couple of them. There have been large complex deployments I'll call it than they've been over.

Speaker Change: Ross, we still see a path forward of how we streamline that improvement.

Speaker Change: But that's going to take some time.

Speaker Change: Okay.

Speaker Change: And then maybe just touching on the tariffs and the pass through.

Speaker Change: Can you give us a sense of the mix in the backlog that is fixed cost versus cost plus.

Speaker Change: Notice there is some language that changed in the recent filings in.

Speaker Change: Just wondering how those contracts are negotiated and if theres any yeah.

Speaker Change: Recent updates there.

Speaker Change: Yeah, I'd say that the best way to think about that is contract type obviously varies by project and contract and we have ability for even items that are in our backlog as we go ahead and sign new projects going forward, there's elements of that that we negotiate as pass throughs and updates for.

Speaker Change: Things like escalation and changes to material that we've talked about in the past around steel.

Speaker Change: And probably the best way to look at it is that for those things that are fully in our control rather that schedule of project execution the customers' expectations are.

Speaker Change: We go ahead, and we performed to those and both costs and investments we will take a hit on gross margin. There. If we don't perform to that but the other things such as the tariffs that Rick identified theyre typically passengers.

Speaker Change: Okay, but you don't get the sense you are seeing.

Speaker Change: More pushback at this juncture and if we hit a more rapid inflationary environment.

Speaker Change: To start seeing more customers trying to shift to a fixed cost schedule.

Speaker Change: No we're not we're not seeing that and as you're aware we've got.

Speaker Change: Long term agreements in place for a good portion of our backlog and so if you think about our backlog for both our Walmart customer and our green box customer those contracts are in place and we're not looking at changing those okay.

Speaker Change: Awesome. Thank you guys.

Speaker Change: Thanks.

Speaker Change: Please standby for next question.

Speaker Change: Our next question comes from the line of Collaros with Oppenheimer. Your line is open.

Collaros: Thanks, so much guys.

Speaker Change: How should we be thinking about the potential for labor price inflation and how you guys are managing us managing that risk as part of Cogs.

Speaker Change: So a significant portion of our.

Speaker Change: Buildup is is supply based and so we continue to work with our suppliers and.

Speaker Change: <unk> put in place long term agreements with them.

Speaker Change: But for us for some of that and then for the portion of the work that is symbiotic labor and EPC. It's certainly one of the things we'll continue to monitor and we're always looking for opportunities across the rest of our cost basis to ensure that we'll be able to offset that.

Speaker Change: Thanks, so much.

Speaker Change: A fair amount of money that's gone into investing in hardware innovation around robotics and turned on with some of the kind of attention that's being brought to physical AI, we assume that there's going to be some pretty meaningful innovation happening on the component side could you guys talk a little bit about what you're seeing that you're excited about in terms of.

Speaker Change: Mental components that can improve performance or drive costs lower.

Speaker Change: Just in general across the bunch of the whole system.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: So I think we've been.

Speaker Change: I think we've been on the bleeding edge of that for a couple of years now.

Speaker Change: And so we started investing.

Speaker Change: Envision.

Speaker Change: Within Nvidia chips, and graphic interfaces, but you started investing in that probably two or three years ago.

Speaker Change: That's been one of the expenses.

Speaker Change: Expenses that we've incurred over the last couple of years most of that's behind US now so.

Speaker Change: So getting the physical architecture for our bonds in place was a journey because nobody else is doing what we're doing and people are doing this on cars. They.

Speaker Change: They do it in the auto industry, but the bonds or stationery.

Speaker Change: So when you have a moving bonds, it's picking our boxes that that was unique in the industry because of.

Speaker Change: There's vibration theres a bunch of other things that that's behind US now so now what we're really focusing on is being able to what we call <unk>. The box. So essentially a bot to us is now becoming a drone.

Speaker Change: And we can physically move the bar, we can move the arms.

Speaker Change: And then the next step for that so that's happening now it's been happening for the last six months.

Speaker Change: And Thats all been part of the journey, we've been on to increase the reliability and in terms of the customer support we've had a lot of people on site.

Speaker Change: And so what that translates and so that's been part of the expense of the last quarter, but what that translates into the box learn.

Speaker Change: So what happens is now is if a bot goes to pick up a case and the lid Pops open boxes I can't pick up the case, maybe the buckets stuck now what's happening is we will tell you off that at all.

Speaker Change: I actually mimic the skills that the operator is doing and teach the bot.

Speaker Change: Call It a I call it ever you want but the bots learn and then they give us feedback and so that that part of the journey is what really separates our system. We're still on a journey to have a light so warehouse.

Speaker Change: And within our structure and getting much much closer to that in terms of how many manual interventions we have so the AI.

Speaker Change: What we're seeing is that.

Speaker Change: Compute power is faster.

Speaker Change: So and we can now before we used to have to do all this stuff with servers on site. We're gonna start with proper cyber security, we're gonna start to use they take advantage of the cloud to actually get faster transactions more simulations and take advantage of AI. So ours is.

Speaker Change: <unk> is.

Speaker Change: An application, where AI will help us learn faster.

Speaker Change: Excellent. Thanks, so much guys.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Mike Latimore with Northland Capital markets. Your line is open.

Mike Latimore: Alright, great. Thanks very much.

Speaker Change: An update on Green box can you talk a little bit about the.

Speaker Change: The demand Youre seeing there do you expect.

Speaker Change: Revenue out of your Atlanta facility.

Speaker Change: <unk> of this year, we expect more sites. This year, maybe just some color on that would be great.

Speaker Change: Atlanta is still on build out.

Speaker Change: So not a lot of revenue there for this year that will probably run into next year.

Speaker Change: <unk> growth in <unk>.

Speaker Change: California, similar situation, but what we have but we have had.

Speaker Change: Some interesting inquiries into Green box is people are starting to look at the technology.

Speaker Change: Looking at different applications, but what I've spent the last the whole team has the last three or four months is where we cant announce it yet, but we have some very good.

Speaker Change: The hires that we will announce.

Speaker Change: And the next quarter or so to build out the management team at Green box, who has experience on.

Speaker Change: With with big and small manufacturers selling and developing of the rollout. So that's that's been a big focus on us and we've had a couple of breakthroughs, which we'll announce in the next quarter or so.

Speaker Change: Now I'll just do one go back in terms of both laser and Atlanta, they're heavy implementation period will be later this year and so that's when you'll really start seeing the revenue ramping up but we're taking revenue for both of those now that you're probably seeing in our in our financials, but heavy ramp up towards the back half of this year, yes somebody go get revenue, but the green box.

Speaker Change: Got it got it next year.

Speaker Change: Okay. So just to be clear symbiotic, we'll be seeing revenue. This later this year absolutely, yes, yes, okay gotcha, Okay got it.

Speaker Change: And then on the cash flow from operations.

Speaker Change: Strong quarter $205 million.

Speaker Change: As you think about the rest of the year should we use cash flow from operations being.

Above or below whatever you produce in EBITDA.

Speaker Change: And so we don't we don't guide for full year for free cash flow. So <unk> was significantly benefit benefited by the timing of the receipts that we talked about last quarter.

Speaker Change: We were waiting on and we had a large a our balance. So <unk> is highly benefited from that but you should expect to see our cash position continue to rise throughout the year.

Speaker Change: Okay, great. Thank you.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

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

Derek Soderberg: Yeah. Thanks, Thanks for taking the questions good evening everyone.

Derek Soderberg: Wanted to ask on the software subscriptions and support that was down quarter over quarter. Just curious what leads to the variability there on the downside, especially I think last quarter you added nine.

Derek Soderberg: Systems.

Derek Soderberg: And.

Derek Soderberg: And you brought a few on.

Derek Soderberg: It's a lag production I'm just curious what leads to that to decline sequentially and then whats the actual mix between software subscriptions and that and then the mix of supporting that and then I've got a follow up.

Derek Soderberg: And so.

