Q4 2025 Symbotic Inc Earnings Call

November 24, 2025

Speaker #1: Good day, and thank you for standing by. Welcome to the Symbotic Q4 2025 financial results conference call. At this time, all participants are in listen-only mode.

Operator: Good day, and thank you for standing by. Welcome to the Symbotic Q4 2025 financial results conference call. At this time, all participants are on a listen-only mode. After this speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To explore your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Charlie Anderson. Please go ahead.

Speaker #1: After this speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press *11 on your telephone.

Speaker #1: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.

Speaker #1: I would now like to turn the conference over to your speaker for today, Charlie Anderson. Please go.

Speaker #1: ahead. Hello.

Charlie Anderson: Hello. Welcome to Symbotic's Q4 and fiscal year 2025 financial results webcast. I'm Charlie Anderson, Symbotic's 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. 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. In addition, during this call, we will present both GAAP and non-GAAP financial measures. Reconciliation of GAAP to non-GAAP financial 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-symbotic.com. On today's call, we're joined by Rick Cohen, Symbotic's Founder, Chairman, and Chief Executive Officer, and Izzy Bartons, Symbotic's Chief Financial Officer.

Speaker #2: Welcome to the 2025 financial results webcast. I'm Charlie Anderson, Symbotic's 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.

Speaker #2: 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.

Speaker #2: any forward-looking statements. In You undertake no obligation to update addition, during this call, we will present both GAAP and non-GAAP financial measures. Reconciliation of GAAP to non-GAAP financial 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.symbotic.com.

Speaker #2: And today's call, we're joined by Rick Cohen, Symbotic's Founder, Chairman, and Chief Executive Officer, and Izzy Bartons, Symbotic's Chief Financial Officer. These executives will discuss our Q4 and fiscal year 2025 results and their outlook, followed by a Q&A.

Charlie Anderson: These executives will discuss our Q4 and fiscal year 2025 results and their outlook, followed by Q&A. With that, I'll turn it over to Rick to begin. Rick.

These executives will discuss our Q4 and fiscal year 2025 results and their outlook, followed by Q&A. With that, I'll turn it over to Rick to begin. Rick.

Speaker #2: With that, I'll turn it over to Rick to.

Speaker #2: begin. Rick? Thank you,

Rick Cohen: Thank you, Charlie. Good afternoon, and thank you for joining us to review our most recent results. We made strong progress in fiscal year 2025 and finished the year with good momentum. For the full year, we increased revenue by 26% year over year while delivering significant margin expansion and free cash flow generation. The cash on our balance sheet now exceeds $1.2 billion. During the fiscal year, we also expanded and upgraded our product portfolio. We added micro-fulfillment as a new category to address e-commerce, and upgraded our storage structure to a proprietary next-generation design that offers leading density and rapid installation. When we marry up our innovative bot technology that can handle goods of many sizes, this new highly dense storage structure, and our proprietary software, we believe we can unlock more opportunities than ever before.

Speaker #3: Charlie: Good afternoon, and thank you for joining us to review our most recent results. We made strong progress in fiscal year 2025 and finished the year with good momentum.

Speaker #3: For the full year, we increased revenue by 26% year over year while delivering significant margin expansion and free cash flow generation. The cash on our balance sheet now exceeds $1.2 billion.

Speaker #3: During the fiscal year, we also expanded and upgraded our product portfolio. We added micro-fulfillment as a new category to address e-commerce and upgraded our storage structure to a proprietary next-generation design that offers leading density and rapid installation.

Speaker #3: Bot technology that can handle goods of many sizes. When we marry up our innovative new highly dense storage structure and our proprietary software, we believe we can unlock more opportunities than ever before.

Speaker #3: This includes everything from smaller buildings to e-commerce facilities to perishable facilities, where square footage is at a premium. We are seeing this play out with a growing sales pipeline as our solutions deliver space savings and installation efficiencies that result in higher value.

Rick Cohen: This includes everything from smaller buildings to e-commerce facilities to perishable facilities where square footage is at a premium. We are seeing this play out with a growing sales pipeline, as our solutions deliver space savings and installation efficiencies that result in higher value. Customers are already taking advantage of this breakthrough in installation efficiency. Notably, our largest customers opted to utilize our next-gen storage to combine what previously took two separate deployments or phases into one single phase for new sites. That means a phase one system deployment when we enter a distribution center for the first time will be able to do twice as much work versus when we began deployments for this customer previously.

This includes everything from smaller buildings to e-commerce facilities to perishable facilities where square footage is at a premium. We are seeing this play out with a growing sales pipeline, as our solutions deliver space savings and installation efficiencies that result in higher value. Customers are already taking advantage of this breakthrough in installation efficiency. Notably, our largest customers opted to utilize our next-gen storage to combine what previously took two separate deployments or phases into one single phase for new sites. That means a phase one system deployment when we enter a distribution center for the first time will be able to do twice as much work versus when we began deployments for this customer previously.

Speaker #3: Customers are already taking advantage of this breakthrough in installation efficiency. Notably, our largest customers opted to utilize our next-gen storage to combine what previously took two separate deployments or phases into one single phase for new sites.

Speaker #3: That means a Phase One system deployment, when we enter a distribution center for the first time, will be able to do twice as much work versus when we began deployments for this customer previously.

Speaker #3: And the overall time to install and achieve acceptance for the same amount of case output in this example will be cut by more than half.

Rick Cohen: The overall time to install and achieve acceptance for the same amount of case output in this example will be cut by more than half, generating significant savings, reducing disruption, and generating a larger and faster return on investment for customers. Customers are also taking advantage of the modular build qualities of our next-gen storage, with a handful of deployments that began in fiscal Q4, connecting next-gen storage to prior-gen storage at the same site. GreenBox is moving forward with next-gen storage, signing up to utilize it at new sites near Dallas and Chicago, both of which were signed in fiscal Q4. Notably, with these sites, GreenBox coverage will extend from California to the Midwest to the Southeast. We also finished the fiscal year by signing a new customer, Medline, the largest provider of medical-surgical products and supply chain solutions serving all points of care.

The overall time to install and achieve acceptance for the same amount of case output in this example will be cut by more than half, generating significant savings, reducing disruption, and generating a larger and faster return on investment for customers. Customers are also taking advantage of the modular build qualities of our next-gen storage, with a handful of deployments that began in fiscal Q4, connecting next-gen storage to prior-gen storage at the same site. GreenBox is moving forward with next-gen storage, signing up to utilize it at new sites near Dallas and Chicago, both of which were signed in fiscal Q4. Notably, with these sites, GreenBox coverage will extend from California to the Midwest to the Southeast. We also finished the fiscal year by signing a new customer, Medline, the largest provider of medical-surgical products and supply chain solutions serving all points of care.

Speaker #3: Generating significant savings, reducing disruption, and generating a larger and faster return on investment for customers. Customers are also taking advantage of the modular build qualities of our next-gen storage, with a handful of deployments that began in fiscal Q4, connecting next-gen storage to prior-gen storage at the same site.

Speaker #3: And green boxes moving forward with next-gen storage, signing up to utilize it at new sites near Dallas and Chicago, both of which were signed in the fiscal Q4.

Speaker #3: Notably, with these sites, green box coverage will extend from California to the Midwest to the Southeast. We also finished the fiscal year by signing a new customer, Medline.

Speaker #3: The largest provider of medical and surgical products, as well as supply chain solutions, serving all points of care. This marks our first customer in the healthcare vertical, where we believe the case for automation is very strong given the importance of accuracy, speed, and cost.

Rick Cohen: This marks our first customer in the healthcare vertical, where we believe the case for automation is very strong given the importance of accuracy, speed, and cost. This is also one of the largest potential new verticals available to us. It is worth noting that there are over 500 healthcare distribution centers in the US alone, with a combined 76 million square feet of warehouse space, according to the Health Industry Distributors Association. With our scale rapidly improving, project execution, and growing set of capabilities across the supply chain, we are in a better place than ever to bring our new customers covering multiple verticals, geographies, and use cases. Our focus in this has never been greater.

This marks our first customer in the healthcare vertical, where we believe the case for automation is very strong given the importance of accuracy, speed, and cost. This is also one of the largest potential new verticals available to us. It is worth noting that there are over 500 healthcare distribution centers in the US alone, with a combined 76 million square feet of warehouse space, according to the Health Industry Distributors Association. With our scale rapidly improving, project execution, and growing set of capabilities across the supply chain, we are in a better place than ever to bring our new customers covering multiple verticals, geographies, and use cases. Our focus in this has never been greater.

Speaker #3: This is also one of the largest potential new verticals available to us. It is worth noting that there are over 500 healthcare distribution centers in the U.S. alone, with a combined 76 million square feet of warehouse space, according to the Health Industry Distributors Association.

Speaker #3: With our scale rapidly improving project execution and a growing set of capabilities across the supply chain, we are in a better place than ever to bring in our new customers covering multiple verticals, geographies, and use cases.

Speaker #3: Our focus this year has never been greater. In summary, we delivered on the commitment we made at the start of the year to achieve strong top-line growth and a significant rise in operational systems, thanks to improvements in our deployment process.

Rick Cohen: In summary, we delivered on the commitment we made at the start of the year to achieve strong top-line growth and a significant rise in operational systems thanks to improvements in our deployment process. This also enabled us to deliver strong margin expansion. Looking ahead, our key objectives for fiscal year 2026 are: number one, harness our growing product portfolio and capabilities to broaden our opportunities with customers, particularly in e-commerce with our micro-fulfillment solution; two, unlock higher margins by driving additional value for our customers, along with operational improvements; three, continue to invest in our innovation engine to expand our capabilities and support future growth. I just want to end by thanking our team for their efforts, along with our customers and investors for their support. I'll now turn it over to Izzy, who will discuss our financial results and outlook. Izzy?

