Q2 2025 Symbotic Inc Earnings Call
[music].
Okay.
Operator: Good day, and thank you for standing by.
Good day, and thank you for standing by.
Operator: Welcome to the Symbiotic Second Quarter 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again.
and shall result the conference call. At this time, all participants aren't a listen-only mode.
After this speaker's presentation, there will be a question and answer session.
To ask a question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised.
Speaker Change: To withdraw your question, please press star one one again. Please be advised that the conference is being recorded. I would now like to hand the conference over to your first speaker today, Charlie Anderson,
Operator: Please be advised that today's conference is being recorded.
Charlie Anderson: I would now like to hand the conference over to your first speaker today, Charlie Anderson, Symbiotic Vice President of Investor Relations. Please go ahead. Thank you.
Rick Cohen: Welcome to Symbiotic's second quarter of fiscal 2025 financial results.
Speaker Change: Thank you. Welcome to Symbotic Second Quarter of fiscal 2025 financial results.
Charlie Anderson: I'm Charlie Anderson, Symbiotics Vice President of SVF. Some of the statements that we make today regarding our business operations and financial performance may be considered forward-looking. Such statements are based on current expectations and assumptions that are subject to a number of risks and opportunities.
I'm Charlie Anderson, Symbolics Vice President of Best Relations.
Speaker Change: Some of the statements that we make today regarding our business operations and financial performance may be considered forward-looking. Such statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties.
Charlie Anderson: Actual results can differ. Please refer to our Form 10-K, including the written...
Actual results can differ materially.
Please refer to our on-10k in the respectors.
Charlie Anderson: We undertake no obligation to update any forward- In addition, during this call, we will present both GAAP and non-GAAP financial measures. Reconciliation of Gap to Non-Gap 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.symbiotic.com.
We undertake no obligation to update any board looking state.
Speaker Change: In addition, during this call, we will present both gap and non-gift financial measures.
Speaker Change: A reconciliation of gap to non-GAAP measures included in today's earnings press release, which is distributed and available to the public, who are investor relations website located at IRNF symbolic.com
Charlie Anderson: On today's call, we are joined by Rick Cohen, Symbiotics Founder, Chairman, and Chief Executive Officer, and Carol Hibbard, Symbiotics Chief Financial Officer. These executives will discuss our second quarter fiscal year 2025 results and our outlook, followed by Q&A.
Rick Cohen: On today's call, we are joined by Rick Cohen, Symbatic Spounder, Chairman and Chief Executive Officer, and Carol Hibbard and Symbatic's Chief Financial Officer.
Rick Cohen: These executives will discuss our second quarter fiscal year 2025 results in our outlook followed by Q&A. With that, I'll turn it over to Rick to begin. Greg? Thank you, Charlie. Good afternoon and thank you for joining us to review our most recent results. Thank you for joining us today.
Rick Cohen: With that, I'll turn it over to Rick to begin. Rick? Thank you, Charlie. Good afternoon, and thank you for joining us to review our most recent results. In the second quarter, we delivered strong results, both financially and operationally. Our revenue grew by 40% year over year, and our gross margins expanded significantly, reflecting our focus on project execution while controlling costs and delivering high quality deployment. Carol will give more detail on the level of improvements in her remarks, but at a high level, the changes we have made to improve our deployment processes are beginning to pay off.
Rick Cohen: In the second quarter, we delivered strong results both financially and operationally.
Rick Cohen: Our revenue grew by 40% year over year, and our gross margins expanded significantly, reflecting our focus on project execution while controlling costs and delivering high quality deployments.
Rick Cohen: Carol give more detail on the level of improvements in her remarks, but at a high level the changes we have made to improve our deployment processes are beginning to pay off.
Rick Cohen: These include a more streamlined and predictable workflow and installation, closer coordination with contractors by insourcing construction management, and a strong emphasis on quality management principles to minimize errors and rework, among others.
Carol: These include a more streamlined and predictable workflow and insulation, closer coordination with contractors by in-sourcing construction management, and a strong emphasis on quality management principles to minimize errors and rework among others.
Rick Cohen: With stronger project execution, we are well positioned to access future growth, and are adding talent to do so.
Carol: With stronger project execution, we are well positioned to access future growth and are adding talent to do so.
Rick Cohen: That includes Brian Alexander, our new Senior Vice President Commercial, who joined us recently from Hub Group, where he served in roles including Chief Operating Officer and Chief Marketing Officer, serving multiple Fortune 500 clients with specialized supply chain solutions.
Speaker Change: That includes Brian Alexander, our new Senior Vice President Commercial, who joined us recently from Hub Group, where he served in roles including Chief Operating Officer and Chief Marketing Officer, serving multiple Fortune 500 clients with specialized supply chain solutions.
Rick Cohen: For more information visit www.FEMA.gov Additionally, Greenbox, our warehouse as a service joint venture with SoftBank, recently hired Ashok Choudhury as CEO. Ashok joins Greenbox from SEVA Logistics, where he oversaw the third largest contract logistics business in the world as its global managing director. Greenbox also began a third site during the quarter, and we remain excited about our prospects.
Speaker Change: Additionally, Greenbox are warehouse as a service joint venture with Softbank, recently hired Hitchcock Childry at CEO . Hitchcock joins Greenbox from SEVO Logistics, where he oversaw the third largest contract logistics business in the world as its global managing director.
Speaker Change: Greenbox also began a third site during the quarter and we remain excited about our prospects.
Rick Cohen: During the quarter, we also closed our acquisition of Walmart Advanced Systems and Robotics, or ASR, which expands our product portfolio to include a micro-fulfillment solution, both for ambient and perishable environments. Beyond this edition, we have compelling innovation on our roadmap to deliver even more value to our customers while also building upon the progress we've made to deploy systems more efficiently.
Speaker Change: During the quarter, we also closed our acquisition of Walmart Advanced Systems and Robotics, or ASR, which expands our product portfolio to include a micro fulfillment solution both the ambient and perishable environments.
Rick Cohen: I'm excited to share more in the coming...
I'm excited to share more in the coming quarters.
Rick Cohen: In summary, Symbiotic is in an advantageous position going forward. We have a strong multi-year opportunity with nearly $23 billion of backlog, our margins have expanded due to improved execution, and we continue to attract impressive talent.
Carol Hibbard: I want to close my remarks by thanking our customers for their continued trust, our team for their strong execution, and our investors for their support of our Now, Carol will discuss our financial results, and I'll welcome Carol. Higher revenues and forecasts, combined with improving growth margins, drove a reduction in our net loss of $21 million in the second quarter, versus $55 million in the second quarter of fiscal 2020. Adjusted EBITDA in the quarter of $35 million was also above our forecast and more than tripled year-over-year from $9 million in the year-ago quarter. In our second quarter, we began a record 10 new system deployments, which included one new green box site in Southern California intended for multiple along with multiple break.
Speaker Change: I close my remarks by thanking our customers for their continued trust, our team for this strong execution, and our investors for this support of our company.
Speaker Change: Now, Carol will discuss our financial results, and I'll welcome Carol.
Carol: Thank you, Rick. Second quarter revenue grew 40% year-over-year to $550 million, with revenue growth driven by solid progress across our 46 systems and income deployments, and we more than doubled the number of operational systems coming year ago.
Speaker Change: We also benefited from too much of contribution from the acquired Walmart advanced systems and robotics.
Speaker Change: Higher revenues and forecasts combined with improving growth margins for a reduction in our net loss $21 million a second quarter for $55 million in the second quarter of fiscal 2024.
Speaker Change: Adjusted EBITDA in the quarter of $35 million was also above our forecast and more than tripled year-over-year from $9 million in the year-to-go quarter.
Speaker Change: In our second quarter, we began a record 10 new system deployment, which included one new green box site in Southern California intended for multiple tenants.
along with multiple break-packed appointments. [inaudible]
Carol Hibbard: We also completed eight systems in the quarter, doubling our previous record of four, bringing us to a total of 37 operations. As Rick mentioned, we are improving our installation. You have heard us talk in the past about total deployment timelines of roughly 24 months, defined as time between the signing of a statement of work for a system to customer acceptance event. However, the portion of a deployment most in our control is the time between the start of its installation and its acceptance by a customer. This also happens to be where we see most of the cost of revenue recognition, which impacts our margins.