Derek Soderberg: Our software revenue quarter over quarter.

Derek Soderberg: We didn't grow the number of sites that we went from 25 sites five to 29 sites live for Q, We had a onetime benefit in the software revenue line item for some features that we added so yeah. If you normalize for that onetime benefit in the fourth quarter, you actually see a sequential increase in our in our overall.

Derek Soderberg: Revenue for our software and we expect that to continue to grow so the overall.

Derek Soderberg: All operations of the services were performed from the site shows up in our operation services line. So our software line is in software license and subscription related.

Speaker Change: Got it that's helpful. And then just a high level question for Rick.

The team has really executed against your growth strategy of expanding in domestic markets and then international with Walmart now you've got an in store solution.

Speaker Change: How do you see the business evolving from here in terms of other adjacent growth opportunities maybe cold chain.

Speaker Change: <unk> returns smaller packages what else do you envision that somebody can do although you are not already doing today.

Speaker Change: Yes, so the.

Speaker Change: The.

Speaker Change: Accelerated pick up and delivery of the <unk> that we'll be doing for Walmart will have frozen and perishable. So we're developing out before coaching and.

Speaker Change: And that will eventually lead to us doing just perishable warehouses as well as back to store, we've already done some experimenting on the perishable side 38 degrees, it's not a problem for us frozen there's still we still have more testing to do.

Speaker Change: So that's still on our roadmap. Our returns is something we think we could be very good at we've just been too busy to actually get at it right now.

Speaker Change: Okay.

Speaker Change: Please standby for our next question.

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

Greg Palm: Yeah. Good evening, thanks for taking the questions.

Speaker Change: Going back to some of the cost overruns that alright.

Speaker Change: Alright surface loss last quarter I'm, just curious if we could get kind of a just a broader update especially on kind of visibility levels and you know when you sort of see those moderate and slash going away completely at least given what we saw.

Speaker Change: From some of the quarters in fiscal 'twenty four.

Speaker Change: Yes.

Speaker Change: This quarter, we saw a slight improvement in our systems gross margin, so a slight tick up.

Speaker Change: And as we go forward into Q3 Q4, Q. We do have continued focus on making sure we're adhering to schedule adhering to cost, but you're also going to see benefited in the back half of the year is.

Speaker Change: As we will see several of our lower margin very complex systems go live and so we're going to see the benefit of a higher gross margin mix as you head to the back half of the year.

Speaker Change: So.

Speaker Change: Focus on on cost control and focus on deploying opportunities for all of those projects, but we're also going to see the benefit of those systems starting to go live.

Speaker Change: And our mix will improve.

Speaker Change: Okay understood and then.

Speaker Change: The revenue at least by our math the revenue from non Walmart customers, which had been growing.

Speaker Change: Pretty fast for the last year, plus really moderated this quarter. It was just very very slight growth.

Speaker Change: Was that just timing like how should how should we think about just the revenue profile of obviously, the Walmart business, but also the non Walmart customers as well.

Speaker Change: Yes, so clearly by the backlog that we have and the percent that's contributed from Walmart youre going to see a significant contribution from Walmart going forward.

Rick Cohen: And as Rick talked about from a green box perspective, once we get the management team in place and we're fielding inbound there youre going to start seeing that.

Rick Cohen: Grow at the back half of the year.

Rick Cohen: We continue to focus on what are some other customers that we can bring in in house and maybe I'll turn it over to Rick to highlight some of the inbound or discussions we're having.

Rick Cohen: Yes.

Rick Cohen: So we have.

Rick Cohen: A number of.

Rick Cohen: Manufacturers now looking at how they could use our systems for mixing centers. So this is opening up.

Rick Cohen: Really our first <unk>.

Rick Cohen: CPG companies that are beginning to look at this as they start figuring out that.

Rick Cohen: They need to ship <unk> palace to some of the smaller customers because they need the sales.

Rick Cohen: I also think you're going to see the back of store systems, which are considerably cheaper than a warehouse system as a way for us to get rapid.

Rick Cohen: <unk>.

Rick Cohen: Interest from a lot of other retailers besides Walmart.

Rick Cohen: We've already had a couple of incoming <unk> company for a week.

Rick Cohen: Could you do this in terms of customer pick up in the back of the store.

Rick Cohen: So.

Rick Cohen: So we're seeing that.

Rick Cohen: And that's basically what we've been working on and then we've also seen.

Rick Cohen: Hum.

Rick Cohen: Started doing some work in different verticals medical supplies things like that.

Rick Cohen: So I think we'll see interest there.

Speaker Change: Okay. Thanks for the color.

Rick Cohen: Thank you.

Speaker Change: Please standby for all next question.

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

Rob Mason: Yes, good evening, thanks for taking the question.

Speaker Change: Wanted to see if you could provide us an update just on how the deployment of break Pacs systems are going I understand I guess, even last quarter. There was maybe the second one deployed but.

Speaker Change: How that's going and relatedly or or maybe not when you talk about.

Carol: Carol you mentioned some of the complexity of it.

Carol: Some of the lower margin product projects I'm. Just curious is that is that related to new features that are being put in new features that maybe we haven't been familiar with.

Carol: Or just the nature of the installation that's causing the complexity.

Carol: Yes, so we have.

Carol: Our second brake pad being deployed and we have a bunch of others that will become and after that shortly which we haven't announced yet but.

Carol: And so we've.

Carol: We designed the original mini bar.

Carol: And we've made some new design functions, which actually customers are really happy about it makes it a little smaller lowers the price, but still over it actually increases the margin for us so.

Carol: I would say that's that's that's just one of another product thats been in development for a while and going well.

Carol: And then in terms of my comment on the mix changing as we go forward. It's less about the new features that were on those projects and they're projects that have just been with us for a long time that started out as a lower margin and as we burn those off we're going to see that mix change.

Carol: Hum.

Carol: So it was less about features of those particular development some of them are bigger systems.

Carol: That have been in deployment for a while and it would be good to get those.

Carol: Moved off into system system deployment.

Speaker Change: Very good thank you.

Rob Mason: Thanks, Rob.

Speaker Change: Please standby for our next question.

Speaker Change: Okay.

Speaker Change: Our next question comes from the line of Ken Newman with Keybanc capital markets line is open.

Ken Newman: Hey, Thanks, Good evening guys.

Speaker Change: Hi.

Speaker Change: Carol you mentioned expectations for gross margins to expand from <unk> into <unk>.

I just think about that in the context of the midpoint of your guide.

Speaker Change: Some of the comments about mix kind of improving into the second half.

Speaker Change: Assume that the systems gross margin can break 20% here in the first half or is that still a bit too optimistic.

Speaker Change: Yeah, I would say breaking 20 in the first half is optimistic.

Speaker Change: First half, meaning one case behind us already so if I think about <unk> I would not expect to see that eclipsed 20 and in the first half of the year.

Speaker Change: And to be cleared.

Speaker Change: That mix step up that you mentioned earlier in the call is that a potential step to kind of breaking that pathway.

Speaker Change: Yeah, and I think youre going to see in the second quarter. Two is we're going to have growth in opex, which we talked about and so that's what you're also seeing in our EBITDA guide. It reflects an increase in opex as well as a slight improvement in systems gross margin.

Speaker Change: Software margin, we're going to continue to see.

Speaker Change: <unk> levels in the in the sixties.

Speaker Change: And as we talked about <unk> gross margin will be will be a drag for the near term, but long term, we expect that to rebound to.

Yep.

Speaker Change: And then for my follow up here, Rick I, just wanted to circle back on an earlier comment around AI.

Speaker Change: I know, we've seen a lot of headlines here about potentially cheaper ways to train AI models.

Speaker Change: And when you think of I know you've been kind of first movers within the technology, but when you consider that.

Speaker Change: These models might be cheaper to trade do you view that as a catalyst for yourself or is that potentially a competitive threat as new.

Speaker Change: As other competitors try to utilize that cheaper technology, how do you think about that as it relates to the system offerings.