In summary, we delivered on the commitment we made at the start of the year to achieve strong top-line growth and a significant rise in operational systems thanks to improvements in our deployment process. This also enabled us to deliver strong margin expansion. Looking ahead, our key objectives for fiscal year 2026 are: number one, harness our growing product portfolio and capabilities to broaden our opportunities with customers, particularly in e-commerce with our micro-fulfillment solution; two, unlock higher margins by driving additional value for our customers, along with operational improvements; three, continue to invest in our innovation engine to expand our capabilities and support future growth. I just want to end by thanking our team for their efforts, along with our customers and investors for their support. I'll now turn it over to Izzy, who will discuss our financial results and outlook. Izzy?

Speaker #3: This also enabled us to deliver strong margin expansion. Looking ahead, our key objectives for fiscal year 2026 are: number one, harness our growing product portfolio and capabilities to broaden our opportunities with customers, particularly in e-commerce with our micro fulfillment solution.

Speaker #3: Two, unlock higher margins by driving additional value for our customers along with operational improvements. Three, continue to invest in our innovation engine to expand our capabilities and support future growth.

Speaker #3: I just want to end by thanking our team for their efforts, along with our customers and investors for their support. I'll now turn it over to Izzy, who will discuss our financial results and outlook.

Speaker #3: Izzy?

Speaker #4: Thanks, Rick. Fiscal

Izzy Bartons: Thanks, Rick. Fiscal Q4 revenue grew 10% year over year to $618 million, exceeding our expectations. Year-over-year revenue growth in the quarter was driven by the expansion of the number of systems in operation, fueling higher recurring revenue, along with continued progress on our paid development program. Due to higher stock-based compensation reflecting our commitment to attracting and retaining top talent, and restructuring expenses primarily associated with acquisition integration activities, our net loss for the fiscal Q4 was $19 million versus net income of $16 million in Q4 of fiscal year 2024. Adjusted EBITDA in the fiscal Q4 of $49 million was at the high end of our forecast due to revenue and gross margin upside, and up from $42 million in Q4 of fiscal year 2024. Our backlog of $22.5 billion remained in a strong position.

Izzy Martins: Thanks, Rick. Fiscal Q4 revenue grew 10% year over year to $618 million, exceeding our expectations. Year-over-year revenue growth in the quarter was driven by the expansion of the number of systems in operation, fueling higher recurring revenue, along with continued progress on our paid development program. Due to higher stock-based compensation reflecting our commitment to attracting and retaining top talent, and restructuring expenses primarily associated with acquisition integration activities, our net loss for the fiscal Q4 was $19 million versus net income of $16 million in Q4 of fiscal year 2024. Adjusted EBITDA in the fiscal Q4 of $49 million was at the high end of our forecast due to revenue and gross margin upside, and up from $42 million in Q4 of fiscal year 2024. Our backlog of $22.5 billion remained in a strong position.

Speaker #4: Q4 revenue grew 10% year-over-year to $618 million, exceeding our expectations. Year-over-year revenue growth in the quarter was driven by the expansion of the number of systems in operation.

Speaker #4: Fueling higher recurring revenue along with continued progress on our paid development program. Due to higher stock-based compensation reflecting our commitment to attracting and retaining top talent, and restructuring expenses primarily associated with acquisition integration activities, our net loss for fiscal Q4 was $19 million, versus net income of $16 million in Q4 of fiscal year 2024.

Speaker #4: Adjusted EBITDA in fiscal Q4 of $49 million was at the high end of our forecast due to revenue and gross margin upside, and up from $42 million in Q4 of fiscal year 2024.

Speaker #4: Our backlog of $22.5 billion remained in a strong position. The increase from $22.4 billion last quarter was due to final pricing on projects started and the addition of backlog associated with Medline, offsetting revenue recognized in the quarter.

Izzy Bartons: The increase from $22.4 billion last quarter was due to final pricing on projects started, and the addition of backlog associated with Medline, offsetting revenue recognized in the quarter. In our fiscal Q4, we began 10 new system deployments. As Rick highlighted, this included two deployments for GreenBox, and one for Medline. We also had six systems go operational in the quarter, bringing our total to 48 operational systems, or nearly double the level at the end of fiscal year 2024. Importantly, for the systems that went operational for our largest customer in the fiscal Q4, we observed nearly three months of improvement in the time between start of installation and customer acceptance compared with our historical average with this same customer. This period of deployment is the portion that is most within our control, and it is also when we recognized the highest level of revenue and profit.

The increase from $22.4 billion last quarter was due to final pricing on projects started, and the addition of backlog associated with Medline, offsetting revenue recognized in the quarter. In our fiscal Q4, we began 10 new system deployments. As Rick highlighted, this included two deployments for GreenBox, and one for Medline. We also had six systems go operational in the quarter, bringing our total to 48 operational systems, or nearly double the level at the end of fiscal year 2024. Importantly, for the systems that went operational for our largest customer in the fiscal Q4, we observed nearly three months of improvement in the time between start of installation and customer acceptance compared with our historical average with this same customer. This period of deployment is the portion that is most within our control, and it is also when we recognized the highest level of revenue and profit.

Speaker #4: In our fiscal Q4, we began 10 new system deployments. As Rick highlighted, this included two deployments for green box and one for Medline. We also had six systems go operational in the quarter, bringing our total to 48 operational systems, or nearly double the level at the end of fiscal year 2024.

Speaker #4: Importantly, for the systems that went operational for our largest customer in fiscal Q4, we observed nearly three months of improvement in the time between the start of installation and customer acceptance compared with our historical average with this same customer.

Speaker #4: This period of deployment is a portion that is most within our control, and it is also one we recognize to generate the highest level of revenue and profit.

Speaker #4: With the continued growth in operational systems, we saw our software revenue grow 57% year over year to $9.3 million in fiscal Q4. Operations services revenue grew 21% year over year to $26.9 million.

Izzy Bartons: With the continued growth in operational systems, we saw our software revenue grow 57% year over year to $9.3 million in the fiscal Q4, and operations services revenue grew 21% year over year to $26.9 million. Turning to margins in the fiscal Q4, system gross margin continued its trend of significant year-over-year improvement, driven by disciplined cost management, solid project execution, and strong supply chain partnership as we roll out our next-gen structure and deliver increasing value to our customers. We expect to see additional expansion in systems gross margin. Software maintenance and support also saw substantial year-over-year gross margin gains, benefiting from continued scale and exceeding 70% for the full year. In operations services, we posted a loss as we increased investment in additional resources to support certain sites and ensure their long-term success. Operating expenses on a GAAP basis in the fiscal Q4 were $149 million.

With the continued growth in operational systems, we saw our software revenue grow 57% year over year to $9.3 million in the fiscal Q4, and operations services revenue grew 21% year over year to $26.9 million. Turning to margins in the fiscal Q4, system gross margin continued its trend of significant year-over-year improvement, driven by disciplined cost management, solid project execution, and strong supply chain partnership as we roll out our next-gen structure and deliver increasing value to our customers. We expect to see additional expansion in systems gross margin. Software maintenance and support also saw substantial year-over-year gross margin gains, benefiting from continued scale and exceeding 70% for the full year. In operations services, we posted a loss as we increased investment in additional resources to support certain sites and ensure their long-term success. Operating expenses on a GAAP basis in the fiscal Q4 were $149 million.

Speaker #4: Turning to margins in fiscal Q4, system gross margin continued its trend of significant year-over-year improvement, driven by disciplined cost management, solid project execution, and strong supply chain partnerships, as we roll out our next-gen structure and deliver increasing value to our customers.

Speaker #4: We expect to see additional expansion in systems gross margin. Software maintenance and support also saw substantial year-over-year gross margin gains, benefiting from continued scale and exceeding 70% for the full year.

Speaker #4: In operations services, we posted a loss as we increased investment in additional resources to support certain sites and ensure their long-term success. Operating expenses on a GAAP basis in fiscal Q4 were $149 million.

Speaker #4: Adjusted operating expenses in the quarter were $87 million, up sequentially, primarily due to strategic R&D investments in supporting our expanding product portfolio and cloud-based software tools.

Izzy Bartons: Adjusted operating expenses in the quarter were $87 million, up sequentially primarily due to strategic R&D investments in supporting our expanding product portfolio and cloud-based software tools. These investments are in areas where we see the greatest potential to increase value and long-term impact. We finished the quarter with cash equivalents of $1.2 billion, up from $778 million in the fiscal Q3 due to the timing of cash receipts tied to project milestones and the signing of new projects. Now turning to the forecast. As I've settled into the CFO role, I want to share some context for how I think about guidance. We will continue to guide one quarter ahead, with a focus on transparency and consistency.

Adjusted operating expenses in the quarter were $87 million, up sequentially primarily due to strategic R&D investments in supporting our expanding product portfolio and cloud-based software tools. These investments are in areas where we see the greatest potential to increase value and long-term impact. We finished the quarter with cash equivalents of $1.2 billion, up from $778 million in the fiscal Q3 due to the timing of cash receipts tied to project milestones and the signing of new projects. Now turning to the forecast. As I've settled into the CFO role, I want to share some context for how I think about guidance. We will continue to guide one quarter ahead, with a focus on transparency and consistency.