Speaker Change: We also completed eight systems in the quarter, doubling our previous record of four, bringing us to a total of 37 operational systems.
As Rick mentions, we are improving our insulation performance.
Speaker Change: You've heard us talk in the past about total deployment timelines of roughly 24 months to find this time between the signing of the state and your work for systems to customer acceptance of that system.
Speaker Change: However, the portion of his deployment most in our control is the time between the start of its installation and its acceptance by a customer.
Speaker Change: This also happens to be where we see most of the cost of revenue recognition which impacts our margin performance.
Carol Hibbard: The largest sample size we have for comparisons are the phase one deployments for our largest In the second quarter, our installation to acceptance timelines were roughly two months shorter for phase one systems than our historical estimates. And notably, these systems were 15% larger in size than our historical average for Phase I. Normalizing for size, which also equates to revenue, our improvement level is more than 30% better than our historical average. With the increase in operational systems, we saw our software revenue grow by over 160% year over year to $6.7 million. and Operation Services Revenue grew 47% year over year to $29.6 billion.
Speaker Change: The largest sample size we have for comparison, though, the phase one appointment for our largest customer. [inaudible]
Speaker Change: In second quarter, our installation to acceptance timeline were roughly two months shorter for phase one systems than our historical average.
Speaker Change: And notably, these systems were 15% larger in size than our historical average for base 1 system.
Speaker Change: Normalizing for slides, which also equates to revenue, are improvement levels more than 30% better than our historical average.
Speaker Change: With the increase in operational systems, we saw our software revenue grow by over 160% year over year to $6.7 million.
and Operation Services Revenue Group 47% year-over-year to 29.6 million.
Carol Hibbard: In terms of the backlog, our backlog of $22.7 billion grew sequentially from $22.4 billion last quarter. This increase was primarily due to the addition of our development contract with Walmart associated with Accelerated Pickup and Delivery, or APD, system. Offset by the revenue Turning to margins, system gross margin improves significantly on a sequential basis as we gain the expected improvement from completing lower margin systems, while also improving our overall project execution as both Rick and I highlight. Revenue from Walmart ASR was also created. Growth margin on software maintenance and support again exceeded 65% trending toward typical industry software margins as we gained.
Speaker Change: In terms of the backlog, our backlog of 22.7 billion grew sequentially from 22.4 billion last quarter.
Speaker Change: This increase was primarily due to the addition of our development contract with Walmart, associated with accelerated pickup and delivery or APD system.
Offset by the Revenue Renly.
Speaker Change: Starting to margins, system growth margin improves significantly on a sequential basis, as we gain the expected improvement from completing lower margin systems, while also improving our overall project execution as both Rick and I highlighted.
Speaker Change: Revenue from Walmart, ASR, but also a free-ass sourcing march.
Speaker Change: Growth margin on software maintenance and support, again exceeding 65% trending toward typical industry software margins as we gain scale.
Carol Hibbard: And in operations services, we swung back to a gross profit thanks to a more favorable mix due to training revenue associated with the large number of new systems that went. We also saw modest benefits in the Walmart ASRX. where we are now providing services for the existing APD sites in operation. Operating expenses were up sequentially due to acquisitions and the investments we are making to support our growth. We finished the quarter with cash in equivalence of $955 million, which increased from $903 million in the first quarter, primarily due from cash from operations of $270 million in the quarter, offset by the $200 million paid for Walmart ASR and $21 million of capital Now turning to our out...
Speaker Change: And in Operation Services, we're going back to a gross profit thanks to a more favorable mix due to training revenue associated with the large number of new systems that went by.
We also saw a lot of benefits in the Walmart ASR exhibition. [inaudible]
Speaker Change: where we are now providing services for the existing APD sites and operations.
Speaker Change: Operating expenses were up sequentially due to acquisitions and the investments we are making to support our growth.
and others. Thank you. Thank you.
Speaker Change: We finished the quarter with cash and equivalent of $955 million, which increased from $903 million.
in the first quarter. [inaudible]
Primarily due from cash from operations. [inaudible]
Speaker Change: of 270 million in the quarter, offset by the 200 million paid for Walmart ASR and 21 million of capital expenditures.
Carol Hibbard: For the third quarter of fiscal 2025, we expect revenue between $520 million to $540 million and adjusted EBITDA between $26 million and $30 million.
Operator: Summary, our execution has improved, resulting in improved gross margin performance, and we are investing to drive future growth and product With that, we now welcome.
Speaker Change: In summary, our execution has improved resulting in improved growth margin performance and we are investing to drive future growth and product innovation.
Speaker Change: With that, we now welcome your question. Operator, please begin the Q and A.
Operator: Operator, please begin the Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you'll need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. We ask that you please limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster.
Thank you. Bye.
Speaker Change: Thank you. At this time, we will conduct the question and answer session. As a reminder to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.
To withdraw your questions, please press star one one again.
Speaker Change: We ask that you please limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster.
Andy Kaplowitz: Our first question comes from the line of Andy Kaplowitz of Citi. Your line is now open. Good afternoon, everyone. Hello, Rick and Carol, I know one of the big focal points this year was scaling for growth. So does Q2 foreshadow where you want to be in terms of I think you said 10 system starts, 8 completions? And if it does, how do we think about system starts and completions given the ramp up in Q2? Carol, I know you've said in the past, it's lumpy, but should we assume that you've turned the corner, you continue to ramp up from here?
Speaker Change: and others. For more information visit www.fema.gov For more information visit www.fema.gov
Speaker Change: Our first question comes from the line of Andy Kaplowitz of City. Your line is now open.
Good afternoon, everyone.
Hello.
Speaker Change: Rick and Carol, I know one of the big focal points this year was scaling for growth. So,
Speaker Change: Q2 4-shadow where you want to be in terms of I think you said 10-system start date completions, and if it does, how do we think about system starts and completions given the ramp up in Q2? Carol, I know you've said in the past it's lumpy, but should we assume that you've turned the corner, you contain a ramp up from here, and is the improvement really a function of getting your arms around EPC and sourcing?
Carol Hibbard: And is the improvement really a function of getting your arms around EPC?
Carol Hibbard: So thanks for the question, Andy. Our system starts is, will continue to be lumpy. So I do think the number that we start is a combination of ourselves as well as our customers being ready to go ahead and launch and demo in a new building or a new phase. And so it's a mutual decision between the two of us to go ahead and start. With that being said, we do see the trajectory with the backlog ahead of us that we will continue to see the number of systems starts improve as we go through the coming quarters and the coming.
Speaker Change: So, thanks for the question, Andy. Our system's start will continue to be lumpy.
Speaker Change: So I do think the number that we start is a combination of ourselves as well as our customers being ready to go ahead and launch and demo in a new building or a new phase.
Speaker Change: and so it's a mutual decision between the two of us to go ahead and start with that being said we do see the trajectory with the backlog ahead of us but we will continue to see the number of systems starts and proof as we go through the coming quarters on the coming years.
Operator: Got it.
Carol Hibbard: And Carol, you're forecasting you put that margin down a bit sequentially in Q3 versus Q2 at the midpoint. Is there anything in the forecast for tariff-related impact? Maybe it's mixed. Can you talk about the puts and takes and margin going into the second half? And do you have an estimate for tariff-related expense or how you think? Moving forward. Okay, yeah, you've got a lot wrapped up in that question. I'll start with the overall gross margin performance. So this quarter's gross margin performance was driven by three key things. It was project mix. So we had eight projects that we completed.
Speaker Change: David and Carol, you're forecasting, you put that margin down a bit sequentially in Q3 versus Q2 at the midpoint. Is there anything in the forecast for a tariff related impact? Maybe it's mix, can you talk about the puts and takes a margin going in the second half? And do you even estimate for tariff related expense or how you're thinking about it moving forward in terms of price versus cost? Yeah, that's right.