Speaker Change: Yeah. That's a really good question. So we think we're very very far ahead of everybody else and the reason I say that is we've now hit a 1 billion transactions a year.

Speaker Change: And you can't train these models without data.

Speaker Change: And nobody has the amount of data that we have combined with the architecture and the software. So we we think we'll just continue to distance ourselves from the crowd.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of well, Brian with Goldman Sachs. Your line is open.

Hey, good evening and thank you for taking my question I'm on for Mark Delaney today. So just one really quickly on the Apd acquisition I know is supposed to be accretive to revenue margins and free cash flow, but can you just give a little bit more impact to the financials going for at least this year given that revenue is not supposed to kick.

Speaker Change: Again for a couple more quarters. Please.

Speaker Change: And so our second quarter does have a modest amount of revenue associated with our acquisition. So again, it's modest because we'll have a partial quarter.

Speaker Change: And we're just getting started from that development program, but you're going to see that growth throughout 2025 is pre ramp up development.

Speaker Change: If you think about the cash that we got for the first year I think R. R.

Speaker Change: No comment was don't assume $230 million of cash from the quarter drive $200 million of revenue for this year. So it will be back loaded.

Speaker Change: But we do have revenue a modest amount already beginning in the second quarter and we're excited to get the integration going forward and start development.

Speaker Change: Thank you for the color and just one more I know somebody had commented that it plans to add more salespeople. So what are your expectations for potential new customers either with with them about it.

Speaker Change: Yeah. So that's what we that's what I was implying we've we're starting to ramp up the green box, our sales team and some of those will be transferable to survive.

Speaker Change: So we will be selling a symbiotic system. So we will be offering a green box solution.

Speaker Change: And so we've we're in the process of bringing on the sales leaders and we think with the reception. We've had with the leadership teams are building up the sales force will be will be good.

Speaker Change: We have started hiring two or three additional salespeople at symbiotic already.

Speaker Change: And they'll they'll focus on different verticals.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Guy Hartwig with Freedom capital markets. Your line is open.

Guy Hartwig: Hi, good evening.

Guy Hartwig: My questions have been asked already but I was just wondering how you feel about the guidance you gave in the 2024 10-K that 10% or $22 4 billion backlog.

Guy Hartwig: Would be Delever this year and maybe you can give some puts and takes to that or does it depend on certain number of deployments in progress.

Guy Hartwig: And so what youll see in our 10-Q that we posted this evening is the remaining performance performance obligation that we expect to deliver in the next 12 months, we bought that to 11%. So I think that will be a good indicator of how our revenue grow.

Guy Hartwig: Those back half loaded for 2025.

Guy Hartwig: And so will <unk> stronger than <unk> is what we're currently looking at.

Speaker Change: Alright, Thank you and just as a follow up sorry, if I missed it earlier I was late on the call I'm just wondering how discussions with non grocery customers are progressing say general merchandise customers potential new customers that are I mean.

Guy Hartwig: Yeah.

Guy Hartwig:

Speaker Change: A number of the customers we're talking to are non grocery customers.

Guy Hartwig: And.

Guy Hartwig: There.

Guy Hartwig: The.

Guy Hartwig: There are different verticals so.

Guy Hartwig: I mean, most retail is still food or general merchandise, but theres also medical supplies and there is auto parts and there's a bunch of other things all of which were in discussions with.

Okay. Thank you.

Guy Hartwig: Thank you.

Guy Hartwig: Please standby for our next question.

Guy Hartwig: Our next question comes from the line of Robert Jameson with vertical Research partners. Your line is open.

Guy Hartwig: Hey, Thanks for taking my question.

Speaker Change: Just a quick one on the Walmart Robotics acquisition I know, it's just closed and it's only been a few weeks, but Rick do you have a sense of where you think the majority of work will be directed to meet walmart's requirements for these MPD systems like is it more software related.

Speaker Change: Is there anything you can use or repurpose or make better on the heart on the hardware robotics, Ron that was may be developed by alert innovation mailbox system.

Speaker Change: Yeah. So.

Speaker Change: Though walmart's robotics solution at this point, we're still looking at it but there's a.

Speaker Change: A bunch of our hardware and a bunch of our software will be applicable to what Walmart already had.

Speaker Change: And that will accelerate the rollout of these sites.

Speaker Change: There is some good technology.

Speaker Change: But I think the combination of their technology and our technology is what really got Walmart excited and accelerated the rollout.

Speaker Change: Okay. Thank you. Thank you and then.

Speaker Change: Give me an update on international I mean.

Speaker Change: It doesn't seem like there's much of an update this time, but I mean, how did conversations trend during the quarter did you see an increase in inbound queries.

Speaker Change: And that would suggest maybe that that activity is getting a little bit better the environment's improving over there.

Speaker Change: Yeah. So we.

Speaker Change: We we had a couple of European tours that we gave and visits.

Speaker Change: And then I spent a bunch of time in Mexico, because of walnuts just to understand the potential there.

Speaker Change: And it was it was.

Speaker Change: Trust Me I mean, obviously wages are lower in Mexico than there are in the U S. But also their supply chain.

Speaker Change: Is much further behind our supply chain in terms of inventory management and flow to the stores and it actually went to some Walmart supercenters and but there are a lot of small stores in Mexico.

Actually are enabled by particularly the way you specialize and build pallets are delivered to the stores. So.

Speaker Change: Huge opportunity.

Speaker Change: South of the border across all the way down to.

Speaker Change: Central Mexico Central America, South America.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, I'm showing no further questions in the queue I would now like to turn the call back to Charlie for closing remarks.

Speaker Change: Yes. Thank you everybody for joining our call Tonight, we really appreciate your interest in symbolic and look forward to seeing many of you during the quarter at the various investor conferences won't get done.

Speaker Change: Do you in your body.

Speaker Change: Ladies and gentlemen that concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change: [music].

Speaker Change: [music].

Speaker Change: [music].

Speaker Change: Hello, and welcome to symbiotic first quarter 2020.

Speaker Change: Our natural results conference call.

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

Speaker Change: After the speaker's presentation, there will be a question and answer session.

Speaker Change: To ask a question during this session we need to press star one on your telephone.

Speaker Change: It would be in here, our automated message advising yohane this range.

Speaker Change: To withdraw your question. Please press star one again.

Speaker Change: I'd now like to turn the conference over to Charlie Anderson, Vice President of Investor Relations you may begin.

Charlie Anderson: Thank you Hello, and welcome to <unk> first quarter 2025 financial results webcast.

Charlie Anderson: Charlie Anderson, Vice President of Investor Relations some of the statements that we make today regarding our business operations and financial performance may be considered forward looking.

Charlie Anderson: Such 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 statement.

Charlie Anderson: In addition, during this call we will present, both GAAP and non-GAAP financial measures a reconciliation of GAAP to non-GAAP measures is included in today's earnings press release, which is distributed and available to the public through our Investor Relations website located at IR Dot symbiotic dot com.

Greg Palm: On today's call. We are joined by Rick Cohen, <unk>, founder, Chairman and Chief Executive Officer, and Carol Hibbard Synbiotics Chief Financial Officer. These executives will discuss our first quarter fiscal 2025 results and our outlook followed by Q&A with that I'll turn it over to Greg to be get rich.

Thank you Charlie.

Speaker Change: Good afternoon, and thank you for joining us to review our most recent results in.

Greg Palm: In the first quarter, we continued to deliver high growth, while enhancing our technology position.

Greg Palm: Last quarter I highlighted that our key objectives for fiscal year 2025, we're scaling for growth and investing in our innovation engine, while delivering high quality system to our customers.

Greg Palm: And that by doing so we would look forward to another year of strong top line growth and expanding profitability.

Greg Palm: On the scaling front, we believe we have made good progress building out the team to support growth in deployments deploying.

Greg Palm: Deployment and execution is critical for our company and we are seeing progress from the change we made last year, bringing more of the deployment functions in house. In addition, we continue to focus on project execution and schedule.