Speaker #4: These investments are in areas where we see the greatest potential to increase value and long-term impact. We finished the quarter with cash equivalents of $1.2 billion, up from $778 million in fiscal Q3 due to the timing of cash receipts tied to project milestones and the signing of new projects.

Speaker #4: Now, turning to the forecast. As I've settled into the CFO role, I want to share some context for how I think about guidance. We will continue to guide one quarter ahead, with a focus on transparency and consistency.

Speaker #4: My approach will be to set a guidance range reflecting where we expect to land based on our best view of the deployment schedules and a balanced assessment of both risks and opportunities.

Izzy Bartons: My approach will be to set a guidance range reflecting where we expect to land based on our best view of the deployment schedules and a balanced assessment of both risks and opportunities. With that in mind, for Q1 of fiscal 2026, we expect revenue between $610 million to $630 million, representing year-over-year growth between 25% and 29%, and adjusted EBITDA between $49 and $53 million. I want to reiterate what we highlighted during last quarter's earnings call. That is, the introduction of our proprietary next-gen storage structure has resulted in a realignment of deployment schedules. While this has no impact on our $22.5 billion of backlog, it does have an impact on how our revenue is phased throughout the fiscal year, with the quarters in the first half of fiscal 2026 showing less pronounced sequential growth.

My approach will be to set a guidance range reflecting where we expect to land based on our best view of the deployment schedules and a balanced assessment of both risks and opportunities. With that in mind, for Q1 of fiscal 2026, we expect revenue between $610 million to $630 million, representing year-over-year growth between 25% and 29%, and adjusted EBITDA between $49 and $53 million. I want to reiterate what we highlighted during last quarter's earnings call. That is, the introduction of our proprietary next-gen storage structure has resulted in a realignment of deployment schedules. While this has no impact on our $22.5 billion of backlog, it does have an impact on how our revenue is phased throughout the fiscal year, with the quarters in the first half of fiscal 2026 showing less pronounced sequential growth.

Speaker #4: With that in mind, for the first quarter of fiscal 2026, we expect revenue between $610 million and $630 million, representing year-over-year growth between 25% and 29%.

Speaker #4: An adjusted EBITDA between $49 million and $53 million. I want to reiterate what we highlighted during last quarter's earnings call. That is, the introduction of our proprietary next-gen storage structure has resulted in a realignment of deployment schedules.

Speaker #4: While this has no impact on our $22.5 billion backlog, it does have an impact on how our revenue is phased throughout the fiscal year.

Speaker #4: With the quarters in the first half of fiscal 2026 showing less pronounced sequential growth, we believe this new technology advancement, combined with the unique capability of our proprietary box and software, is resonating with customers as they recognize our competitive differentiation and the significant value our solution creates.

Izzy Bartons: We believe this new technology advancement, combined with the unique capability of our proprietary bots and software, is resonating with customers as they recognize our competitive differentiation and the significant value our solution creates. It also unlocks new opportunities across the supply chain, as well as the opportunity for more efficient deployments, which we expect will contribute to higher margins over time for Symbotic. With that, we now welcome your questions. Operator, please begin the Q&A.

We believe this new technology advancement, combined with the unique capability of our proprietary bots and software, is resonating with customers as they recognize our competitive differentiation and the significant value our solution creates. It also unlocks new opportunities across the supply chain, as well as the opportunity for more efficient deployments, which we expect will contribute to higher margins over time for Symbotic. With that, we now welcome your questions. Operator, please begin the Q&A.

Speaker #4: It also unlocks new opportunities across the supply chain, as well as the opportunity for more efficient deployments, which we expect will contribute to higher margins over time for Symbotic.

Speaker #4: With that, we now welcome your questions, Operator. Please begin the Q&A.

Speaker #2: Thank you. As a reminder, if you would like to ask a question, please press *11 on your telephone. You'll hear an automated message advising your hand is raised.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star 11 on your telephone. You'll hear an automated message advise when your hand is raised. We also ask that you limit yourself to one question and one follow-up. As well, please wait for your name and company to be announced before proceeding with your question. One moment while we compile the Q&A roster. Our first question today will be coming from the line of Nicole DeBlase of Deutsche Bank. Your line is open.

Speaker #2: We also ask that you limit yourself to one question and one follow-up. As well, please wait for your name and company to be announced before proceeding with your question.

Speaker #2: One moment while we compile the Q&A roster. Our first question today will be coming from the line of Nicole DuBlais of Deutsche Bank. Your

Speaker #2: line is open. Yeah.

Speaker #3: Thanks, guys. Good afternoon. Maybe just starting with Medline. Is it possible for you to provide a bit more color on the relationship with your commitment to, and then it seems like healthcare could be a pretty big opportunity with respect to new customers?

Nicole DeBlase: Yeah, thanks, guys. Good afternoon. Maybe just starting with Medline, is it possible for you to provide a bit more color on the relationship, what they've committed to? It seems like healthcare could be a pretty big opportunity with respect to new customers. Anything on how aggressively the Salesforce is pursuing that right now?

Speaker #3: Anything on how aggressively Salesforce is pursuing that right now?

Speaker #4: So, you broke up a little bit, but the Medline relationship is something that we worked on for about a year, maybe a little bit longer.

Rick Cohen: You broke up a little bit, but the Medline relationship is something that we worked on for about a year, maybe a little bit longer. It was a combination of understanding what they wanted to accomplish with the hospitals and the critical care units that they deliver with, and then for them to understand how the ability of our system to handle lots and lots of items and also the incredible accuracy with which we ship product. Thirdly, the ability we have to sequence products, because oftentimes to hospitals, you're delivering to a specific section, to a specific floor. We work with them to give them a good understanding of the unique capabilities of our system. That's why we won the award, and they have lots of warehouses, great customer. We're very excited about that.

Speaker #4: And it was a combination of understanding what they wanted to accomplish with the hospitals and the critical care units that they deliver with, and then for them to understand how the ability of our system to handle lots and lots of items, and also the incredible accuracy with which we ship product. And then thirdly, the ability we have to sequence products because oftentimes to hospitals, you're delivering to a specific section, to a specific floor.

Speaker #4: And so we work with them to give them a good understanding of the unique capabilities of our system. And so that's why we won the award, and there are lots of warehouses with great customers.

Speaker #4: So, we're very excited about that. In terms of future growth, we've added about five or six new salespeople in the past six months. We're much more in an aggressive marketing role than we were before.

Rick Cohen: In terms of future growth, we've added about five or six new salespeople in the past six months. We're much more in the aggressive marketing role than we were before. Probably a year ago, we were still wanting to make sure everything was working and testing out. As I tell the organization, you can't scale chaos. Over the last year, as we began to hit all our timelines for builds and price points for execution, and the quality of the way we measure it and some of our internal measures has more than improved by almost 300%. We're feeling very bullish about being able to handle a much broader base of customers and to deploy systems that'll work on day one.

In terms of future growth, we've added about five or six new salespeople in the past six months. We're much more in the aggressive marketing role than we were before. Probably a year ago, we were still wanting to make sure everything was working and testing out. As I tell the organization, you can't scale chaos. Over the last year, as we began to hit all our timelines for builds and price points for execution, and the quality of the way we measure it and some of our internal measures has more than improved by almost 300%. We're feeling very bullish about being able to handle a much broader base of customers and to deploy systems that'll work on day one.

Speaker #4: Probably a year ago, we were still wanting to make sure everything was working and testing it out. As I tell the organization, you can't scale chaos.

Speaker #4: But over the last year, as we began to hit all our timelines for builds and price points for execution, the quality of the way we measure it in some of our internal measures has improved by almost 300%.

Speaker #4: So, we're feeling very bullish about being able to handle a much broader base of customers and to deploy systems that'll work on day one.

Speaker #4: one. Thanks, Rick.

Nicole DeBlase: Thanks, Rick. That's really helpful. You kind of alluded to this, Izzy, when you were talking about the cadence of 2026. Is the expectation that you guys start to really ramp next-gen systems still kind of around the middle of the year? I think that's what we shared on the last earnings call. Does that mean we're going to have kind of stable revenue through the first half and then the next step up kind of comes in the second half of 2026? Thank you.

Speaker #3: That's really helpful. And you kind of alluded to this when you were talking about the cadence of 2026, but is the expectation that you guys start to really ramp next-gen systems still kind of around the middle of the year?

Speaker #3: I think that's what was shared on the last earnings call. And does that mean we're going to have kind of stable revenue through the first half and then the next step up kind of comes in the second half of '26?

Speaker #3: Thank

Speaker #3: you. Nicole,

Izzy Bartons: Nicole, that's exactly the way we're thinking of it. As you know, we unveiled it last quarter, so we had some signings then, and this quarter's signings are all about the next-gen system. What that does is exactly what you said. You'll see a less pronounced increase in revenue in, call it, the fourth, the first, and the second, and then you'll see more of an increase towards the tail end. Nicole, I would say you got that right. Thank you.

Izzy Martins: Nicole, that's exactly the way we're thinking of it. As you know, we unveiled it last quarter, so we had some signings then, and this quarter's signings are all about the next-gen system. What that does is exactly what you said. You'll see a less pronounced increase in revenue in, call it, the fourth, the first, and the second, and then you'll see more of an increase towards the tail end. Nicole, I would say you got that right. Thank you.

Speaker #5: That's exactly the way we're thinking of it. As you know, we unveiled it last quarter, so we had some signings then, and this quarter's signings are all about the next-gen system.

Speaker #5: So what that does is exactly what you said. You'll see a less pronounced increase in revenue and call it Q4, the first, and the second.