Speaker Change: Okay, yeah, you've got a lot wrapped up in that question. The overall growth margin performance.
Speaker Change: Performance. So, this quarter's first margin performance was driven by three key things. It was project mix. So, we had eight projects that we completed, many of those were our lower margin projects. And so, those will be moving off.
Carol Hibbard: Many of those were our lower margin projects. And so those will be moving off. Overall project execution improved. We also had contribution, as I mentioned, from our ASR business, which is bringing a creative margin to our overall systems revenue. As I think about the, or even a guide for 3Q would imply roughly 100 basis points down from what we just posted this quarter. Primarily the difference there is the ASR business for this quarter was higher than what we expect to see in the next quarter. And so some of that business, as we work through overall design, we'll see that ramp back up in the coming quarters when we start building prototypes.
Speaker Change: Overall project execution improved. We also had contribution, as I mentioned, from our ASR business, which is bringing a creative margin to our overall systems revenue.
Speaker Change: As I think about the or even a guy for 3Q would imply roughly 100 basis points down from what we just posted this quarter.
Speaker Change: Primarily, the difference there is the ASR business for this quarter was higher than what we expect to see in the next quarter. So some of that business, as we, you know, worked through overall design, we'll see that ramp back up in the coming quarters when we start building prototype. Bye.
Operator: But you're seeing the impact of that, which is why we're at roughly 21% for the coming quarter. In terms of tariff, our guide both for top line and for bottom line does not include the impact of tariff. If I think about tariff impact for us, With most of our contracts allowing CARES being passed through, you'll actually see increases in revenue associated with that, but it'll be a drag on gross margin because it's passed through revenue. God, so just be dollar for dollar, Pastor. Yep. Thank you. Thanks, Sandy. One moment for our next question.
Speaker Change: But you're seeing the impact of that, which is why we're at roughly 21% for the coming quarter.
Speaker Change: The terms of terrorists are guide both for top line and for bottom line, does not include the impact of terrorists, but think about tariff impact for us.
Speaker Change: With most of our contracts allowing tariffs being passed through, you'll actually see increases in revenue associated with that, but it'll be a drag on gross margin because it's passed through revenue.
God, so it would just be dollar for dollar, Pastor. Thank you.
Yep.
Thank you.
Thanks, Andy.
One moment for our next question.
Nicole DeBlase: Our next question comes from the line of Nicole DeBlase of Deutsche Bank. Your line is now open. Yeah, thanks. Good afternoon, guys.
Speaker Change: Our next question comes from the line of the called The Bloss of Deutsch Bank. Your line is now open.
Yeah, thanks. Good afternoon, guys.
Nicole DeBlase: Hello, just a follow on from Andy is you guys are also kind of modeling revenue down sequentially in the third quarter, which is unusual from a seasonal perspective. Is that also to do with the timing of, you know, acquisition impacting the P&L? Or is there something else going on there? So thanks for the question, Nicole. There is a little bit of impact because we did have modest revenue this quarter associated with ASR. We'll see that drop a little bit in the next quarter. But the primary driver for our third quarter revenue is really a function of the number of starts that we had a year ago.
Hello.
Speaker Change: Just a follow-on from Andy is you guys are also kind of modeling revenue down sequentially in the third quarter which is unusual from a seasonal perspective. Is that also to do with the timing of acquisition impacting the PNL or is there something else going on there?
Speaker Change: So thanks for the question, Nicole. There is a little bit of impact because we did have modest revenue this quarter associated with ASR. We'll see that drop a little bit in the next quarter, but the primary driver for our third quarter revenue is really a function of the number of starts that we had a year ago.
Carol Hibbard: So if you remember 2Q and 3Q last year were our lowest system starts and we're now a year into where they would be really heavy in system implementation.
Speaker Change: If you remember, 2Q and 3Q last year were our lowest system starts and were now a year into where they would be really heavy in system implementation.
Operator: And so that's the primary driver in terms of what you're seeing for our guide for the third quarter. Okay, understood.
Speaker Change: And so that's the primary driver in terms of what you're seeing for our guide for the third corner.
Carol Hibbard: And then with respect to the OPEC, so R&D and SG&A stepped up pretty significantly sequentially, are we now kind of at a good R&D and SG&A run rate? Or should we expect further step ups in the second half? For our R&D run rate, I'd say that's a good run rate going forward. The SG&A run rate was higher this quarter primarily related to So our acquisition costs were higher in SG&A. You're going to see that step back down in the next quarter and see that slide. Okay, and any quantification of how much we should expect that to step down?
Speaker Change: Okay, understood. And then with respect to that ABAC, so R&D and SGA stepped up pretty significantly sequentially. Are we now kind of at a good R&D and SGA run rate, or should we expect further step ups in the second half? Yeah.
Speaker Change: For our R&D run rate, I'd say that's a good run rate going forward. The FGNA run rate was higher this quarter primarily related to acquisition.
Speaker Change: So our acquisition costs were higher in that DNA. You're going to see that step back down in the next quarter and see that one.
Speaker Change: Okay, on any quantification of how much we should expect that to step down.
Carol Hibbard: Yeah, I would expect somewhere between four and $5 million of a step down in the SG&A office. Thank you.
Speaker Change: Yeah, I would expect somewhere between $4.5 million of a step down in the FGNA Olympics.
Operator: I'll pass it on. Okay, one moment for our next question.
Thank you. I'll pass it on.
One moment for our next question.
Jim Ricchiuti: Our next question comes from the line of Jim Ricchiuti of Needham Company. Your line is now open. Thanks. Good afternoon. Wasn't sure if you gave this in your your script. Did you say what ASR contributed in a quarter to revenue? No, we did not. Thanks for the question, Jim. So we are a single digit percent of revenue. associated with it. Okay, we'll see that. Go ahead. No, please go ahead. Yeah, I'm sorry.
Speaker Change: Our next question comes from the line of Jim Ricciuti of Needham Company. Your line is now open.
Jim Raschutte: I think, good afternoon. It wasn't sure if you gave this in your script. Did you say what ASR contributed in the quarter to revenue?
Associated with A.S. Army.
Okay. We'll see that. Yeah.
Okay.
No, please go ahead and I'll show you the interrupt.
Carol Hibbard: Yeah, and so as we build out the development program over the coming eight to 12 quarters, you'll see our revenue for ASR in, you know, back half of this year, early next year, start ramping up as we start building towards that's helpful and Are you able to tell us... what the the installation time looks like for your large customer. I mean, you clearly are making progress. and I know some of these are different, but is there any, you know, in rough terms, can you tell us what the installation to acceptance time looks like? So we quantify from start or signature of a project to when we hit project acceptance of about 24 months.
Jim Raschutte: Yeah, so as we build out the development program over the coming eight to twelve quarters you'll see our revenue for ASR in you know back half of this year early next year start ramping up as we start building
That's helpful and.
Are you able to tell us?
Jim Raschutte: what the the installation time looks like for your large customer? I mean you clearly are making progress there but and I know some of these are different but is there any you know in rough terms can you tell us what the installation to acceptance time looks like right now?
Jim Raschutte: So we quantify from start or signature of a project to when we hit project acceptance about 24 months.
Operator: The install to acceptance, which is what we indicated, where we have the most ability to impact is about half of that time. So what we saw this quarter is a couple months improvement. So if you think we were at 12 months from install to accept on a couple of the projects that we had this quarter, we saw two months shaved off. All right. Thank you. Thanks, Jim. One moment for our next question.
Jim Raschutte: The install to acceptance, which is what we indicated where we have the most ability to impact is about half of that time.
Jim Raschutte: So what we saw in this quarter is a couple months improvement. So if you think we were at 12 months from install to accept on a couple of the projects that we had this quarter we saw two months shaped off of that.
Thank you.
Thanks. Thanks, Jim.
One moment for our next question.
Matt Summerville: Our next question comes from the line of Matt Summerville of D.A. Davidson. Your line is now open. Thanks.