Greg Palm: In terms of investing in innovation, we recently brought onboard a new CTO James.

Greg Palm: James brings a wealth of experience and robotics and software with relevant leadership experience and Toyota and global <unk>.

Greg Palm: James and the team are working on several exciting initiatives, notably new simulation tools intended to allow us to deploy new features more rapidly.

Greg Palm: This capability was bolstered by our acquisition of R&D labs during the quarter, which allowed us to add software assets and tools that accelerate our simulation efforts company wide.

Greg Palm: Being a strong technology position is at the core of our acquisition of walnuts advance systems, and robotics business and the related commercial agreement to automate Walmart store level accelerated pickup and delivery centers or apd.

Greg Palm: As I noted a few weeks ago, when we announced the deal we see this acquisition as giving somebody arguably the industry's strongest collection of products talent and intellectual property for supply chain automation.

Greg Palm: Our goal is to help customers automate all the way from the manufacturing plant to the store and eventually to the consumer.

Greg Palm: We closed this transformative acquisition last week.

Greg Palm: <unk> already begun our integration efforts as a reminder.

Greg Palm: We will first be in a development phase, which will include the building of prototypes.

Greg Palm: This is a logical extension of our core technology and Walmart is committed to deploying our technology in 400 stores over a multiyear period, representing over $5 billion in each of backlog, providing we made key performance criteria journey in this space.

Greg Palm: Stepping back we've closed three acquisitions in the last seven months, which we believe sets us apart as a leader in this space.

Greg Palm: Further all of that selection of us to automate their apg's is a strong acknowledgement of our capabilities. Our technical talent continues to grow and we remain focused on expanding our profitability.

Greg Palm: I want to close my remarks by thanking our team for their hard work this quarter our customers for their continued trust and our investors for their support of our company.

Speaker Change: Carol will discuss our financial results and outlook Cheryl.

Carol Hibbard: Thanks, Greg first quarter revenue grew 35% year over year to 487 million with revenue growth driven by solid progress across our 44 systems in the process of deployment.

Carol Hibbard: With 80%, but year over year growth from our recurring revenue, which includes software and operations services.

Carol Hibbard: In the quarter, we began for knee system deployments and completed four systems, bringing it back to the total of 29 and operation.

Carol Hibbard: As more systems go operational we're seeing a more noticeable contribution from software.

Carol Hibbard: Our software revenue in the first quarter more than doubled year over year, and we delivered softer margins over 65% for the first time in a partner.

Carol Hibbard: In terms of backlog our backlog of committed contracted orders of $22 4 billion remained consistent with last quarter. As the addition of the wall next contract with final pricing on contracts was offset by revenue recognized during the quarter.

Carol Hibbard: System gross margin improved on a sequential basis as we continue to improve our execution.

Carol Hibbard: Gross margin on software maintenance and support also improved sequentially.

Carol Hibbard: Renewing its trend towards typical industry software margins as we gain scale.

Carol Hibbard: And operation services, we posted a negative gross profit as we continue to support certain sites by investing in additional resources to ensure customer success we.

Carol Hibbard: We would expect the impact of this increase in reimbursement to moderate going forward and see no change to our long term model of operation services as a beneficial contributor to overall margins.

Carol Hibbard: We see our focus on reliability and ease of use for our customers as enabling long term benefits that we believe will far exceed any short term expense associated with these efforts.

Carol Hibbard: Operating expenses were up sequentially as expected due to the investments we are making to support our growth.

Carol Hibbard: Overall, our net loss for the quarter was $19 million.

Carol Hibbard: Thanks to improving gross margins on systems and software adjusted EBITDA in the quarter of $18 million came in above our forecast.

Carol Hibbard: We finished the quarter with cash and equivalents of $903 million, which increased from $7 27 in the fourth quarter, primarily due to cash from operations of $205 million in the quarter, which is driven by the timing of cash receipts.

Carol Hibbard: Now turning to our outlook for the second quarter of fiscal 2025, we expect revenue of 510 million to $530 million and adjusted EBITDA between $26 million and $30 million, reflecting another quarter of at least 30% year over year revenue growth and a sequential increase in overall gross.

Carol Hibbard: Margins.

Carol Hibbard: Accommodating a sequential increase in operating expenses associated with recent acquisitions.

Carol Hibbard: We note that our guidance reflects only a modest contribution from the acquisition of the Walmart advanced systems, and robotics business, given the partial quarter and the fact that it is the early days of our development program.

Carol Hibbard: As a reminder, you should not expect our revenue for our development program to track Walmart's Frontloaded payments and we may end up deferring a portion of the revenue to the store deployment period.

Carol Hibbard: In summary, we look forward to another quarter of high growth with a continued recovery in our margins.

Carol Hibbard: With that we now welcome your questions operator, please begin the Q&A.

Carol Hibbard: Thank you Lady.

Carol Hibbard: Ladies and gentlemen, as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Carol Hibbard: We ask that you limit yourself to one question and one follow up please standby, while we compile the Q&A roster.

Speaker Change: Our first question comes from the line of Nicole <unk> with Deutsche Bank. Your line is open.

Speaker Change: Yes, thanks, good afternoon guys.

Speaker Change: Hi, Nicole.

Speaker Change: So maybe just starting with the Opex in Q.

Speaker Change: You mentioned that we should see another Q on Q increase can you talk a little bit about the magnitude of that Opex increase expected in.

Speaker Change: At what point do you get to kind of run rate.

Opex, maybe you can split it between SG&A and R&D. Thank you.

Speaker Change: Okay. Thanks, Nicole yes, so we saw a step up in our Opex this quarter and we would expect second quarter Opex to increase about $5 million to $10 million. This was primarily driven by the investments we're making in the long term for the business as well as what Youre seeing from the acquisition. So the step up this.

Speaker Change: Quarter, one quarter that we're posting he saw a step up in SG&A some of that was our overall infrastructure.

Speaker Change: I'm getting ready for acquisitions and are scaling of our program management function.

As we moderate going forward you should expect that opex.

Speaker Change: To moderate between R&D and SG&A similar to the levels youre going to see an impact.

Speaker Change: Got it. Thank you and then just maybe if we could.

Speaker Change: Dig into the operations services.

Speaker Change: The loss in the quarter, a little bit more. Thank you guys had expected that to returns you may be positive growth. So can you talk a little bit more about what happened and then how should how should we think about.

Speaker Change: Gross profit for that business for the recipe here. Thanks.

Speaker Change: Yes, so when I think about operation services and what that included so that and you say a little bit of.

Speaker Change: Lumpiness in terms of revenue from quarter over quarter as well and so there are different intensity at different sites based on what we're providing from a training and resources perspective, what you saw this quarter as we alluded to we're supporting several of our customers and the resources needs that they need in some of our large systems go lives I would.

Speaker Change: Expect youll likely to see this continue in the near term, but not at the same level.

Speaker Change: That depends on what we're focused on for the long term, which is focus on reliability and support for our customers as they deploy and bring our systems online.

Speaker Change: Thank you I'll pass it on.

Speaker Change: Okay.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Andy Kaplowitz with Citigroup. Your line is open.

Speaker Change: Hey, good afternoon, and good evening everyone.

Speaker Change: Hi, Andy.

Speaker Change: Richard I think you said that your move to more infill in sourcing is on track and Youre forecasting higher adjusted EBITDA margin again in Q2, so it seems like you're starting to get down on the cost curve again as you increase the number of deployed systems. When maybe you could update us on where you are in the process of in sourcing whether you feel good about more let's call It limited noise.

Speaker Change: As in margin from here.

Speaker Change: And thanks for the question Andy So in terms of our engineering procurement and construction contract, we're making good progress and so as we talked about this is going to be a multi quarter transition.

Speaker Change: Over the course of the last several months.