Speaker #5: And then you'll see more of an increase towards the tail end. So, Nicole, I would say you got that.

Speaker #5: right. Thank you. Perfect.

Nicole DeBlase: Perfect. Thanks. I'll pass it on.

Speaker #3: Thanks. I'll pass it on.

Speaker #2: Thank you. One moment for the next question. And our next question is coming from the line of Joe Giordano of TDCal, and your line is open.

Operator: Thank you. One moment for the next question. Our next question is coming from the line of Joe Giordano of TD Cowen. Your line is open.

Speaker #6: Hey, thanks, guys. Yeah, on Medline, can you talk about what's contemplated there? How many sites are we talking about? What types of technology is this encompassing?

Joe Giordano: Hey, thanks, guys. Yeah, on Medline, can you talk about what's contemplated there? How many sites are we talking about? What types of technology is this encompassing? Is there breakpack in this? Is there room for the micro-fulfillment strategy in there as well? What was effectively added to the backlog from them right now?

Speaker #6: Is there a break pack in this? Is there room for the micro-fulfillment strategy in there as well? What was effectively added to the backlog from them right now?

Speaker #4: Yeah. So Joe, it's one site. It's a proof of concept, is the way we look at it. Obviously, if we do a good job, they have a lot of warehouses.

Rick Cohen: Yeah. Joe, it's one site. It's a proof of concept is the way we look at it. Obviously, if we do a good job, they have a lot of warehouses. Initially, we contemplated a pretty straightforward moving case system, but we also, as we think, we can upsell or extend to sell to these customers micro-fulfillment, which could either be in a receiving room in a hospital for them, or very specific selection for them in a warehouse. Breakpack is also an opportunity for us to sell. Basically, we could sell them three different products. Right now, we're starting out with the first original product.

Speaker #4: And initially, we contemplated a pretty straightforward moving case system, but we also think we can upsell or extend to sell to these customers micro-fulfillment, which could either be in a receiving room in a hospital for them or very specific selection for them in a warehouse.

Speaker #4: And then break pack is also an opportunity for us to sell. So basically, we could sell them three different products. But right now, we have we're starting out with the first original product.

Speaker #6: And then, do we need to... I just want to make sure I understand the comments about Walmart, where the two phases are being incorporated into one now.

Joe Giordano: Do we need to—I just want to make sure I understand the comments about Walmart where the two phases being incorporated into one now. Do we need to change the way we describe these things? I guess I just want to make sure we understand the definition. If you say 10 new systems were started, can some of those new systems effectively be two that you would have said last time? Do we have to talk in dollar terms instead of number of sites now?

Speaker #6: Do we need to change the way we describe these things? I guess I just want to make sure that we understand the definition. So if you say 10 new systems were started, can some of those new systems effectively be two that you would have said last time?

Speaker #6: Do we have to talk in dollar terms instead of the number of sites now?

Speaker #4: I'll turn that over to Izzy because I'll get in.

Rick Cohen: I'll turn that over to Izzy because I'll get in trouble.

Speaker #4: trouble. I

Speaker #5: I think the way you said it, you have it right in the sense that not every system is created equal. But going forward, the size of the system is going to be slightly larger.

Izzy Bartons: I think the way you said it, you have it right in the sense of not every system is created equal, but going forward, the size of the system is going to be slightly larger. That's how I would think about it.

Izzy Martins: I think the way you said it, you have it right in the sense of not every system is created equal, but going forward, the size of the system is going to be slightly larger. That's how I would think about it.

Speaker #5: So that's how I would think about it.

Speaker #4: They could be slightly larger, or we also have the ability to do some smaller systems in terms of smaller space in a warehouse. So, it gives us a lot of flexibility. But what Izzy was saying is absolutely right: in the same amount of space that we were going to install and operate in some of our bigger sites, they can actually take down more of the warehouse because we can do more work in the same space.

Rick Cohen: They could be slightly larger, or we also have the ability to do some smaller systems in terms of smaller space in a warehouse. It gives us a lot of flexibility. What Izzy was saying is absolutely right, that in the same amount of space that we were going to install an operation in some of our bigger sites, they can actually take down more of the warehouse because we can do more work in the same space as we did before.

Speaker #4: As we

Speaker #4: did before. Yeah, I see.

Joe Giordano: Yeah, I see. Okay. Thanks, guys.

Speaker #6: Okay. Thanks, guys.

Speaker #2: Thank you. One moment. While we prepare for the next question. And our next question is coming from the line of Andrew Kabowitz of Citigroup.

Operator: Thank you. One moment while we prepare for the next question. Our next question is coming from the line of Andrew Kaplowitz of Citigroup. Your line is open.

Speaker #2: Your line is open.

Andrew Kaplowitz: Close enough. How are you guys doing? Systems gross margin was, I think, a high watermark close to 22%. That's despite all the changes you're making to your systems. I think you had spoken about more flattish gross margin for Q4. Is Q4 a function of ASR mix maybe being a little higher? Is it safe to say you're on a better glide path given improved operating leverage, better execution, any more color on whether you think your system gross margin continues to sort of just kind of go up from here?

Speaker #7: Guys, close enough. How are you doing? So, systems gross margin was, I think, a high watermark close to 22%, and that's despite all the changes you're making to your systems.

Speaker #7: And I think you had spoken about more flattish gross margin for Q4. So is Q4 a function of ASR mix maybe being a little higher, or is it safe to say you're on a better glide path given improved operating leverage, better execution, any more color on whether you think your system gross margin continues to sort of just kind of go up from here?

Speaker #5: Yeah. So, let me tack on what you said in the beginning of your question. It's how I think about, call it, ASR in the quarter.

Izzy Bartons: Yeah. Let me tackle what you said in the beginning of your question. It's how I think about, call it ASR in the quarter. It's really, call it mid to high single digits in terms of a percentage of total revenue in the fourth quarter. I kind of would expect that to be about the same as we progress. I think the bigger part of your question is how you think about, okay, how do you unpack the margins? I would say we feel really, really bullish about our system margins, not only where they are, but where we're headed. I think if you see the last several quarters, we have kind of a little bit of a lumpiness, but I think it's about the exit trend, where we landed in the fourth.

Izzy Martins: Yeah. Let me tackle what you said in the beginning of your question. It's how I think about, call it ASR in the quarter. It's really, call it mid to high single digits in terms of a percentage of total revenue in the fourth quarter. I kind of would expect that to be about the same as we progress. I think the bigger part of your question is how you think about, okay, how do you unpack the margins? I would say we feel really, really bullish about our system margins, not only where they are, but where we're headed. I think if you see the last several quarters, we have kind of a little bit of a lumpiness, but I think it's about the exit trend, where we landed in the fourth.

Speaker #5: It's really, call it mid to high digits in terms of a percentage of total revenue in the fourth quarter. I kind of would expect that to be about the same as we progress.

Speaker #5: I think the bigger part of your question is how you think about, okay, how do you unpack the margins? And I would say we feel really, really bullish about our system margins, not only where they are, but where we're headed.

Speaker #5: So, I think if you see the last several quarters, we have kind of a little bit of a lumpiness, but I think it's about the exit trend.

Speaker #5: We landed in the fourth, and I would say, even though we don't guide to margins, I would expect that to be a slight uptick in the first.

Izzy Bartons: I would say, even though we don't guide to margins, I would expect that to be a slight uptick in the first. I think it's more about when you think about how we're recognizing revenue in, call it that 12 to 18-month period, given when we roll out the next-generation storage system, that we expect those margins to really be expanding in the coming quarters. That's really what's the key part. Like I said, I would reiterate, if there's one thing I would walk away from today, it's the fact that we are very bullish about where our margins, not only where they are, but where they're going.

I would say, even though we don't guide to margins, I would expect that to be a slight uptick in the first. I think it's more about when you think about how we're recognizing revenue in, call it that 12 to 18-month period, given when we roll out the next-generation storage system, that we expect those margins to really be expanding in the coming quarters. That's really what's the key part. Like I said, I would reiterate, if there's one thing I would walk away from today, it's the fact that we are very bullish about where our margins, not only where they are, but where they're going.

Speaker #5: But I think it's more about when you think about how we're recognizing revenue in, call it, that 12 to 18-month period, given when we roll out the next-generation storage system, that we expect those margins to really be expanding.

Speaker #5: In the coming quarters, that's really what's the key part. And, like I said, I would reiterate, if there's one thing I would walk away from today, it is the fact that we are very bullish about where our margins are—not only where they are, but where they're going.

Speaker #5: going. It's helpful,

Andrew Kaplowitz: It's helpful, Izzy. Rick, backlog, as you know, has been somewhat flash for Symbotic. I know your burn rates are going up, but do you think you could grow Symbotic's backlog in FY 2026? We know you're ramping on GreenBox, ASR. Can you give us an update on whether FY 2026 is a big year for Symbotic new customers, GreenBox? Can you start booking backlog for ASR? Any thoughts around all that?

Speaker #7: Izzy, and then, Rick, backlog, as you know, has been somewhat flat for Symbotic. I know your burn rates are going up, but do you think you could grow Symbotic's backlog in FY26? We know you're ramping on Greenbox and ASR.

Speaker #7: Can you give us an update on whether FY26 is a big year for Symbotic's new customers, Greenbox? Can you start booking backlog for ASR?

Speaker #7: Any thoughts around all that?

Speaker #5: Yeah. So you're trying to trap me a little bit. So we don't guide to backlog, but here's how I would say it: Given the guide we provided for the first quarter, I would expect our backlog in the first quarter to really be no different than where we are.