Jim Raschutte: Our next question comes from the line of Matt Summerville of D.A. Davidson. Your line is now open.
Matt Summerville: I was hoping maybe you could talk a little bit more about your technology and innovation roadmap. Rick, you've obviously touched on the development of Perishable in the past, so maybe an update there and maybe some of the other projects you're able to talk about that you're working on, maybe some milestones you may be achieving along the way there with some of those things. And then I have a Yeah, thanks, Matt. So, with the ASR project, We're developing. We will have bots that can do both perishables and frozen. So, and that will, eventually, we're now beginning to talk to people about actually building perishable warehouses for them.
Matt Somerville: Thanks, I was hoping maybe you could talk a little bit more about your technology and innovation road map Rick, you've obviously touched on.
Jim Raschutte: The development of perishable in the past, so maybe an update there and maybe some of the other projects you're able to talk about that you're working on, maybe some milestones you may be achieving along the way there was some of those things, and then I have a follow-up.
Yeah, thanks Matt. So, with the ASR projects
which we're developing.
Jim Raschutte: We will have bots that can do both perishables and frozen.
Jim Raschutte: So, and that will eventually, we're now beginning to talk to people about actually building perishable warehouses for them. So, that's on our roadmap, can say exactly when that'll happen, but
Rick Cohen: So, that's on our roadmap. Can't say exactly when that'll happen, but it's a lot sooner than it was two months ago. So, there's demand for it, and people are very interested in that, and we have to do it for the back of the store. And so, that's moving right along. The other, and we're doing a couple of other things to make the structures smaller, which is giving us opportunities to talk to customers that want smaller systems. And also, it actually will accelerate. the installation of some of the bigger systems because we can actually put more in a smaller space and get it built faster.
Jim Raschutte: It's a lot sooner than it was too much to go. So there's the man for it.
Jim Raschutte: and people are very interested in that and we have to do it for the back of the store.
and so that's moving right along.
Jim Raschutte: The other, and we're doing a couple of other things to make the structure smaller.
Jim Raschutte: which is giving us opportunities to talk to customers that want smaller systems and also
It actually will accelerate.
Jim Raschutte: Installation of some of the bigger systems because we can actually put more to smaller space and get it built faster. So technology is moving right along. We're starting our second.
Rick Cohen: So technology is moving right along. We're starting our second design of a break pack system. The first one is working well. The second one is will be better. So we're now we're now really able to offer three products. One is the big system, and that can come in anywhere from very very large to a couple of inbound and outbound cells on the smaller side. A break pack system can be large or small and now we're talking about a third module which will be the really I mean a 15,000 foot system in the back of a store or even we've had some people now come and say could you a 30,000 foot system for us for special needs so as our as our product offering is expanding We're generating a lot of interest.
Jim Raschutte: Design of a great pack system. The first one is working well. The second one is what we better. So, we're now, we're now really able to offer three products. One is the big system and that can come in anywhere from.
Jim Raschutte: Very very large to a couple of inbound and outbound cells on the smaller side.
Jim Raschutte: for special needs so as our product offering is expanding.
Jim Raschutte: We're generating a lot of interest then, and so we'll be going the development and we'll be continuing to speed up.
Rick Cohen: And so we're, we'll be going, the development will be continuing to speed up.
Carol Hibbard: And as a follow-up, Carol, I just want to be clear, the Walmart ASR revenue was a single-digit millions or single-digit percentage? Because if it's a single-digit percentage, that could be anywhere from like $5 million to $50 million. So it can maybe help us triangulate on that a little bit.
Speaker Change: Thank you for that. And as a follow-up, Carol, I just want to be clear, the Walmart ASR revenue was a single-digit millions or single-digit percentage? Because if it's a single-digit percentage, that could be anywhere from like 5 million to 50 million.
Speaker Change: to maybe help us triangulate on that a little bit. And then also if you guys can give an update on when you think you'll be able to make some announcements regarding potential green box at tenants. Thank you.
Rick Cohen: And then also, if you guys can give an update on when you think you'll be able to make some announcements regarding potential green box tenants. So yeah, to clarify, ASR was single digit per sentence. say that's mid to high single-digit percent. Thank you for the green box question. Yeah, the green box.
So yeah, to clarify, ASR was single-digit percentage.
I'd say that's mid to high single-digit percentage of reps.
Thank you for the green box question.
Speaker Change: Yeah, the Greenbugs. We now have a CEO and so we're accelerating our sales efforts, looking at a number of strategic opportunities and now talking to early customers about involvement in...
Rick Cohen: And we now have a CEO. And so we're accelerating our sales efforts, looking at a number of strategic opportunities can now talking to early customers about involvement in in Greenbox. Our first customer will be the Lathrop site, and that will be CNS will be the very first customer plus we may be able to add some other customers onto that site compared to in incorporating all the capacity that's available. Second sites in Atlanta, the third site will be in California. So getting more interest because we're on both coasts. Thank you guys. One moment for our next question.
Speaker Change: In Greenbox, our first customer will be the laser upside and that will be C and S will be the very first customer plus we may be able to add some other customers onto that site compared to
Speaker Change: and incorporating all the capacity that's available. Second sites in Atlanta, the third site will be in California. So getting more interest because we're on both coasts now.
You're stood. Thank you, guys.
One moment for our next question.
Joe Giordano: Our next question comes from the line of Joe Giordano of TD Cowen. Your line is now open. Hey, guys. Good evening. Thanks for taking my question. I'm just curious on the tariffs. Is there any like How hard is the language on this stuff with passers? I know we had some in the past, like some stuff that was thought to be reimbursable was not. So like, I'm guessing these contracts, when they were written, wasn't contemplating something like this necessarily, like from a policy standpoint. So like how much debate or like ambiguity is. is there around a is this kind of something from Eurozone, like how do we think about this?
Thank you very much.
Speaker Change: Our next question comes from the line of Joe Giordano of TD Cohen. Your line is now open.
Hey, guys. Good evening. Thanks for taking my questions.
I guess just curious on the tariffs. [inaudible]
Is there any lights?
Speaker Change: How hard is the language on this stuff with pastors? I know we had some in the past, like...
Speaker Change: stuff that was thought to be reimbursable was not so like I'm guessing these contracts when they were written wasn't contemplating something like this necessarily like from a policy standpoint. So like, how much debate or like ambiguity is, is there around? Hey, is this kind of accepted?
Speaker Change: something from Eurozone, like how do we think about this? Is there, how certain are you on that?
Carol Hibbard: Is there? How certain are We are certain, so in general, these costs will be passed.
Speaker Change: We are certain, so in general, these costs will be passed through for us.
Carol Hibbard: We've gone through and done an analysis of all of our contracts over the over the last quarter or so, and I'll take this opportunity to highlight a bit on tariff because I really just answered the portion related to guide. So if I think about the current environment we have now, our overall exposure is a single digit percent of a typical tariff. We have coverage for USMCA for our box production in Mexico. So our primary exposure comes from Europe. Got it. That's clear.
Speaker Change: We've gone through and done an analysis of all of our contracts over the last quarter or so.
Speaker Change: And I'll take this opportunity to highlight a bit on tariff because I really just answered the portion.
Speaker Change: related to Guy. So if I think about the current environment we have now, our overall exposure is a single digit percent of a typical system.
Speaker Change: And as I indicated, the cost of pass through, we recognize this equates to higher system cost though. And so we're in the process of identifying with our supply chain. What else can we do go do to work offsets so that we're not passing all those costs on to our costs? [inaudible]
but from a contractual perspective, we're protected.
Rick Cohen: And then Rick, I know it's early days with ASR, but like Any updated thoughts on how you might be able to leverage kind of technology and best practices to take the best parts of each of the three types of modules you have to make like the three best things you can build? Well, it's Yeah, sure. I think the We're talking to some people about putting all three in the same building. and then we're also talking to some people about just putting them in the back of the store. Essentially ASR is, and this is, this is a potential big plus for Greenbox.