Speaker Change: We have brought all of that work in house and the sourcing that we had brought that we brought in <unk> from the contract or they have completed their work ahead of schedule and so all of that work is now in the hands of symbolic we continue to scale and we will have our first couple of systems where somebody.

Speaker Change: Performing the EPC work behind us in the next quarter or so so that's certainly one of the contributors in terms of managing overall schedule. We know we have work to do in terms of overall systems gross margin schedule is one of those elements and then we're focused on how we continue to improve our cost as well.

Got it Thats helpful. And then maybe related I think you said you had four new system starts. This quarter you had nine last quarter and we know it's going to be a bit lumpy is the run rate's still higher. The overall are you still expecting more over the next few quarters as you sort of stabilized.

Speaker Change: As you just talked about in sourcing and what have you like how do you think about sort of new starts while balancing execution as you've talked about.

Speaker Change: Yes, Sir.

Speaker Change: New starts this quarter was not unexpected given the fact that we are coming off of the last quarter at nine and so we've also talked about every quarter, it's going to be lumpy and we'll have some quarters that are higher some are lower but we should expect that number to continue to increase throughout the year as we build out our 'twenty two.

Speaker Change: Backlog.

Speaker Change: I appreciate it.

Speaker Change: Hey, guys.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Damian Karas with UBS. Your line is open.

Damian Karas: Hey, good evening everyone.

Speaker Change: Hi, Yes, maybe just taking a step back from kind of your current deployments I was wondering if you could just maybe give us a sense on.

Damian Karas: Any indications or discussions from.

Damian Karas: The the potential target pool of customers out there and how they're.

Damian Karas: Thinking about.

Damian Karas: Budget this year.

Damian Karas: Are you, possibly seeing any changes in those discussions.

Damian Karas: From from last year.

Damian Karas: Where there was a more tempered capex backdrop, or what kind of business as usual.

Rick Cohen: Yes. So this is Rick so.

Damian Karas:

Damian Karas: It's Ben.

Damian Karas: It's been an interesting year I think is.

Damian Karas: The investments we're making in.

Damian Karas: Running these sites better and better and operationally.

Damian Karas: Have have come to fruition. So we've had a lot more inquiries across multiple categories.

Damian Karas: And the last.

Damian Karas: I would say the end of last year. The end of 2024, where people are starting to think about spending money and 25%. So we've had obviously we've had.

Damian Karas: A bunch more orders for Walmart, but also we've had.

Manufacturers and different suppliers, a bunch more incoming.

Damian Karas: As well as.

Damian Karas: More international inquiry. So I think I think what's happening is that I think people are more concerned about the labor situation than they were before.

Damian Karas: Thank the people that have the capital our interest in deploying the capital now versus maybe waiting and watching to see how some of our bigger customers were handling things. So we're pretty encouraged by what we see with the new customers and the new inquiries coming in.

Damian Karas: Great that's really helpful color.

Damian Karas: And obviously.

Damian Karas: The subject matter of tariffs has been quite topical in the investor World of late so.

Speaker Change: I don't think I think you've said in the past you don't depend too much on China, but maybe you could just give us a sense thinking about these three countries, China, Mexico, and Canada, and what your exposures might be there.

Damian Karas: Yes, I can.

Rick Cohen: Can start and then Rick chime in.

Rick Cohen: Are we a immaterial impact for China.

Speaker Change: We continue to work closely with our supply chain team because as you indicated it's rather volatile at the moment.

Speaker Change: Our contracts are varied as well by customer and by project, but typically these types of costs are pass throughs for us.

Speaker Change: And so from the other jurisdictions, we're looking at we do have bought assembly in Mexico, and so that's one we'll keep our eye on but as you said the.

Speaker Change: What's included in terms of the value add as well as what the final tariffs are going to end up being.

Speaker Change: Remains pretty volatile.

Speaker Change: And most of our products are actually made in the U S. There is some assembly that we do in Mexico.

Speaker Change: I think I think the more interesting things, though people are focusing on tariffs.

Speaker Change: But if immigration.

Speaker Change: As a result of tariffs has slowed down.

Speaker Change: Deportations or accelerated I would expect the demand for our products to continue to accelerate.

Speaker Change: Yes that makes sense.

Speaker Change: And just thinking about your own supply chain, though.

Speaker Change: Hypothetically.

Speaker Change: There is a Mexico tariff they get tacked on.

Would you lean towards.

Speaker Change: Some price adjustments or.

Speaker Change: Kind of.

Speaker Change: Hey.

Speaker Change: Shifting the footprint just any any thoughts on where you blayne.

Speaker Change: Yes contractually.

Speaker Change: We contemplated tariffs we've contemplated.

Speaker Change: It's not necessarily force majeure, but government taxes and regulations.

Speaker Change: All of our contracts allow us to pass that along.

Speaker Change: Great. Thanks for the color.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Joe Giordano with TD Cowen Your line is open.

Joe Giordano: Hi, guys. Thanks for taking my questions.

Carol Hibbard: Carol I was.

Speaker Change: I'm wondering if you can give us an update on like the control procedures implemented related to the issues you guys found that as part of the year end audit and how thats kind of informing your guide and giving kind of changing confidence in what youre seeing and how it relates to.

Carol Hibbard: Planning future planning.

Phil: Yes, Phil.

Phil: All of our deficiency remediation controls and so those included adding compensating controls over how we do get the receipt as well as adding compensating controls over how we're recording revenue for non billable cost growth.

Phil: Provided training, we've provided enhancements to our ERP system. So all of those have been deployed.

Phil: And the results of our testing are encouraging we've had no deficiencies that were noted as part of that testing and I believe that as we've noted before it will take several sequential quarters of testing to remediate, but we are encouraged by the progress.

Phil: Okay.

Phil: Great and then if I could one more follow up there and then if I could sneak one in for Rick, but I'm just curious the four that you completed.

Phil: How long did those systems generally take to do and what's how does that compare to the expected timeline for the four that you just started and then Rick just if I can ask you on.

Phil: On the M&A side and you've done some of these interesting opportunistic deals here how are you balancing.

Phil: Complexity of the organization at an early stage, where youre trying to dial it in and get get more efficient versus taking advantage of some of these things that are out there, but that kind of widened the scope of it. Thanks.

Alright, so in terms of our timeline. So we started our remediation process immediately after the identification of our material weaknesses. So.

Phil: Those controls we put in place and we've tested them over the course of this quarter.

Phil: Okay.

Phil: On the acquisition side.

Phil: The.

Phil: The acquisitions have been.

Phil: They have been small and so.

Phil: Two of the companies.

Phil: We knew the people there and one of the companies was actually doing some consulting for us.

Phil: And so when we've done the acquisition. These are typically the first two outside of the.

Phil: Walmart robotic systems or 20 person companies and so not very significant increases and actually we have replaced some of our people with Saba.

Phil: <unk> some of the new folks so so not no no significant cost changes.

Phil: On the.

Phil: On the Walmart robotics and systems piece, it's been a week or two we are still evaluating everything.

Phil: There is some talent there.

Phil: And we'll we'll figure the integration, but that that building is just it's like 10 minutes from here. So we think the integration of work very smoothly.

Phil: Thanks, guys.

Phil: Thank you.

Phil: Please standby for our next question.

Speaker Change: Our next question comes from the line of Ralph <unk> with William Blair. Your line is open.

Speaker Change: Hey, good evening guys.

Rob Mason: Hi, Rob.

Speaker Change: Hey, Carol can you update us on what the lead times look like in the quarter and just given the work on it and sourcing how should we think about the internal expectations for driving that progress as we move through the year.

Rob Mason: For lead times.

Speaker Change: We've shortened the army over the course of <unk>.

Rob Mason: 2024, I'll say.

Rob Mason: Post COVID-19, because when we tightened up our lead times from the majority of our supply chain.

Rob Mason: And then we have not had significant changes over the course of the last quarter or two we continue to focus on what we can do upstream. So that we can shorten that lead time as well as simplify the deployment once our material arrived on site.