Izzy Bartons: Yeah. You're trying to trap me a little bit. We don't guide to backlog, but here's how I would say, right? Given the guide we gave for the first quarter, I would expect our backlog in the first quarter to really be no different than where we are. You do have in the 10K, call it what our banding is, but what's coming through in the next 12 months. I would say too soon to tell of where backlog will be. It's not something that we talk to in coming quarters. I think you have to take two takeaways. As Rick said, we've built up our sales team, we obviously have more opportunities, and we will continue to do that.

Izzy Martins: Yeah. You're trying to trap me a little bit. We don't guide to backlog, but here's how I would say, right? Given the guide we gave for the first quarter, I would expect our backlog in the first quarter to really be no different than where we are. You do have in the 10K, call it what our banding is, but what's coming through in the next 12 months. I would say too soon to tell of where backlog will be. It's not something that we talk to in coming quarters. I think you have to take two takeaways. As Rick said, we've built up our sales team, we obviously have more opportunities, and we will continue to do that.

Speaker #5: You do have in the 10-K, call it what our banding is, but what's coming through in the next 12 months. So I would say it's too soon to tell where the backlog will be.

Speaker #5: It's not something we talk about in coming quarters. But I think you have to take two takeaways. As Rick said, we've built up our sales team.

Speaker #5: We obviously have more opportunities, and so we will continue to do that. I think it's also important to think about that backlog for us, which is strictly what you do from a gap perspective, not what we think could happen given that most customers will do one system at a time.

Izzy Bartons: I think it's also important to think about that backlog for us is strictly what you do from a GAAP perspective, not what we think could happen given that most customers will do one system at a time. Last but not least, what I'll leave you with, maybe not in the next 12 months, but soon thereafter to some extent, is to think about that we still have more than $5 billion of backlog to unlock with the mini micro-fulfillment systems. I'm not troubled about backlog at all. I think that's more about our long-term strategy. I would say that 2026 is a solid backlog.

I think it's also important to think about that backlog for us is strictly what you do from a GAAP perspective, not what we think could happen given that most customers will do one system at a time. Last but not least, what I'll leave you with, maybe not in the next 12 months, but soon thereafter to some extent, is to think about that we still have more than $5 billion of backlog to unlock with the mini micro-fulfillment systems. I'm not troubled about backlog at all. I think that's more about our long-term strategy. I would say that 2026 is a solid backlog.

Speaker #5: And then last but not least, what I'll leave you with—maybe not in the next 12 months, but soon thereafter to some extent—is to think about that we still have more than $5 billion of backlog to unlock with the mini micro fulfillment systems.

Speaker #5: So I'm not troubled about backlog at all. I think that's more about our long-term strategy. But I would say that 2026 is a solid backlog.

Speaker #7: Appreciate the color,

Andrew Kaplowitz: Appreciate the color, Izzy.

Speaker #7: Izzy. Thank you.

Operator: Thank you. One moment for the next question. Our next question will be coming from the line of Mark Delaney of Goldman Sachs. Your line is open.

Speaker #2: One moment for the next question. Our next question will be coming from the line of Mark Delaney of Goldman Sachs. Your line is open.

Speaker #8: Yes, good afternoon. Thank you very much for taking the questions. The first one was on Greenbox, and now that you have a CEO of Greenbox, along with the new storage structure that you've implemented and some of the progress you spoke to regarding building out sites there.

Mark Delaney: Yes. Good afternoon. Thank you very much for taking the questions. First one was on GreenBox. Now that you have a CEO of GreenBox, and also given the new storage structure that you've had and some of the progress you spoke to around building out sites there, I was hoping you could speak a bit more on the progress at GreenBox in terms of finding new customers to use the GreenBox sites.

Speaker #8: I was hoping you could speak a bit more on the progress at Greenbox in terms of finding new customers who use the Greenbox sites.

Speaker #4: Yeah. So our first site that will come live will be Atlanta. I mean, some of these sites are still under construction. Some will be a year away.

Rick Cohen: Yeah. Our first site that will come live will be Atlanta. I mean, some of these sites are still under construction. Some will be a year away, some maybe a little longer. Atlanta will come alive. We have a lot of interest in Atlanta. No customers to announce yet. We expect, hopefully, in the next 90 days, next 180 days, we'll have some announcements as to who our first customers will be. We continue to get interest. Now that we actually have facilities, we are in discussions with customers about how much space they want and when, but nothing to announce yet.

Speaker #4: Some may be a little longer, but Atlanta will come alive. We have a lot of interest in Atlanta. No customers to announce yet, but we expect, hopefully, in the next 90 days or next 180 days, we'll have some announcements as to who our first customers will be.

Speaker #4: We continue to get interest, and now that we actually have a facility, we are in discussions with customers about how much space they want and when.

Speaker #4: But nothing to announce yet.

Speaker #8: Okay. Is there anything in particular, Rick, you think new customers would want to see in order to get across the...

Mark Delaney: Okay. Anything in particular, Rick, you think new customers would want to see in order to get across the line?

Speaker #4: No. I mean, I think what's happened is what we're seeing in the real estate space. There was a downturn after COVID, and then some of the big guys have gobbled up a bunch of space.

Rick Cohen: No, I mean, I think what's happened is what we're seeing is on the real estate space, there was a downturn after COVID, and then some of the big guys have gobbled up a bunch of space. There's a shortage of space right now. We're very well positioned, and we're talking to people about some would be different versions of GreenBox. Some might be just jet storage, some might be very proactive warehouse handling services, and then we're starting to talk to a few new customers about just being a whole active 3PL. We're in a pretty good spot because we're ahead of the market, and we're talking to different customers about different things right now.

Speaker #4: So there's a shortage of space right now, so we're very well positioned. We're talking to people about some different versions of Greenbox.

Speaker #4: Some might be just jet storage. Some might be very proactive warehouse handling services. And then we're starting to talk to a few new customers about just being a whole active 3PL.

Speaker #4: So we're in a pretty good spot because we're ahead of the market. And so we're talking to different customers about different things right now.

Speaker #8: That's helpful. And just one more from me, if I could, please, on Greenbox. Your partner, SoftBank, has said they're looking to raise capital more generally in order to fund some of the investments they'd like to do.

Mark Delaney: That's helpful. Just one more from me, if I could please, on GreenBox. Your partner, SoftBank, has said they're looking to raise capital more generally in order to fund some of the investments they'd like to do. As you think about what that may or may not mean for GreenBox, any implications you can share in terms of how GreenBox is looking to have the funding and what that might mean for the pace of deployments at GreenBox? Thank you.

Speaker #8: So, as you think about what that may or may not mean for Greenbox, are there any implications you can share in terms of how Greenbox is looking to have the funding and what that might mean for the pace of deployments at Greenbox?

Speaker #8: Thank you.

Speaker #4: Yeah, so I mean, our agreement with SoftBank is ironclad. They're there to provide the funding, so we don't have any worries about providing the funding there.

Rick Cohen: Yeah. I mean, our agreement with SoftBank is ironclad. They're there to provide the funding. We don't have any worries about providing the funding there, and we have a lot of cash to do our part of it as well. Funding will not be a problem with GreenBox.

Speaker #4: And we have a lot of cash to do our part of it as well. So funding will not be a problem.

Speaker #4: Greenbox. Thank

Speaker #8: you.

Mark Delaney: Thank you.

Speaker #2: Thank you. One moment for the next question. And our next question is coming from the line of Colin Rush of Oppenheimer. Your line is open.

Operator: Thank you. One moment for the next question. Our next question is coming from the line of Colin Rusch of Oppenheimer. Your line is open.

Speaker #8: Thanks so much, guys. As you get into these customer conversations in a bit more detail, can you talk a little bit about the potential for adjustments to bot design or even system design more broadly and how we might think about the cadence of that?

Mark Delaney: Thanks so much, guys. As you get into these customer conversations in a bit more detail, can you talk a little bit about the potential for adjustments to bot design or even system design more broadly, and how we might think about the cadence of that evolution?

Colin Rusch: Thanks so much, guys. As you get into these customer conversations in a bit more detail, can you talk a little bit about the potential for adjustments to bot design or even system design more broadly, and how we might think about the cadence of that evolution?

Speaker #8: evolution? Yeah.

Rick Cohen: Yeah, that's a great question. What's happening is that the customers are coming in now. I'll answer your question in two ways. What's happening is that the market is appreciating the fact that we're not selling the same system that we were 10 years ago. A lot of our competitors have not innovated, they're just scaling. Our bots, for instance, we introduced to one of our customers what we call a stretch bot, so we can now handle a 36-inch case. We might even be able to handle two 18-inch cases. The bots have more flexibility. We've introduced vision and lidar on some of our bots, so we have collision avoidance.

Speaker #4: So, that's a great question. What's happening is that the customers are coming in now. And I'll answer your question in two ways. So, what's happening is that the market is appreciating the fact that we're not selling the same system that we were 10 years ago.

Speaker #4: And a lot of our competitors have not innovated; they're just scaling. So our bots—for instance, we introduced to one of our customers what we call a stretch bot.

Speaker #4: So, we can now handle a 36-inch case; we might even be able to handle two 18-inch cases. The bots have more flexibility. We've introduced vision and LIDAR on some of our bots.

Speaker #4: So we have collision avoidance. Customers are coming in, and even some of the ones that we talked to five years ago, who weren't ready to make a decision, they come in now and they say, "My goodness, the pace of change at which you guys are doing things." So I think we're really differentiating ourselves from the rest of the world.