Speaker Change: Got it, that's clear. And then, Rick, I know it's early days with ASR, but likeā¦
Speaker Change: Any updated thoughts on how you might be able to leverage kind of technology and best practices to take the best parts of each of the three types of modules you have to make the three best things you can build.
Uhm?
Well, yeah, sure. I think that's it.
Speaker Change: We're talking to some people about putting all three in the same building.
Speaker Change: and then we're also talking to some people about just putting them in the back of the store. Essentially ASR,
Speaker Change: is, and this is a potential big plus for Greenbox. It is a modified e-commerce solution because we're actually, the goal of the system is to pick in each, put it in the bag, in the back of a store, customer picks it up or you deliver.
Rick Cohen: It is a modified e-commerce solution because we're actually, the goal of this system is to pick and eat you. put it in in a in the bag in the back of a store customer picks it up or you deliver But you can put it in a in a box and ship it to a customer. So and of course, ecommerce, the top 300, 400, 500,000 items that sell on ecommerce are the same top four or 500,000 items that sell on the store. So where We've had a lot of incomings because micro fulfillment, which is what other people call it.
Speaker Change: But you could put it in a box and ship it to a customer. So, and of course e-commerce, the top 300, 400, 500,000 items that sell on e-commerce are the same top 400, 500,000 items sell on the store. So, where?
Speaker Change: We've had a lot of incomings because micro fulfillment, which is what other people call it.
Rick Cohen: was really only looking at doing 5,000 to 6,000 items in the back of a store. And we think we can do, in 15,000 or 20,000 feet, we think we can do 50,000 or 60,000 items. So in 100,000 square feet, we might be able to do a million items. And so the opportunity, and it uses the same basic software platform. There's some changes we would make to the bot, but the reason... that people are interested in because this is an existing technology that's modified. The example I keep using, this is just another app on the iPhone using the same iOS.
Speaker Change: was really only looking at doing 5,000 or 6,000 items in the back of a store. We think we can do in 15,000 or 20,000 feet, we think we can do 50,000 or 60,000 items. So in 100,000 square feet, we might be able to do a million items.
Speaker Change: and so the opportunity and it uses the same basic software platform. There's some changes we would make to the bot but the reason. Let's get started.
Speaker Change: The people are interested in because this is an existing technology that's modified, an example I keep using, this is just another app on the iPhone, using the same iOS, and that's the way we position the technology, but it solves.
Operator: And that's the way we position the technology, but it solves. different problems for different customers. And there's there's shipping cases, there's shipping interpacks and there's shipping each is so we think we're the only ones that actually offer with the same software, the same supplier, all three levels of integration. So people are interested in that. Okay. One moment for our next question.
Speaker Change: Different problems for different customers and there's there's shipping cases there's shipping Interpacks and there's shipping each is so we think we're the only ones that actually offer with the same software and the same
Speaker Change: Supplier, all three levels of integration, so people are interested in that.
Good. Good.
One moment for our next question.
Mark Delaney: Our next question comes from the line of Mark Delaney of Goldman Sachs. Your line is now open. Good afternoon. Thank you very much for taking my questions.
Speaker Change: Our next question comes from the line of Mark Delaney of Goldman Sachs. Your line is now open.
Mark Delaney: Yes, good afternoon. Thank you very much for taking my questions. First question, I'll open a better under for you.
Rick Cohen: to better understand what you're seeing, the potential to bring in additional customers, not only with green box, but with symbiotic, you still have a little bit around the momentum and having a Box CEO, but maybe you could elaborate a bit more on potential incoming demand. And have you seen it change at all with the tariff? of the supply chain challenges it may be creating for some of the Yeah, we've seen two things. We've seen some people just the world is so unknown. We've had a lot of incoming, we've had people. Probably say we want to study this, we want to understand it, not sure we want to go forward to some.
Speaker Change: I understand what you're seeing from the potential to bring in additional customers not only with green box but with symbiotic. You eat with a little bit around the momentum and having a green box to EO but maybe to elaborate a bit more on residential incoming demand and have you seen it change it all with the tariff landscape and some of the
Speaker Change: Applied Change Challengers that may be creating for some of the potential new customers.
Speaker Change: You know, we've seen two things. We've seen some people just the world is so unknown.
We've had a lot of incoming. We've had people.
Speaker Change: Probably say we want to study this, we want to understand it. I'm not sure we want to go forward to some.
Rick Cohen: And then the flip side is in places that have a lot of visas or foreign labor that was coming into the US. We've seen a significant uptick in places where large customers that are doing well are very concerned about labor shortages. And so on balance, I would say we're seeing more incoming. Plus, we've also increased our sales force. So we've probably made twice as many sales calls in the second quarter as we did in the one. But in general, I think the amount of incoming is increasing. We're not. The first thing we get is, how affected are you by tariffs?
Speaker Change: And then the flip side is in places that have a lot of
Uh,
Speaker Change: visas or foreign labor that was coming into the U.S. We've seen a significant uptick in places where large customers that are doing well are very concerned about labor shortages.
Speaker Change: and so on balance I would say we're seeing more incoming plus we've also increased our sales
Speaker Change: Twice as many sales calls in the second quarter as we did in the prior one.
But in general, we're...
I think the amount of incoming is increasing. Thank you.
Speaker Change: We're not, the first thing we get is how effective you by terrorist, what's the pricing, most of our stuff comes from the US.
Rick Cohen: What's the pricing? Most of our stuff comes from the US. We make a lot of stuff in a trade-free zone in Mexico. So I think there's like, okay. And then I think people think inflation is coming. I think they think labor is going up. And so a lot of incoming for that, for those reasons. So on balance, I would say We're not seeing, we're seeing more incoming than we are seeing people holding off.
Speaker Change: We make a lot of stuff in a trade-free zone in Mexico.
Speaker Change: So I think there's like, oh, okay. And then I think people think inflation's coming. I think they think labor's going up. And so a lot of it coming for those reasons. So on balance, I would say
Speaker Change: We're not seeing, we're seeing more incoming than we are seeing people holding on.
Operator: very simple record, you know, a follow up on that. What's the likelihood in Europe? Projects on, but do you expect to be able to announce meaningful investments this year? helpful. We'll stay tuned.
Speaker Change: This is a very simple, you know, follow up on that. What's the, like we've had in Europe , in the end of material new customers being announced this year either for the inbox or.
Speaker Change: Unknown Executive, Richard Cohen, Jeffrey Evanson, Charlie Anderson, Unknown Executive, Unknown Executive, Richard Cohen, Jeffrey Evanson, Charlie Anderson, Unknown Executive,
We do.
Speaker Change: Okay, helpful. We'll stay tuned. My other question was for you, Carol, on free cash flow. Very strong in the quarter, I think 249 million against EBITDAB 35 million. So maybe elaborate a bit more on what drove the degree of free cash flow strength and how to think about free cash flow from here. Thank you.
Carol Hibbard: My other question was for you, Carol on free cash flow, very strong in the quarter. million against EBITDA of 35 million. So maybe elaborate a bit more on what drove the degree of free cash flow strength and how to think about Yeah, 2Q, similar to where we were in 1Q, benefited by timing of receipts. And as we've talked about, you know, when we have a quarter where we're high in terms of the number of signatures, so we had 10 new starts this quarter, our contracts are pretty much set up, we get cash flow early on.
Carol: Yeah, 2Q, similar to where we were in 1Q, benefited by timing of receipt.
Carol: And as we've talked about, you know, when we have a quarter where we're high in terms of the number of signatures, so we had ten new starts this quarter, our contracts are pretty much set up for we did.
Carol: Cashflow early on. And so that's what you're seeing, Leverd. We also had the acquisition take place this quarter. So, both the incoming cash and the outgoing cash, which was net benefit for Sepotic.
Carol Hibbard: And so that's what you're seeing levered.
Operator: We also had the acquisition take place this quarter. So both the incoming cash and the outgoing cash, which was net benefit for Symbiotic. I would expect our free cash flow position between now and the end of the year to be stable as we head into the end of the year.
Carol: I would expect our pre-cashable position between now and the end of the year to be stable as we head into the end of the year.
Thank you.