Rob Mason: Yeah.

Okay.

Rob Mason: Thank you.

Rob Mason: Getting close to closing in on kind of the <unk>.

Rob Mason: 18 months with a path to 12, I mean is that really kind of the framework for the next 12 to 24 months.

Rob Mason: Or is there something yes.

Rob Mason: So the systems that we're deploying right now we're still averaging 24 months or in a couple of them. There have been large complex deployments I'll call it and they have been over.

Speaker Change: Ross, we still see a path forward of how we streamline that improvement.

But that's going to take some time.

Rob Mason: Okay.

Rob Mason: And then maybe just touching on the tariffs and the pass through.

Rob Mason: Can you give us a sense of the mix in the backlog that is fixed cost versus cost plus.

Rob Mason: I noticed there was some language that changed in the recent filings.

Rob Mason: Just wondering now how those contracts are negotiated if theres any.

A recent update there.

Rob Mason: Yes, I would say that the best way to think about that is contract type obviously varies by project and contract and we have ability for even items that are in our backlog as we go ahead and sign new projects going forward, there's elements of that that we negotiate as pass throughs and updates for things.

Rob Mason: Like escalation and changes to material that we've talked about in the past around steel.

Rob Mason: And probably the best way to look at it is that for those things that are fully in our control rather that schedule of project execution the customers' expectations are.

Rob Mason: We go ahead, and we perform to those and those costs and investments we will take a hit on gross margin. There. If we don't perform to that but the other things such as the tariffs that Rick identified theyre typically passengers.

Rob Mason: Okay, but you don't get the sense you are seeing.

Rob Mason: More pushback at this juncture and if we hit a more rapid inflationary environment.

Rob Mason: To start seeing more customers trying to shift to opex cost schedule.

Rob Mason: No we're not we're not seeing that and as you're aware we've got.

Rob Mason: Long term agreements in place for a good portion of our backlog and so if you think about our backlog for both our Walmart customer and our green box customer those contracts are in place and we're not looking at changing us.

Rob Mason: Okay.

Rob Mason: Thank you guys.

Rob Mason: Thanks.

Rob Mason: Please standby for our next question.

Speaker Change: Our next question comes from the line of Colin Ross with Oppenheimer. Your line is open.

Colin Ross: Thanks, so much guys.

Colin Ross: How should we be thinking about the potential for labor price inflation and how you guys are managing that managing that risk as part of Cogs.

Colin Ross: So it's a significant portion of our.

Colin Ross: Buildup is is supply based and so we continue to work with our suppliers and.

Colin Ross: <unk> put in place long term agreements with them.

Colin Ross: But for us for some of that and then for the portion of the work that is symbiotic labor and EPC. It's certainly one of the things we'll continue to monitor and we're always looking for opportunities across the rest of our cost basis to ensure that we'll be able to offset that.

Colin Ross: Thanks, so much.

Colin Ross: Yes.

Colin Ross: A fair amount of money, that's gone into investing in hardware innovation around robotics.

Colin Ross: With some of the kind of attention that's being brought to physical AI, we assume that there's going to be some pretty meaningful innovation happening on the component side could you guys talk a little bit about what youre seeing that youre excited about in terms of <unk>.

Colin Ross: Metal components that can improve performance or drive costs lower.

Colin Ross: Just in general across the bots or the whole system.

Colin Ross: Yeah.

Colin Ross: Yes.

Colin Ross: So I think we've been.

Colin Ross: I think we've been on the bleeding edge of that.

Colin Ross: A couple of years now.

Colin Ross: And so we started investing.

Colin Ross: Envisioned.

Colin Ross: Within Nvidia chips, and graphic interfaces, but you started investing in that probably two or three years ago and that's been one of the.

Colin Ross: Expenses that we've incurred over the last couple of years most of that's behind Us now.

Colin Ross: So getting the physical architecture for our bonds in place was a journey because nobody else is doing what we're doing and people are doing this on cars.

Colin Ross: They do it in the auto industry, but the bonds or stationery.

Colin Ross: So when you have a moving but it's picking up boxes that that was unique in the industry because.

Colin Ross: There's vibration theres a bunch of other things.

That's behind US now so now what we're really focusing on is being able to what we call <unk> the bots. So.

Colin Ross: Essentially a bot to us is now becoming a drone.

Colin Ross: And we can physically move to Nevada, we can move the arms and then the next step for that so that's happening now it's been happening for the last six months.

Colin Ross: And Thats all been part of <unk>.

Colin Ross: Already we've been on to increase the reliability and in terms of the customer support we've had a lot of people on site.

Colin Ross: So what that translates and so thats been part of the expense of the last quarter, but what that translates into the bottler.

Colin Ross: So what happens is now is if a bot goes to pick up the case.

Colin Ross: The lid Pops open boxes I can't pick up the case, maybe the buckets stuck now what's happening is we will tell you that it will actually mimic the skills that the operator is doing and teach the bot.

Colin Ross: You could call it AI call it ever you want but the bots learn and then they give us feedback and so that that part of the journey is what really separates our system. We're still on the journey to have a lights out warehouse.

Colin Ross: Within our structure and getting much much closer to that in terms of how many manual interventions we have so.

Colin Ross: Hi.

Colin Ross: What we're seeing is the compute power is faster so and we can now before we used to have to do all this stuff with servers on site, we're going to start with proper cyber security, we're going to start to use the take advantage of.

Colin Ross: Cloud to actually get faster transactions more simulations and take advantage of AI. So ours as is.

Colin Ross: An application, where AI will help us learn faster.

Speaker Change: Excellent. Thanks, so much guys.

Colin Ross: Thank you.

Colin Ross: Please standby for our next question.

Speaker Change: Our next question comes from the line of Mike Latimore with Northland Capital markets. Your line is open.

Mike Latimore: Alright, great. Thanks, very much maybe.

Mike Latimore: Maybe an update on Green box can you talk a little bit about the.

Mike Latimore: The demand Youre seeing there.

Mike Latimore: We expect revenue out of your Atlas.

Speaker Change: Atlanta facility. This year do you expect more sites this year.

Mike Latimore: Just some color on that would be great.

Mike Latimore: Atlanta is still on build out.

Mike Latimore: So not a lot of revenue there for this year that will probably run into next year.

Mike Latimore: <unk>.

Mike Latimore: In California, similar situation, but what we have but we have had.

Mike Latimore: So interesting inquiries into Green box is people are starting to look at the technology and looking at different applications, but what I've spent the last the whole team has the last three or four months is where we cant announce it yet, but we have some very good.

Mike Latimore: Of hires that we will announce.

Mike Latimore: And the next quarter or so to build out the management team at Green box. So it has experience on.

Mike Latimore: With with Big and small data factor is selling and developing out the rollout. So that's been a big focus on us and we've had a couple of breakthroughs will announce in the next quarter or so now I'll just do one go back in terms of both laser have been Atlanta Theyre heavy implementation period will be later this year and so that's.

Mike Latimore: When you really start seeing the revenue ramp ramping up but we're taking revenue for both of those now that you are probably seeing in our in our financials, but heavy ramp up towards the back half of this year, yes, so vertical revenue, but the Brainbox road got it.

Mike Latimore: Got it next year.

Mike Latimore: Okay. So just to be clear, it's symbiotic we'll be seeing revenue later this year, absolutely, yes, yes, okay.

Okay got it.

Mike Latimore: That makes sense and then on the cash flow from operations.

Mike Latimore: Really strong quarter $205 million.

Mike Latimore: The as you think about the rest of the year should.

Mike Latimore: Should we view cash flow from operations being.

Mike Latimore: Above or below whatever you producing EBITDA.

Mike Latimore: Yes. So we don't we don't guide for full year for free cash flow. So <unk> was significantly benefit benefited by the timing of the receipts that we talked about last quarter, we were waiting on and we had a large <unk> balance. So <unk> is highly benefited from that but you should expect to see our cash position continue to.