Rick Cohen: Customers are coming in, and even some of the ones that we talked to five years ago who were not ready to make a decision, they come in now and they say, my goodness, the pace of change with which you guys are doing things. I think we are really differentiating us from the rest of the world. One of the things that we have done a lot of is we have moved to cloud-based. We are investing in AI resources, the databases, so we can do sorting and slicing and pallet building. For instance, truck routing, I think maybe better than anybody in the world at this point. I should avoid superlatives, but our customers say nobody can do what you guys are doing. It is not just building very aisle-friendly pallets. It is building super-friendly aisle pallets.

Customers are coming in, and even some of the ones that we talked to five years ago who were not ready to make a decision, they come in now and they say, my goodness, the pace of change with which you guys are doing things. I think we are really differentiating us from the rest of the world. One of the things that we have done a lot of is we have moved to cloud-based. We are investing in AI resources, the databases, so we can do sorting and slicing and pallet building. For instance, truck routing, I think maybe better than anybody in the world at this point. I should avoid superlatives, but our customers say nobody can do what you guys are doing. It is not just building very aisle-friendly pallets. It is building super-friendly aisle pallets.

Speaker #4: One of the things that we have done a lot of is we've moved to cloud-based. We're investing in AI resources: the databases, so we can do sorting and slicing and pallet building and, for instance, truck routing; I think maybe better than anybody in the world at this point.

Speaker #4: So I should avoid superlatives, but our customers say, "Nobody can do what you guys are doing." So it's not just building very aisle-friendly pallets; it's building super-friendly aisle pallets.

Speaker #4: But we can actually route the whole truck because of the reliability of our bots, which has made huge progress in the last two years, in terms of we pick a very, very, very high percentage of what we say we're going to pick, and we never make a mistake picking.

Rick Cohen: We can actually route the whole truck because of the reliability of our bots, which has made huge progress in the last two years in terms of we pick very, very, very, very high percentage of what we say we're going to pick, and we never make a mistake picking. For hospital supply, that's absolutely critical. For other people, like we're starting to go live with our Southern Glazer's site pretty soon, and it's liquor. It's both bars and restaurants. The ability to route trucks is really critical for them, and they're telling us other people can't do it. We continue to make improvements both in software. Our bots are getting much more technologically both intelligent, but also better vision tools, collision avoidance, better routing. We're also innovating on our pallet building and depalletizing to get product into the system.

We can actually route the whole truck because of the reliability of our bots, which has made huge progress in the last two years in terms of we pick very, very, very, very high percentage of what we say we're going to pick, and we never make a mistake picking. For hospital supply, that's absolutely critical. For other people, like we're starting to go live with our Southern Glazer's site pretty soon, and it's liquor. It's both bars and restaurants. The ability to route trucks is really critical for them, and they're telling us other people can't do it. We continue to make improvements both in software. Our bots are getting much more technologically both intelligent, but also better vision tools, collision avoidance, better routing. We're also innovating on our pallet building and depalletizing to get product into the system.

Speaker #4: So for hospital supply, that's absolutely critical. But for other people, like we're starting to go live with our Southern Glacier site pretty soon in—and it's liquor, and so it's both bars and restaurants.

Speaker #4: And so the ability to route trucks is really critical for them. And they're telling us other people can't do it. So we continue to make improvements both in software; our bots are getting much more technologically both intelligent but also better vision tools, collision avoidance, better routing, and we're also innovating on our pallet building and de-palletizing to get product into the system.

Speaker #4: So it's been—I mean, the reason I do what I do is I love the innovation, and I love the fact that we have a team that can do innovation very quickly.

Rick Cohen: It's been, I mean, the reason I do what I do is I love the innovation, and I love the fact that we have a team that can do innovation very quickly. That's creating a big, noticeable distinction between us and the rest of the market right now.

It's been, I mean, the reason I do what I do is I love the innovation, and I love the fact that we have a team that can do innovation very quickly. That's creating a big, noticeable distinction between us and the rest of the market right now.

Speaker #4: And that's creating a big, noticeable distinction between us and the rest of the market, right?

Speaker #4: Now, that's incredibly helpful on our.

Mark Delaney: That's incredibly helpful on our side. Just from the human capital and the competition for talent, we're hearing about a variety of different dynamics on that. Can you talk a little bit about your ability to attract folks and retain them as this market really heats up in terms of both physical AI, as well as some of the software that you're talking about?

Colin Rusch: That's incredibly helpful on our side. Just from the human capital and the competition for talent, we're hearing about a variety of different dynamics on that. Can you talk a little bit about your ability to attract folks and retain them as this market really heats up in terms of both physical AI, as well as some of the software that you're talking about?

Speaker #8: And then just from the human capital and the competition for talent, we're hearing about a variety of different dynamics on that. Can you talk a little bit about your ability to attract folks and retain them as this market really heats up in terms of both physical AI as well as some of the software that you're talking about?

Speaker #4: Yeah. So the reason we went public is that we had to create a compensation system that would allow us to attract people who were used to being compensated in stock.

Rick Cohen: Yeah, the reason we went public is because we had to create a compensation system that would allow us to attract people that were used to being compensated in stock. We're not doing billion-dollar packages out in Palo Alto, but we're doing pretty good in the Boston market and in the East. We also have opened an office on the West Coast. We've also opened an office in Vietnam because Omni Labs, which was one of the small healthcare startups that we bought, has a lot of Vietnamese people that founded that company. We've opened an office in Vietnam where there's huge talent. We're getting more than our fair share of talent, and at a faster rate.

Speaker #4: And so we're not doing billion-dollar packages out in Palo Alto, but we're doing pretty good in the Boston market. In the East, we have also opened an office on the West Coast.

Speaker #4: We've also opened an office in Vietnam because Omni Labs, which was one of the small healthcare startups that we bought, has a lot of Vietnamese people who founded that company.

Speaker #4: And so we've opened an office in Vietnam, where there's huge talent. We're getting more than our fair share of talent, and at a faster rate.

Speaker #4: And one of the things that's been interesting is, as the EV space falls down some, we are getting people from the EV world that are just disillusioned with some of the things that are happening there.

Rick Cohen: One of the things that's been interesting is as the EV space falls down some, we are getting people from the EV world that are just disillusioned with some of the things that are happening there and basically are bought. The way we're approaching it is an electronic vehicle with lidar and collision avoidance. It's not passenger carrying, but we do some very complicated things. We are able to attract people because they like the problems that we're solving, and our comp is as good as anybody needs to be. We're not going to compete with ChatGPT, but there's plenty of people that aren't going to work for them either.

One of the things that's been interesting is as the EV space falls down some, we are getting people from the EV world that are just disillusioned with some of the things that are happening there and basically are bought. The way we're approaching it is an electronic vehicle with lidar and collision avoidance. It's not passenger carrying, but we do some very complicated things. We are able to attract people because they like the problems that we're solving, and our comp is as good as anybody needs to be. We're not going to compete with ChatGPT, but there's plenty of people that aren't going to work for them either.

Speaker #4: And basically, our bot, the way we're approaching it, is an electronic vehicle with LIDAR and collision avoidance. It's not passenger-carrying, but we do some very complicated things.

Speaker #4: And so we're able to attract people because they like the problems that we're solving. And our comp is as good as anybody needs it to be; we're not going to compete with ChatGPT.

Speaker #4: But there's plenty of people that aren't going to work for them either.

Speaker #8: Excellent. Thanks so much, guys.

Mark Delaney: Excellent. Thanks so much, guys.

Colin Rusch: Excellent. Thanks so much, guys.

Speaker #4: Yep. Thank you.

Rick Cohen: Yep.

Operator: Thank you. One moment for the next question. Our next question will be coming from the line of Guy Hardwick of Barclays Capital. Your line is open.

Speaker #1: One moment for the next question. And our next question will be coming from the line of Guy Hardwick of Barclays Capital. Your line is open.

Speaker #8: Hi. Good evening. It looks like, based on the change in the RPO, that there was very strong bookings in the quarter, the $6.7 million.

Mark Delaney: Hi. Good evening. It looks like based on the change in the RPO, that there was very strong bookings in the quarter, the $600 to 700 million. Izzy, could you just split that out between the Medline, new win, and pricing?

Guy Hardwick: Hi. Good evening. It looks like based on the change in the RPO, that there was very strong bookings in the quarter, the $600 to 700 million. Izzy, could you just split that out between the Medline, new win, and pricing?

Speaker #8: Izzy, could you just split that out between the Medline new win and...

Speaker #8: pricing? Just so

Izzy Bartons: Just so we make it clear, Medline was something we signed in the tail end of the quarter. Medline is not going to influence really our results in the fourth quarter. Really, Medline is about no different than how we've spoken to how we recognize our revenue over almost really a two-year period. I wouldn't put a lot of, call it, credence to numbers or how we achieved our fourth quarter numbers with the announcement of a new vertical. I think the fourth quarter is about the momentum that we've created for months on end on the installations and moving, call it, six more sites to operational. That's really what drove it, plus the fact that, yes, we did sign 10 more new appointments.

Izzy Martins: Just so we make it clear, Medline was something we signed in the tail end of the quarter. Medline is not going to influence really our results in the fourth quarter. Really, Medline is about no different than how we've spoken to how we recognize our revenue over almost really a two-year period. I wouldn't put a lot of, call it, credence to numbers or how we achieved our fourth quarter numbers with the announcement of a new vertical. I think the fourth quarter is about the momentum that we've created for months on end on the installations and moving, call it, six more sites to operational. That's really what drove it, plus the fact that, yes, we did sign 10 more new appointments.