Operator: One moment.
Operator: One moment for our next question.
One moment for our next question.
Colin Rusch: Our next question comes from the line of Colin Rusch of Oppenheimer & Company. Your line is now open. Thanks so much, guys.
Speaker Change: Our next question comes from the line of Colin Rusch of Oppenheimer Company. Your line is now open.
Rick Cohen: You know, as some of the perception technology begins to evolve at a little bit faster rate, how quickly can you start to integrate some of that? How should we think about that impacting the productivity of the Yeah, I mean, great question. So we are Because we're in 20, 30 warehouses now, but we can also. each level of a warehouse. So let's say there's 10 levels in a warehouse, there might be 300 or 400 levels where we'll have 100 bots on each level. So we now have bots in warehouses with LiDAR. We have bots in warehouses with vision.
Colin Rush: How quickly can you start to integrate some of that improvement in deer systems and how should we think about that impacting the productivity of the overall system?
Because we're in 2030 warehouse now, but we can also...
Colin Rush: Each level of a warehouse, so let's say there's 10 levels in the warehouse, there might be 300 or 400 levels where we'll have 100 bots on each level. So we now have bots in warehouses with LiDAR.
Rick Cohen: We have bots in warehouses that we can run remotely. So the level of technology and The incoming, I mean, it's very interesting in the incoming talent is accelerating. So we would expect. that the level of innovation will increase, not decrease. I think we're just getting started with the learnings for what the bot can do. And so eventually our fleet will be pretty much, I don't know if it'll be 100%, but pretty much a significant portion of our fleet will be, will include LIDAR. We also have a new battery, which has 10 times the energy. So I think what's gonna happen in what we've been working on as we scale is much more reliable machines.
Colin Rush: The incoming, I mean, it's very interesting. In the incoming talent is accelerating, so we would expect...
Colin Rush: that the level of innovation will increase, not decrease. I think we're just getting started.
Colin Rush: with the learnings for what the bot can do. And so, so eventually our fleet will be pretty much...
Colin Rush: I don't know if it would be 100%, but pretty much.
Colin Rush: A significant portion of our fleet will include LiDAR. We also have a new battery which has 10 times the energy. So I think what's going to happen and what we've been working on as we scale is much more reliable machines.
Rick Cohen: and therefore fewer operators, therefore lower operating costs, and therefore higher returns for our customers and for us, and easier to sell the system. So, I think when we started, the technology, there was always concern about where are you with Walmart, where are we with the first systems, and the word of mouth that we're getting back is why I think our incoming is increasing. There's just nobody doing. There's nobody that has LiDAR that we know of on a bot that runs in a warehouse of this scale. Nor can you tell you how it works, nor do you have vision.
and, therefore, fewer operators, therefore, lower operating costs.
Colin Rush: and therefore higher returns for our customers and for us and easier to sell the systems. So I think when we started the technology there was always concern about where are you with Walmart, where are we, the first systems.
Colin Rush: And the word amount that we're getting back is why I think our income is increasing.
There's just nobody doing.
Colin Rush: There's nobody that has light that we know of on a bot that runs in an warehouse at this scale. Nor can you tell you how bot's, nor do you have vision. So all of those things are things that we're accelerating.
Rick Cohen: So all of those things are things that we're accelerating.
Operator: That's super helpful.
Operator: And then just in terms of, you know, the scalability as you get into the back half of the decade, early next decade, I'm curious about your, you know, the work that you're doing with finance partners in terms of underwriting these things with that, or underwriting these assets with that and helping, you know, kind of seed some of the at this point, I guess, how mature is that? That process? And is it, you know, you know, anything that you really need to invest a fair amount of time on? And so we haven't encountered very many customers that have inquired about a financing arm.
Speaker Change: That's super helpful. And then, in terms of, you know...
Speaker Change: The scalability as you get into the back half of the decade, nearly next decade.
Speaker Change: I'm curious about your, you know, the work that you're doing with finance partners in terms of underwriting these things with that, you know, honoring these assets with that and helping, you know, kind of see some of the education.
Speaker Change: And so we we've happened encountered very many customers that have inquired about a financing arm when you think about what Greenbox is designed to do
Guy Hardwick: When you think about what Greenbox is designed to do, with Greenbox being a warehouse as a system, that's one of the opportunities for customers who might have less CapEx capability. So they could come in and be able to utilize part of a warehouse. And so we've used Greenbox as that part of the leverage. But we have not seen a lot of incoming to date from our customers looking. Great. Thanks so much, you guys. One moment for our next question.
with Greenhatt, with Greenbox being your warehouse as a system. [inaudible]
Speaker Change: That's one of the opportunities for customers who might have less CapEx capability, so they could come in and be able to utilize part of a warehouse. And so we've used Greenbox as that part of the leverage, but we have not seen a lot of incoming to date from our customers looking for financing.
Speaker Change: President of the United States of America, Rick Hibbard, Unknown Executive, Richard Cohen, Jeffrey Evanson, Charlie Anderson, Charlie Anderson, Jeffrey Evanson, Charlie Anderson, Richard Cohen, Unknown Executive, Richard Cohen, Jeffrey Evanson, Charlie Anderson, Jeffrey Evanson, Richard Cohen, Richard Cohen,
Great. Thanks so much, you guys.
Give some more moment for the next question.
Operator: Our next question comes from the line of Guy Hardwick of Freedom Capital Markets. Your line is now open. Hi, good evening. I'm just wondering what the Q3 revenue guidance assumes in terms of systems and deployments, because obviously, as pointed out earlier, it's a step down. So just wondering what you have in terms of deployments and progress as well as completions and stuff. So thanks for the question. We typically don't guide with specific numbers of systems that are in deployment. But if you think about were signed a year ago, four were signed a quarter after that.
Speaker Change: Our next question comes from the line of Guy Hardwick, a Freedom Capital Market. Your line is now open.
Hi, good evening.
Scott. [inaudible]
Speaker Change: I'm just wondering what the Q3 revenue guns assumes in terms of systems and deployments, because obviously, as I was pointing out earlier, it's a step down. So I'm just wondering what you have in terms of deployments and progress as well as completions and starts in the quarter.
Speaker Change: So, thanks for the question. We typically don't guide with specific numbers of systems that are in deployment, but if you think about
Speaker Change: Three were signed a year ago, four were signed a quarter after that.
Carol Hibbard: It was a lot, you know, both months in, those are not, you know, there's not a large number contributing to the heavy install at that point. We've got 10 that we signed this quarter, and associated with our revenue ramp, typically we see revenue first quarter where we sign and then we're pretty stagnant on that, that 10 for the next couple of quarters.
Speaker Change: It was a lot, you know, 12 months in, those are not, you know, there's not a large number contributing to the heavy install at that point.
Speaker Change: We've got ten that we signed this quarter and associated with our revenue ramp typically we see revenue first quarter where we sign and then we're pretty stagnant on that that ten for the next couple of quarters.
Carol Hibbard: But we typically don't guide in terms of total numbers. Okay, I'm just just a follow up on that. Grebox, can you kind of update us on the kind of the progress of, you know, building out the sales capability and, you know, what stage Groupox as a company. I think pretty much it's an early stage. We have to sites beyond the initial site that were that we're building out the sales force for and we're prospecting. And we've hired people from the 3PL space, one from Hub Group, one from SEVA. So and we have some time because the buildings are still being built out for the Symbiotic System.
Speaker Change: But we typically don't guide in terms of total number of systems in employment. [inaudible]
Thank you. Thank you.
Speaker Change: Okay, I'm just just to follow up on on green box. Kind of updates on the kind of the progress of building out the sales capability and what stage you think the green box as a company is at this point.
Speaker Change: I think Brelox is it's early stage we have two sites beyond the initial site that we're
Speaker Change: We're building out the Salesforce for and we're prospecting, and we've hired people from the 3PL space, one from Hub Group, one from SEVA, and we have some time because of the buildings. [inaudible]
are still being built out for the somotic system. So, we have about a year. Thank you.