Mike Latimore: <unk> throughout the year.

Mike Latimore: Okay, great. Thank you.

Mike Latimore: Thank you.

Mike Latimore: Please standby for our next question.

Speaker Change: Our next question comes from the line of Derek <unk> with Cantor Fitzgerald. Your line is open.

Speaker Change: Yeah. Thanks, Thanks for taking the questions good evening everyone.

Speaker Change: Wanted to ask on the software subscriptions and support that was down quarter over quarter. Just curious what leads to the variability there on the downside, especially thanks a lot.

Speaker Change: Last quarter you added nine.

Speaker Change: Systems.

Speaker Change: And.

Speaker Change: You brought a few on.

Speaker Change: <unk> production just curious what what leads to that declined sequentially and then what's the actual mix between software subscriptions and that and then the mix of support and that and then I've got a follow up.

Speaker Change: And so.

Speaker Change: Our software revenue quarter over quarter.

Speaker Change: We did grow the number of sites that we went from 25 five to 29 sites live for <unk>, We had a onetime benefit in the software revenue line item for some features that we added so yeah. If you normalized for that one time benefit in the fourth quarter, you actually see a sequential increase in our in our overall.

Speaker Change: Revenue for our software and we expect that to continue to grow so the overall operations.

Speaker Change: The services were performed from the site shows up in our operation services line. So our software line is software license and subscription related.

Speaker Change: Got it that's helpful. And then just a high level question for Rick.

Speaker Change: The team has really executed against your growth strategy expanding in domestic markets and then internationally with Walmart now you've got an in store solution.

Speaker Change: How do you see the business evolving from here in terms of other adjacent growth opportunities maybe cold chain.

Speaker Change: Automating returns smaller packages what else do you envision that somebody can do although you are not already doing today.

Speaker Change: Yes, so the.

The <unk>.

Speaker Change: Accelerated pickup and delivery the apd that we'll be doing for Walmart will have frozen and perishable. So we're developing out before Cochin and.

Speaker Change: And that will eventually lead to us doing just perishable warehouses as well as back to store <unk>.

Speaker Change: <unk> already done some experimenting on the perishable side 38 degrees is not a problem for us frozen is still we still have more testing to do.

Speaker Change: So that's still on our roadmap.

Speaker Change: Returns is something we think we can be very good at we just been too busy to actually get at it right now.

Speaker Change: Please standby for our next question.

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

Greg Palm: Yeah. Good evening, thanks for taking the questions.

Speaker Change: Going back to some of the cost overruns that alright.

Speaker Change: Surface loss last quarter I'm, just curious if we could get kind of just a broader update especially on kind of visibility levels.

Speaker Change: When you sort of see those moderate and slash going away completely at least given what we saw.

Speaker Change: From some of the quarters in fiscal 'twenty four.

Speaker Change: Yes.

Speaker Change: This quarter, we saw a slight improvement in our systems gross margin, so a slight tick up.

Speaker Change: And as we go forward into Q3 Q4, Q. We do have continued focus on making sure we're adhering to schedule adhering to cost, but you're also going to see benefited in the back half of the year.

Speaker Change: As we will see several of our lower margin very complex systems go live and so we're going to see the benefit of a higher gross margin mix as you head to the back half of the year.

Speaker Change: So.

Speaker Change: Our focus on cost control and focus on deploying opportunities for all of those projects, but we're also going to see the benefit of those systems starting to go live.

Speaker Change: And our mix will improve.

Speaker Change: Okay understood and then the revenue at least by our math the revenue from non Walmart customers, which had been growing.

Speaker Change: Pretty fast for the last year plus.

Speaker Change: Really moderated this this quarter. It was just very very slight growth.

Speaker Change: Was that just timing like how should how should we think about just the revenue profile of obviously, the Walmart business, but also on Walmart customers as well.

Speaker Change: Yes, so clearly by the backlog that we have and the percent that's contributed from Walmart youre going to see a significant contribution from Walmart going forward.

Rick Cohen: As Rick talked about from a green box perspective, once we get the management team in place that we're fielding inbound there youre going to start seeing that.

Grow at the back half of the year.

Rick Cohen: We continue to focus on what are some other customers that we can bring in in house and maybe I'll turn it over to Rick to highlight some of the inbound or discussions we're having.

Rick Cohen: Yes.

Rick Cohen: So we have.

Rick Cohen: A number of.

Rick Cohen: Manufacturers now looking at how they could use our systems for mixing centers. So this is opening up.

Rick Cohen: Really our first.

CPG companies that are beginning to look at this as they start figuring out debt.

Rick Cohen: They need to ship <unk> palace to some of the smaller customers because they need the sales.

Rick Cohen: I also think you're going to see the back of store systems.

Rick Cohen: Sure considerably cheaper than a warehouse system as a way for us to get rapid.

Rick Cohen: Interest from a lot of other retailers besides Walmart.

Rick Cohen: We've already had a couple of incoming we've only owned the company for a week.

Rick Cohen: Could you do this in terms of customer pickup in the back of the store and so.

Rick Cohen: So we're seeing that.

Rick Cohen: And that's basically what we've been working on and then we've also seen.

Rick Cohen: We started doing some work in different verticals medical supplies things like that so I think we will see interest there.

Rick Cohen: Okay. Thanks for the color.

Rick Cohen: Okay.

Rick Cohen: You.

Rick Cohen: Please standby for all next question.

Speaker Change #100: Our next question comes from the line of Rob Mason with Baird. Your line is open.

Yes, good evening, thanks for taking the question.

Speaker Change #100: I wanted to see if you could provide us an update just on how the deployment of break Pacs systems are going I understand I guess, even last quarter. There was maybe the second one deployed but.

Speaker Change #101: How thats going and Relatedly or maybe not when you talk about.

Speaker Change #101: Carol you mentioned some of the complexity of.

Speaker Change #101: Some of the lower margin product projects I'm. Just curious is that is that related to new features that are being put in new features that maybe we haven't been familiar with.

Speaker Change #101: Or just the nature of the installation that's causing the complexity.

Speaker Change #101: Yes, so we have.

Speaker Change #101: Our second brake pad being deployed and we have a bunch of others that will be coming after that shortly which we haven't announced yet but.

Speaker Change #101: And so we've redesigned the original muni bonds.

Speaker Change #101: And we've made some new design functions, which actually customers are really happy about it makes it a little smaller lowers the price, but still a very.

Increases the margin for us.

So.

I would say that that's.

Speaker Change #101: It's just one of another product thats been in development for a while and going well.

And then in terms of my comment on the mix changing as we go forward. It's less about the new features that were on those projects and they're projects that have just been with us for a long time that started out as a lower margin and as we burn those off we're going to see that mix change.

Speaker Change #101: <unk>.

Speaker Change #101: So it was less about features those particular developments some of them are bigger systems.

Speaker Change #101: That have been in deployment for a while and there would be good to get those moved.

Speaker Change #101: <unk> moved off into system system deployment.

Speaker Change #101: Very good thank you.

Thanks, Rob.

Speaker Change #101: Please standby for our next question.

Speaker Change #101: Okay.

Speaker Change #103: Our next question comes from the line of Ken Newman with Keybanc capital markets line is open.

Speaker Change #101: Hey, Thanks, Good evening guys.

Speaker Change #103: Hi.

Speaker Change #103: You mentioned expectations for gross margins to expand from <unk> into <unk>.

Speaker Change #103: I just think about that in the context of the midpoint of your guide.

Speaker Change #103: Some of the comments about mix kind of improving into the second half does that assume that the systems gross margin can break 20% here in the first half or is that still a bit too optimistic.

Speaker Change #103: Yeah, I would say breaking 20 in the first half as optimistic first half, meaning <unk> is behind us already so if I think about <unk> I would not expect to see that eclipsed 20 and in the first half of the year.

Speaker Change #103: And to be cleared.

Speaker Change #104: That mix step up that you mentioned earlier in the call is that a potential step kind of breaking that pathway.