Speaker #9: We just want to make it clear: Medline was something we signed in the tail end of the quarter. So, Medline is not going to influence really our results in the fourth quarter.

Speaker #9: Really, Medline's about no different than how we spoke to how we recognize our revenue over almost really a two-year period. So I wouldn't put a lot of, call it, credence to numbers or how we achieved our fourth quarter numbers with the announcement of a new vertical.

Speaker #9: I think the fourth quarter is about the momentum that we've created for months on end with the installations, and moving, call it, six more sites to operational.

Speaker #9: That's really what drove it, plus the fact that, yes, we did sign 10 more new deployments. But overall, I would characterize the success of the fourth quarter based on the momentum that we've been working on for months on end.

Izzy Bartons: Overall, I would characterize the, call it, the success of the fourth quarter based on the momentum that we've been working on for months on end.

Overall, I would characterize the, call it, the success of the fourth quarter based on the momentum that we've been working on for months on end.

Speaker #8: So, Medline was not in the RPO, the $2.2 billion RPO at the end.

Mark Delaney: Medline was not in the RPO, the $222.5 billion RPO at the end of the quarter?

Guy Hardwick: Medline was not in the RPO, the $222.5 billion RPO at the end of the quarter?

Speaker #8: of the quarter? It is.

Speaker #9: Yes. It is in the RPO, but it's not, and it has no significance to the revenue generated in.

Izzy Bartons: It is. Yes. It is in the RPO, but it has no significance to the revenue generated in the quarter.

Izzy Martins: It is. Yes. It is in the RPO, but it has no significance to the revenue generated in the quarter.

Speaker #9: the quarter.

Speaker #8: Okay. So I'm

Mark Delaney: Okay. My question was more, was it material to that increase in the RPO? Given you would imply that your bookings were at $700 million, given the revenue burn in the quarter plus the change in the backlog, that's a very significant increase compared to, say, previous quarters. The question is really the mix of that, how much of it was Medline versus the increase in pricing.

Guy Hardwick: Okay. My question was more, was it material to that increase in the RPO? Given you would imply that your bookings were at $700 million, given the revenue burn in the quarter plus the change in the backlog, that's a very significant increase compared to, say, previous quarters. The question is really the mix of that, how much of it was Medline versus the increase in pricing.

Speaker #8: Just my question was more, was it material to that increase in the RPO? Because given, you would imply that your bookings were at $700 million, given the revenue burn in the quarter plus the change in the backlog.

Speaker #8: So, that's a very significant increase compared to, say, previous quarters. So, the question is really the mix of that: how much of it was Medline versus the increase in pricing?

Speaker #9: Yeah. I would say it's more about the increase in pricing, or call it how you consider what we did years ago and how inflation has moved.

Izzy Bartons: Yeah, I would say it's more about the increase in pricing, or call it how you consider what we did years ago and how inflation has moved. That's really the main driver in the RPO change. Yes, Medline is in there.

Izzy Martins: Yeah, I would say it's more about the increase in pricing, or call it how you consider what we did years ago and how inflation has moved. That's really the main driver in the RPO change. Yes, Medline is in there.

Speaker #9: So that's really the main driver in the RPO change. But yes, Medline is in there.

Speaker #8: And just in the 10-K, which you've referenced, Izzy, it looks like 12% of the backlog will be delivered over the next 12 months.

Mark Delaney: Just in the 10-K, which you referenced, Izzy, it looks like 12% of the backlog will be delivered over the next 12 months. That's quite a big increase if you go back 12 months ago. In the 2024 10-K, it said 10%. It looks like you actually missed that 10%. You came in more like 9, particularly if you include the ASR R&D revenue. Given what you said also about being a back-end loaded year, 12% of that backlog seems quite a big significant step up on the previous delivery, which you comparatively kind of missed slightly. What reasons should give us confidence that you can deliver 12% of the backlog in the next 12 months?

Guy Hardwick: Just in the 10-K, which you referenced, Izzy, it looks like 12% of the backlog will be delivered over the next 12 months. That's quite a big increase if you go back 12 months ago. In the 2024 10-K, it said 10%. It looks like you actually missed that 10%. You came in more like 9, particularly if you include the ASR R&D revenue. Given what you said also about being a back-end loaded year, 12% of that backlog seems quite a big significant step up on the previous delivery, which you comparatively kind of missed slightly. What reasons should give us confidence that you can deliver 12% of the backlog in the next 12 months?

Speaker #8: That's quite a big increase if you go back 12 months ago. In the 2024 10-K, you said 10%. It looks like you actually missed that 10%.

Speaker #8: You came in more at 9, particularly if you include the ASR R&D revenue. So given what you said about being a back-end loaded year, 12% of that backlog seems quite a significant step up on the previous delivery, which you effectively kind of missed slightly.

Speaker #8: So, what reasons should we give us confidence that you can deliver 12% of the backlog in the next 12 months?

Speaker #9: I think it's all about what we said in our prepared remarks. Given that we're seeing, call it, improvements from that start of installation to the end line.

Izzy Bartons: I think it's all about what we said in our prepared remarks, given that we're seeing, call it, improvements from that start of installation to the end line. That's what gives us the, call it, the momentum that we're talking about. Yes, we do have ASR that we built in during the year. You're absolutely correct. I think we need to be laser-focused on the exit trends and what the new structure delivers. As you know, not only is it more dense, but more importantly, from an installation perspective, it has, call it, it's somewhat the sub-assemblies that come in that have that process get done at a much faster pace. Good call-out on the 10 to 12. I'm really comfortable with the 12% that we have in this year's banding.

Izzy Martins: I think it's all about what we said in our prepared remarks, given that we're seeing, call it, improvements from that start of installation to the end line. That's what gives us the, call it, the momentum that we're talking about. Yes, we do have ASR that we built in during the year. You're absolutely correct. I think we need to be laser-focused on the exit trends and what the new structure delivers. As you know, not only is it more dense, but more importantly, from an installation perspective, it has, call it, it's somewhat the sub-assemblies that come in that have that process get done at a much faster pace. Good call-out on the 10 to 12. I'm really comfortable with the 12% that we have in this year's banding.

Speaker #9: And that's what gives us the momentum that we're talking about. Yes, we do have ASR that we built in during the year.

Speaker #9: So you're absolutely correct. But I think you really laser-focused on the exit trend and what the new structure delivers. As you know, not only is it more dense, but more importantly, from an installation perspective, it has, call it, its sub-assemblies that come in that have that process done at a much faster pace.

Speaker #9: So good call-out on the 10 to 12. I'm really comfortable with the 12% that we have in this year's banding.

Speaker #8: Thank

Mark Delaney: Thank you.

Guy Hardwick: Thank you.

Speaker #1: Thank you. One moment for the next question. And our next question is coming from the line of Derek Soderbergh of Cantor Fitzgerald. Your line is open.

Operator: Thank you. One moment for the next question. Our next question is coming from the line of Derek Soderberg of Cantor Fitzgerald. Your line is open.

Speaker #10: Yeah, thanks for taking my questions. On the recurring software fees, I'm wondering if you can share what new customers are signing up for in terms of an annual software fee on a percentage basis?

Rick Cohen: Yeah, thanks for taking my questions. On the recurring software fees, I'm wondering if you can share what new customers are signing up for in terms of an annual software fee on a percentage basis. Can you share that at all?

Derek Soderberg: Yeah, thanks for taking my questions. On the recurring software fees, I'm wondering if you can share what new customers are signing up for in terms of an annual software fee on a percentage basis. Can you share that at all?

Speaker #10: Can you share that at

Speaker #10: all?

Speaker #9: Unfortunately, that's

Izzy Bartons: Unfortunately, that's not an area that we give any more color. I think it's just, in general, how you map, call it, what we move to operational and when we start triggering that software fee. I would think if you take a little bit of the exit trend, that's really what we would be expecting in the near term.

Izzy Martins: Unfortunately, that's not an area that we give any more color. I think it's just, in general, how you map, call it, what we move to operational and when we start triggering that software fee. I would think if you take a little bit of the exit trend, that's really what we would be expecting in the near term.

Speaker #9: Not an area that we give any more color. I think it's just, in general, how you map call it, what we move to operational, and when we start triggering that software fee.

Speaker #9: But I would think if you take a little bit of the exit trend, that's really what we would be expecting in the near term.

Speaker #10: Okay, got it. And then, Rick, you mentioned there's about 76 million square feet of distribution centers in the healthcare vertical. I'm wondering if you've done the math internally—how many modules does this equate to, or what's sort of the dollar opportunity?

Rick Cohen: Okay. Got it. Rick, you mentioned there's about 76 million sq ft of distribution centers in the healthcare vertical. I'm wondering if you've done the math internally, how many modules does this equate to or what's sort of the dollar opportunity? I'm just wondering if you can help us size that healthcare vertical in the US. Thanks.

Derek Soderberg: Okay. Got it. Rick, you mentioned there's about 76 million sq ft of distribution centers in the healthcare vertical. I'm wondering if you've done the math internally, how many modules does this equate to or what's sort of the dollar opportunity? I'm just wondering if you can help us size that healthcare vertical in the US. Thanks.

Speaker #10: I'm just wondering if you can help us size that healthcare vertical in the U.S.

Speaker #10: Thanks. I haven't done

Rick Cohen: I haven't done that, but you can ask Izzy after this call is over.

Speaker #2: That, but you can ask Izzy after this call's over.