Operator: So we have about a year, a year and a half before we're really concerned about filling them up. But the prospecting is going well. And and we're continuing to make a lot of sales calls. So it just takes time.
Speaker Change: A year and a half before we're really concerned about filling them up but the prospecting is going well and we're continuing to make a lot of sales calls so it just takes time.
Thank you.
Operator: One moment for our next question.
One moment for our next question.
Derek Soderberg: Our next question comes from the line of Derek Soderberg of Cantor Fitzgerald. Your line is now open. Yeah, hey, guys, thanks for taking the questions.
Speaker Change: Our next question comes from the line of Derek Soderberg of Cantor Fritz Gerald. Your line is now open.
Derek Soderberg: Yeah, hey guys, thanks for taking the questions. On the ASR business, can you provide some color as to what sort of revenue that is? I think you mentioned your providing services.
Derek Soderberg: On the ASR business, can you provide some color as to what sort of revenue that is? I think you mentioned you're providing services. I'm curious if you're paid based off of each unit that you're handling. And I might have missed it, but are we going to be seeing that ASR revenue in operation services? Or is there a systems component to that as well? So the development associated with ASR is running through our system. And so that's where we saw the revenue for this quarter, primarily. And we talked about that being mid to high single-digit percentage of what we posted for the quarter.
Speaker Change: So the development associated with ASR is running through our system of clients.
Speaker Change: and so that's where we saw the revenue for this quarter primarily.
Speaker Change: And we talked about that being mid to high single digit percentage of what we posted for the quarter. And so that's the development activity and the design activity. And for the next three years as we work through development build of our three prototypes, that's where you're going to see the primary revenue. [inaudible]
Carol Hibbard: And so that's the development activity and the design activity. And for the next three years, as we work through, develop, and build of our three prototypes, that's where you're going to see the primary revenue. We do have some revenue running through recurring, because associated with the acquisition, we are responsible for maintaining the existing APD systems. So we have a small amount of software running through software. And then we have parts and services similar to how we operate our core business that you're going to see in the ops services. But it's a very small amount of revenue.
Speaker Change: We do have some revenue running through recurring because associated with the acquisition we are responsible for maintaining the existing APD systems.
Speaker Change: So, we have a small amount of software running through software, and then we have parts and services similar to how we operate our core business that you're going to see in the ops services, but it's a very small amount of revenue.
Derek Soderberg: Got it. That's helpful.
Speaker Change: That's helpful. And then, Rick, you mentioned your scale and capabilities and just sort of being at multiple layers in the supply chain. Seems like you can find some pretty valuable insights with that data. Curious if you're exploring new avenues to monetize some of that data has there been an environment where you've kind of found. Yeah.
Rick Cohen: And then, Rick, you mentioned your scale and capabilities and just sort of being at multiple layers in the supply chain. Seems like you can find some pretty valuable insights with that data. Curious if you're exploring new avenues to monetize some of that data. Has there been an environment where you've kind of found a way to monetize some of that data? certain insights and plug that back into the ROI of the system. And, you know, that longer term can improve kind of the wallet share with your customers. Any ways to sort of monetize that data at this point?
Speaker Change: Certain insights and plug that back into the ROI of the system, and you know that longer term can improve kind of the wallet share with your customers. Any ways to sort of monetize that data at this point. Thanks.
Rick Cohen: Yeah, so what we're so We are doing that. We're actually The selling of the customer's data, the customer owns the data, so that's very tricky for us. And so we should just, I get asked this question a lot. And so we can't sell their data. It's their data. So, but what we've learned is. Surprisingly We probably know more about the shape and size of boxes than anybody in the world at this point And so it's actually helped us redesign our system to be Smaller and that Allows the customer to store more and we're actually taking advantage of that in our pricing That's helpful.
Yes, so what we're, we're, so.
We are doing that. We're actually... Um...
Speaker Change: The selling of the customer's data, the customer owns data, so that's very tricky for us.
Speaker Change: and so we should just, I get asked this question a lot and so we can't sell their data, it's their data, so but what we've learned is
Surprisingly,
Speaker Change: We probably know more about the shape and size of boxes than anybody in the world at this point.
Speaker Change: And so it's actually helped us redesign our system to be smaller and that allows the customer to store more and we're actually taking advantage of that in our pricing.
Operator: Thanks.
That's helpful, thanks.
Operator: One moment for our next question.
One moment for our next question.
Ken Newman: Our next question comes from the line of Ken Newman of KeyBank Capital Markets. Your line is now open. Hey guys, thanks for putting me in. Hey, Carol, maybe back on the tariff question. I know it sounds like the guide isn't reflecting any impact from pass-through pricing. But I am curious if you're already seeing some of your larger suppliers push price to you. And curious if you have a sense of just how much that pass-through could look given the early notifications you may or may not be getting from Yeah, so our primary impact is from Europe, that their tariffs went into effect in April.
Speaker Change: Our next question comes from the line of Ken Newman of Keybank Capital Market. Your line is now open.
Yes, thanks for being here.
Unknown Speaker Bye bye.
Speaker Change: Hey, Carol, maybe back on the tariff question, I know it's not that the guy doesn't reflect any impact from past through pricing but I am curious if you're already seeing
some of your larger suppliers, push price.
Speaker Change: to you, and curious if you have a sense of just how much that pass through could look given the early notifications you may or may not be getting from your suppliers.
Yes, so our primary impact is from Europe .
Carol Hibbard: And so 3Q will be the first where we're actually seeing the impact of that. As I indicated, we're a single-digit percent of a typical system. And so what we're in the process doing right now is discussions with our supply chain, because we also are interested in making sure we're focused on continuing to reduce the cost. So where we'll start seeing the impact is as the suppliers deliver equipment here in the 3Q. But we're in discussion to figure out other ways to access. Right, okay.
Speaker Change: That their tariffs went into effect in April . And so 3-2 will be the first where we're actually in the impact of that. And that by indicating that we're a single-digit, digit percent.
Speaker Change: of a typical system. And so what we're in the process doing right now is discussions with our supply chain because we also are interested in making sure we're both continuing to reduce the cost.
Speaker Change: So where we'll start seeing the impact is as the supplier's delivery equipment here in the third quarter.
Speaker Change: But we're in discussion to figure out other ways to offset.
Right, okay.
Carol Hibbard: And then maybe as a follow-up there, just on that pass-through conversation, you know, I get that pass-throughs protect gross profit dollars, but given all the talk that you had on improving the efficiencies and lowering the amount of time it takes to deploy a system, I would imagine you could also drive stronger SG&A leverage, even if on the higher revenue base, even if you keep price-cost neutral on the gross profit line. I know there are a lot of moving pieces, but do you think it's possible to drive EBITDA margin expansion, even if the gross margins are, you know, nominally weaker just from tariffs?
Speaker Change: and then maybe as a follow-up bear on that path through conversation. You know, I get that pass-throughs protect gross profit dollars, but...
Speaker Change: Given all the talk that you had on improving your efficiencies and lowering the amount of time it takes to deploy a system, I would imagine you could also drive stronger S-GNA leverage.
Speaker Change: on the higher revenue base, even if you keep price cost neutral on the gross profit line. I know there are a lot of moving pieces, but do you think it's possible to drive EBITOM margin expansion, even if the gross margins are nominally weaker just from terrorists?
Carol Hibbard: Yeah, we continue to focus on our SG&A leverage. And I think the step up you saw this quarter was primarily related to our acquisition. As we get the synergies between the two companies better understood and work through that integration, we hopefully will be able to identify additional synergy going forward. And then as you indicated, as we continue to scale, we're seeing the benefit of that scale on overall program management on our, you know, just the performance of what we did for insourcing on our EPC contract. So we're starting to see the benefit as we continue to ramp up.
Speaker Change: Yeah, we continue to focus on our FGNA lover, I think the step up you saw this quarter was primarily related to our acquisition.
Speaker Change: As we get the synergies between the two companies that are understood and work through that integration, we hopefully will be able to identify additional synergy going forward and then as you indicate it as we continue to scale.