Speaker Change #104: Yeah, and I think youre going to stay in the second quarter. Two is we're going to have growth in opex, which we talked about and so thats. What youre also seeing in our EBITDA guide. It reflects an increase in opex as well as a slight improvement in systems gross margin.

Speaker Change #104: Software margin, we're going to continue to see.

Speaker Change #104: <unk> levels in the <unk>.

Speaker Change #104: And as we talked about op gross margin will be will be a drag for the near term, but long term, we expect that to rebound to.

Yes.

Speaker Change #105: And then for my follow up here, Rick I, just wanted to circle back on an earlier comment around AI.

Speaker Change #105: I know, we've seen a lot of headlines here about potentially cheaper ways to train AI models.

Speaker Change #105: When you think of I know you've been kind of first movers within the technology, but when you consider that.

Speaker Change #106: These models might be cheaper to trade do you view that as a catalyst for yourself or is that potentially a competitive threat as new.

Speaker Change #106: Other competitors try to utilize that cheaper technology, how do you think about that as it relates to the system offerings.

Yes, that's a really good question so we.

Speaker Change #106: We think we're very very far ahead of everybody else and the reason I say that is we've now.

Speaker Change #106: Billion transactions a year.

Speaker Change #106: And you can't train these models without data.

Speaker Change #106: And nobody has the amount of data that we have combined with the architecture and the software.

Speaker Change #106: So we we think we'll just continue to distance ourselves from the crowd.

Speaker Change #106: Thank you.

Speaker Change #107: Please standby for our next question.

Will Brian: Our next question comes from the line of will Brian with Goldman Sachs. Your line is open.

Speaker Change #109: Hey, good evening and thank you for taking my question I'm on for Mark Delaney today. So just one really quickly on the Apd acquisition.

Speaker Change #109: As opposed to be accretive to revenue margins and free cash flow, but can you just give a little bit more impact to the financials going forward at least this year given that revenue is not supposed to kick in for a couple more quarters. Please.

Speaker Change #109: Yeah, So our search.

Speaker Change #109: Second quarter does have a modest amount of revenue associated with our acquisition. So again, it's modest because we'll have a partial quarter and we're just getting started from that development program, but youre going to see that growth throughout 2025 is re ramp up development.

Speaker Change #109: And if you think about the cash that we got for the first year I think R. R.

Speaker Change #109: Comment was don't assume $230 million of cash from the quarter.

Speaker Change #109: <unk> $200 million of revenue for this year, so it will be back loaded.

Speaker Change #109: But we do have revenue modest amount already beginning in the second quarter and we're excited to get the integration going forward and start development.

Speaker Change #110: Thank you for the color and just one more I know symbiotic had commented that it plans to add more salespeople. So what are your expectations for potential new customers either with with about it.

Speaker Change #110: Yes, so that's why we that's what I was implying.

Speaker Change #110: We're starting to ramp up the green box.

Speaker Change #110: Sales team and some of those will be transferable to survive.

Speaker Change #110: So we will be selling a symbiotic system. So we will be offering a green box solution.

Speaker Change #110: And so we've we're in the process of bringing on the sales leaders and we think.

Speaker Change #110: The reception we've had with the leadership teams are building up the sales force will be will be good.

Speaker Change #110: We have started hiring two or three additional salespeople at symbiotic already.

Speaker Change #110: And they'll they'll focus on different verticals.

Speaker Change #110: Thank you.

Speaker Change #110: Please standby for our next question.

Speaker Change #111: Our next question comes from the line of Guy Hartwig with Freedom capital markets. Your line is open.

Speaker Change #111: Hi, good evening most of.

Guy Hartwig: My questions have been asked already but I was just wondering how you feel about the guidance you gave in the 2024 10-K that 10% or $22 4 billion backlog.

Guy Hartwig: We delivered this year and maybe you can give some puts and takes to that or does it depend on certain number of deployments in progress.

Guy Hartwig: And so what you'll see in <unk>.

Guy Hartwig: Our 10-Q that we posted this evening is the remaining performance performance obligation that we expect to deliver in the next 12 months, we've upped that to 11%. So I think that will be a good indicator of how our revenue grows back half loaded for 2025.

Guy Hartwig: And so will <unk> stronger than <unk> is what we're currently looking at.

Speaker Change #113: Alright, Thank you and just as a follow up sorry, if I missed it early I was late on the call I'm just wondering how discussions with non grocery customers are progressing say general merchandise customers potential new customers.

Guy Hartwig: Yes.

Guy Hartwig: Yeah.

Guy Hartwig: Okay.

Speaker Change #114: One of the customers, we're talking to are non grocery customers.

Guy Hartwig: And.

Guy Hartwig: There.

Guy Hartwig: Yes.

Guy Hartwig: There are different verticals so.

Guy Hartwig: I mean, most retail is still fluid or general merchandise, but theres also medical supplies and there is auto parts. So there's a bunch of other things all of which were in discussions with.

Speaker Change #115: Okay. Thank you.

Speaker Change #115: Thank you.

Speaker Change #115: Please standby for our next question.

Speaker Change #116: Our next question comes from the line of Robert Jameson with vertical Research partners. Your line is open.

Robert Jameson: Hi, Thanks for taking my question.

Speaker Change #115: Sure.

Speaker Change #115: I had a quick one on the Walmart Robotics acquisition I know it just closed in quite a bit in a few weeks, but Rick.

Speaker Change #115: You have a sense of where you think the majority of work will be directed to meet walmart's requirements for these MPD systems like is it more software related.

Speaker Change #115: Is there anything you can use or repurpose or make better on the heart on the hardware robotics, Ron that was may be developed by alerting innovations mailbox system.

Speaker Change #115: Yes so.

Speaker Change #115: The Walmarts robotics solution at this point, we're still looking at it but there is.

Speaker Change #115: Each of our hardware and a bunch of our software will be applicable to what Walmart already had.

Speaker Change #115: That will accelerate the rollout of these sites.

Speaker Change #115: To add some good technology.

Speaker Change #115: But I think the combination of their technology and our technology is what really got Walmart excited and accelerate the rollout.

Speaker Change #115: Okay. Thank you.

Speaker Change #115: Thank you and then.

Speaker Change #115: Just give us an update on international I mean.

Speaker Change #115: It doesn't feel like there is much of an update at this time, but I mean, how did conversations trend during the quarter did you see an increase an imbalance or queries.

Speaker Change #115: That would suggest maybe.

Speaker Change #115: That activity is getting a little bit better the environment's improving over there.

Speaker Change #115: Yes, so we.

Speaker Change #115: We.

Speaker Change #115: We had a couple of European tours that we gave and visits.

Speaker Change #115: And then I spent a bunch of time in Mexico, because of walnuts just to understand the potential there.

Speaker Change #115: And it was it was.

Speaker Change #115: So yes, I mean, obviously wages are lower in Mexico than they are in the U S. But also their supply chain.

Speaker Change #115: Is much further behind our supply chain in terms of.

Speaker Change #115: Joining management and flow to the stores.

Speaker Change #115: Actually what it says on Walmart supercenters, and but there are a lot of small stores in Mexico that actually are enabled by particularly the way you specialize and build pallets are delivered to the stores. So.

Huge opportunity.

Speaker Change #115: South of the border across all the way down to.

Speaker Change #115: Central Mexico Central America, South America.

Speaker Change #115: Great. Thank you.

Speaker Change #115: Thank you.

Charlie Anderson: Ladies and gentlemen, I'm showing no further questions in the queue I would now like to turn the call back to Charlie for closing remarks.

Charlie Anderson: Yes. Thank you everybody for joining our call Tonight, we really appreciate your interest in symbolic and look forward to seeing many of you during the quarter at the various investor conferences will be attending.

Charlie Anderson: Goodbye.

Speaker Change #118: Ladies and gentlemen that concludes today's conference call. Thank you for your participation you may now disconnect.