Speaker Change: We're seeing the benefit of that scale on overall program management on our, you know, just the performance of what we did for our Enforcing on our EPC contract. So we're starting to see the benefit as we continue to ramp.
Operator: Very helpful, thanks. Great. Thanks.
Very helpful. Thanks.
Operator: As a reminder, to ask a question, please remember to press star 11 on your telephone and wait for your name to be announced. One moment for our next question.
Speaker Change: As a reminder to ask a question, please remember to press star 11 on your telephone and wait for your name to be announced. One moment for our next question.
Greg Palm: Our next question comes from the line of Greg Palm of Craig Hallam Capital Group. Your line is now open. Yeah, thanks. Specifically on gross margin, I think Carol, you mentioned or alluded to maybe a little bit of a benefit in the quarter from ASR. But can you just talk about whether there were any other, you know, sort of one time benefits? You know, it sounds like a lot of it was just due to more efficiencies. And obviously, you had much better gross margin in software and operations services, but just kind of curious how you view that going forward.
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Speaker Change: Our next question comes from the line, I'm Greg Palm of Craig Hallum Capital Group. Your line is now open.
Greg Palm: Yeah, thanks. Specifically, I'm gross margin. I think Carol, you mentioned or alluded to maybe a little bit of a benefit in the quarter from ASR, but can you just talk about whether there were any other...
Greg Palm: You know, sort of one-time benefits, you know, it sounds like a lot of it was just due to more efficiencies and obviously you had much better gross margin and software and operation services, but just kind of curious how you be that going forward.
Carol Hibbard: Yeah, the other one time benefit is mostly in the recurring. And so in a quarter where we had eight systems hit acceptance, there's a significant amount of, you know, high margin training revenue that goes along with that acceptance. So that's what you're seeing in the Ops Services revenue. We had it bounce back this quarter from last quarter. So that's the one timer. But in terms of the system gross margin, the project mix shifting, that will continue going forward. Our overall improvements that we're seeing, you know, from shorter install duration benefits from bringing the insourcing in of EPC, that will continue.
Greg Palm: The other one-time benefit is mostly in the recurring and so in a quarter where we had eight systems hit acceptance there's a significant amount of...
Greg Palm: You know, high margin training revenue that goes along with that acceptance. So that's what you're seeing in the out services revenue. We had a bounce back this quarter from last quarter. So that's the one timer, but in terms of the system gross margin. [inaudible]
Greg Palm: The project makes shifting that will continue going forward are overall improvements that are seeing, you know, shorter install duration benefits from bringing the enforcing in of EPC that will continue.
Carol Hibbard: The ASR is a higher margin contribution, and so we saw the benefit of that quarter. We'll have less of that next quarter, but that will come back.
Greg Palm: And the ASR is a higher margin contribution, and so we saw the benefit of that reporter, we'll have less of that next quarter, but that will come back, it's revenue in the future.
Carol Hibbard: Okay, perfect. And you mentioned the three green box locations already, I think there are another 10 that you have already, you know, specifically targeted in terms of cities, can you just help us out with revenue contribution? You know, from green box? I mean, is there a timeline associated with the startup of these additional 10? And so what we've talked about, so we've launched three. And in prior quarters, we had talked about five locations where we would typically be thinking through a potential multi-tenant warehouse. So one was the Atlanta region, one was Southern California. We've looked at Dallas, we've looked at Chicago, and we've looked at somewhere on the East Coast.
Greg Palm: Okay, perfect. And you mentioned the three green box locations already. I think there are another 10 that you have already, you know, specifically targeted in terms of cities. Can you just help us out with revenue, contribution, you know, from green box? I mean, is there a timeline associated with the startup of these additional 10?
Greg Palm: So what we've talked about, so we've won three.
and in prior quarters, we had talked about five. [inaudible]
Greg Palm: locations where we would typically be thinking through a potential multi-tenant warehouse. So one was the Atlanta region, one was Southern California, we looked at Dallas, we looked at Chicago and we looked at somewhere on the East Coast. So we've identified five of those.
Operator: So we've identified five of those, which we have now launched two. Our green box has been slower to ramp. But now that we've got the CEO, and their employees identifying additional sales folks, I think we're going to see a lot more activity on green box in the Okay, fair enough. All right. Thanks. Thank you.
Greg Palm: which we have now launched to. Our green box has been slower to ramp, but now that we've got the CEO and they're in place identifying additional sales folks, I think we're going to see a lot for activity on green backs in the coming.
Okay, fair enough. All right, thanks.
Thank you. Thank you.
Robert Mason: One moment for our next question. Our next question comes from the line of Robert Mason of Baird. Your line is now open. Yes, good evening.
One moment for our next question.
Speaker Change: Our next question comes from the line of Robert Mason of Baird, your line is now open.
Carol Hibbard: Carol, you may have run through this, but could you bridge the backlog again from Q1 to Q2. I know ASR was booked. Is there anything else? Yeah, thanks for the question. Backlog, the addition to the backlog was for the development associated with the ASR business. That was the only addition. And then what you saw was reductions associated with the revenue posted for the quarter. So those offsets and then every quarter as we talk about when we sign a final statement of work, there's puts and takes in terms of final configuration.
Robert Mason: Yes, good evening. Carol, you may have run through this, but could you bridge the backlog again from? [inaudible]
Robert Mason: Q1 to Q2, I know ASR was booked, but was there anything else? [inaudible]
Yeah, thanks for the question. Backlog.
Robert Mason: The addition to the backlog was for the development associated with the ASR business. That was the only addition, and then what you saw was the reductions associated with the revenue posted for the quarter.
Robert Mason: So those offsets, and then every quarter as we talk about when we find a final statement of where there's tips and takes in terms of final configuration and that's what the Delta is.
Carol Hibbard: And that's what the Delta Okay, maybe related to that, I think earlier on, you mentioned around your deployment schedules, compressing some that phase ones, some phase ones are now 15% larger than some of the earlier stage deployments. I'm just curious, you know, what's, what's driving that? Or is that just that the nature of the particular sites or? The customer wants more installed up front. I'm just curious. cause the expansion. Yeah, it is purely the nature of those particular sites. I would not infer from that that all future phase ones are getting bigger. It really is dependent on every single location and size and capability of that particular warehouse as we go in.
Speaker Change: Okay, maybe related to that, I think earlier on, you mentioned...
Arrange your deployment.
Speaker Change: Phase Ones, some Phase Ones are now 15% larger than some of the earlier stage deployments. I'm just curious, you know, what's driving that? Or is that just the nature of the particular sites? Or the customer wants more installed up front? I'm just curious what's...
Calls the Expansion. Yeah, it is purely the nature of those particular sites.
Speaker Change: I would not infer from that that all future phase ones are getting bigger. It really is dependent on every single location and size and capability of that particular warehouse as we go in and as we talked about our largest customers.
Operator: And as we talked about our largest customers, we typically end up with three phases. And so there is a little bit of a mix of what they want to do in phase one, two or three. But I would not infer that all of our phase ones are getting 15%. Very good. Thank you. Thanks, Rob.
Speaker Change: We typically end up with three phases, and so there is a little bit of a mix of what they want to do with phase one, two or three, but I would not infer that all of our phase ones are getting 15% larger.
Very good. Thank you.
Thanks Rob.
Charlie Anderson: I am showing no further questions at this time.
Speaker Change: I am showing no further questions at this time. I would now like to turn it back to Charlie Anderson for closing remarks.
Operator: I would now like to turn it back to Charlie Anderson for closing remarks. Yeah, thanks, everybody for joining our call tonight. We really appreciate your interest in Symbiotic and look forward to seeing many of you during the quarter at the various Thanks and have a nice day.
Speaker Change: Yeah, thanks everybody for joining our call tonight. We really appreciate your interest in symbolic and look forward to seeing many of you during the quarter of the various investor come.
Makes it have a nice day.
Operator: Thank you for your participation in today's conference.
Speaker Change: Thank you for your participation in today's conference. This concludes the program. You may now disconnect.
Operator: This concludes the program. You may now disconnect.
The End
Speaker Change: [music].