Izzy Bartons: It'd be quite large.

Izzy Martins: It'd be quite large.

Speaker #10: That sounds like it would be quite large. Good. Will...

Rick Cohen: Sounds good. Will do.

Speaker #10: do. Thank you.

Operator: Thank you. One moment. Our next question will be coming from the line of Jim Ridatucci of Needham & Company. Your line is open.

Speaker #1: One moment. Our next question will be coming from the line of Jim Ratatucci from Needham & Company. Your line is open.

Speaker #1: open. Thanks.

Nicole DeBlase: Thanks. Evening. I think late in the quarter, there was an announcement regarding Symbotic working with, I guess, a small battery technology company, I think in the UK, Niall Bolt. I'm trying to understand the significance of this, and if you could talk to how we might think of potential deployments. Is this going to be on new projects? Is there a plan to move forward with retrofits as the maintenance schedules dictate?

Jim Ricchiuti: Thanks. Evening. I think late in the quarter, there was an announcement regarding Symbotic working with, I guess, a small battery technology company, I think in the UK, Niall Bolt. I'm trying to understand the significance of this, and if you could talk to how we might think of potential deployments. Is this going to be on new projects? Is there a plan to move forward with retrofits as the maintenance schedules dictate?

Speaker #2: Evening. I think late in the quarter, there was an announcement regarding Somatic working with, I guess, a small battery technology company. I think in the UK, Niobolt.

Speaker #2: And I'm trying to understand the significance of this. And if you could talk to how we might think of potential deployments, is this going to be on new projects?

Speaker #2: Is there a plan to move forward with retrofits as the maintenance schedules dictate? Yep. So all our new batteries, starting, I think, from February on, we'll have Niobolt batteries.

Rick Cohen: Yep. All our new batteries, starting I think from February on, will have Niall Bolt batteries. We, for the last 15 years, have used ultra capacitors. An ultra capacitor can take a million charges, but the charge only lasts about eight minutes. The Niall Bolt is actually a battery, but it charges the same way as an ultra cap, and it can take a 40-minute charge. That may not seem that much to you at home, but the American grid, especially with all the stuff that's happening with AI, is pretty erratic, especially in hot weather places like Florida and Texas, which also have tornadoes. The ability to go 40 minutes is like a lifetime for us in terms of reliability of the bots.

Speaker #2: So, we, for the last 15 years, have used ultra-capacitors. An ultra-capacitor can take a million charges, but the charge only lasts about eight minutes.

Speaker #2: The Niobolt is actually a battery, but it charges the same way as an ultracapacitor, and it can take a 40-minute charge. Now, that may not seem like much to you at home, but the American grid—especially with all the stuff that's happening with AI—is pretty erratic, especially in hot weather places like Florida and Texas, which also have tornadoes.

Speaker #2: The ability to go 40 minutes is like a lifetime for us in terms of the reliability of the bots. So, when there's a power flicker, we want our bots to get back to a home station, which is on a charge plate.

Rick Cohen: When there's a power flicker, we want our bots to get back to a home station, which is on a charge plate. In the past, sometimes eight minutes wasn't enough. This is just one more thing that, as we show new customers what we're doing with battery technology, most people are operating their bots with a third rail. It's kind of an electronic wire in the system. When you have a flicker, the whole thing is down. The progress we've made on battery technology, and we've taken a stake in this company, it's very, very exciting. We can actually use these batteries for other parts of our system, and sometimes actually to help our customers keep uninterruptible power supplies in their warehouses. It's just one more thing of the march of technology that we had a problem.

When there's a power flicker, we want our bots to get back to a home station, which is on a charge plate. In the past, sometimes eight minutes wasn't enough. This is just one more thing that, as we show new customers what we're doing with battery technology, most people are operating their bots with a third rail. It's kind of an electronic wire in the system. When you have a flicker, the whole thing is down. The progress we've made on battery technology, and we've taken a stake in this company, it's very, very exciting. We can actually use these batteries for other parts of our system, and sometimes actually to help our customers keep uninterruptible power supplies in their warehouses. It's just one more thing of the march of technology that we had a problem.

Speaker #2: And in the past, sometimes eight minutes wasn't enough. So this is just one more thing that, as we show new customers what we're doing with battery technology, most people are operating their bots with a third rail.

Speaker #2: It's kind of an electronic wires in the system. And so you have a when you have a flicker, the whole thing is down. But so the progress we've made on battery technology, and we've taken a stake in this company, it's very, very exciting.

Speaker #2: And we can actually use these batteries for other parts of our system. Sometimes, we can help our customers keep uninterruptible power supplies in their warehouses.

Speaker #2: So it's just one more thing of the march of technology that we had a problem. The American grid is pretty bad and erratic, and we were thinking, well, how do we solve this problem for these automation systems?

Rick Cohen: The American grid is pretty bad or erratic. We were thinking, well, how do we solve this problem for these automation systems? I think this is really going to help us in life sciences and a bunch of other areas. Just in general, our systems are way more reliable than they were even two years ago.

The American grid is pretty bad or erratic. We were thinking, well, how do we solve this problem for these automation systems? I think this is really going to help us in life sciences and a bunch of other areas. Just in general, our systems are way more reliable than they were even two years ago.

Speaker #2: I think this is really going to help us in life sciences and a bunch of other areas. But just in general, our systems are way more reliable than they were even two years ago.

Speaker #2: ago. Yeah.

Speaker #10: Thank you. Follow-up question, just as we think of that, your fiscal 2026 goals—I'm wondering how does geographic expansion figure into that? Obviously, you've got a site in Mexico.

Rick Cohen: Thank you. Follow-up question. Just as we think about your fiscal 2026 goals, I'm wondering how does geographic expansion figure into that? Obviously, you've got a site in Mexico that you're working on. I'm just wondering if there's an opportunity, you think, in fiscal 2026 to perhaps get into Europe.

Jim Ricchiuti: Thank you. Follow-up question. Just as we think about your fiscal 2026 goals, I'm wondering how does geographic expansion figure into that? Obviously, you've got a site in Mexico that you're working on. I'm just wondering if there's an opportunity, you think, in fiscal 2026 to perhaps get into Europe.

Speaker #10: You're working on, and I'm just wondering if there's an opportunity you think in Fiscal 2026 to perhaps get into Europe?

Speaker #2: Yeah. As a matter of fact, half our sales teams are in Europe today. It’s been interesting with Europe because so many of the great automation companies came from Europe.

Rick Cohen: Yeah. As a matter of fact, half our sales team is in Europe today. It's been interesting with Europe because so many of the great automation companies came from Europe because Europe had either smaller land spaces, more restrictive labor laws. As we go to Europe, especially with our smaller, denser warehouses, people are really getting interested. We've been doing this long enough that the reliability issues are not a problem. I'm very optimistic about Europe. We see lots of opportunities.

Speaker #2: Because Europe has either smaller land spaces or more restrictive labor laws, as we expand to Europe, especially with our smaller, denser warehouses, people are really getting interested.

Speaker #2: And we've been doing this long enough that the reliability issues are not a problem. So I'm very optimistic about Europe. We see lots of opportunities.

Speaker #10: Thank you.

Rick Cohen: Thank you.

Jim Ricchiuti: Thank you.

Speaker #1: Thank you. One moment for the next question. And our next question will be coming from the line of Ken Newman of KeyBank Capital Markets.

Operator: Thank you. One moment for the next question. Our next question will be coming from the line of Ken Newman of KeyBanc Capital Markets. Your line is open.

Speaker #1: Your line

Speaker #1: Your line is open. Hey,

Speaker #11: Thanks. Good evening, guys. Thanks for having me. Izzy, I wanted to go back to your comment about the change in the phasing of the revenue.

Nicole DeBlase: Hey, thanks. Good evening, guys. Thanks for excusing me in. Izzy, I wanted to go back to your comment about the change in the phasing of the revenue. I know you said you expect less pronounced sequential revenue growth in the first half versus the back half. Just looking historically, though, I think in the last three years, sales have typically been down sequentially, high single to low double digits, Q4 to Q1, and the midpoint of the guide is assuming something that's a little bit better than flat. I just want to make sure we're understanding that growth comment for accelerating growth in the back half versus what already seems like a bit of a stronger start versus typical seasonality.

Ken Newman: Hey, thanks. Good evening, guys. Thanks for excusing me in. Izzy, I wanted to go back to your comment about the change in the phasing of the revenue. I know you said you expect less pronounced sequential revenue growth in the first half versus the back half. Just looking historically, though, I think in the last three years, sales have typically been down sequentially, high single to low double digits, Q4 to Q1, and the midpoint of the guide is assuming something that's a little bit better than flat. I just want to make sure we're understanding that growth comment for accelerating growth in the back half versus what already seems like a bit of a stronger start versus typical seasonality.

Speaker #11: I know you said you expect less pronounced sequential revenue growth in the first half versus the back half. Just looking historically, though, I think in the last three years, sales have typically been down sequentially.

Speaker #11: Highest single to low double digits, 4Q to 1Q. And the midpoint of the guys, assuming something that's a little bit better than flat. So I just want to make sure we're understanding that growth comment for accelerating growth in the back half versus what already seems like a bit of a stronger start versus typical.

Speaker #11: seasonality. That's fair.

Izzy Bartons: That's fair. If you take the high end of the range we just gave for the first quarter, we would sort of break the trends that we've been typically seeing, at least from what I saw the last two years. Clearly, that's our main focus. If you take, call it, the bottom end of the range I gave you, then that's really just about 1% less than where we landed in the fourth quarter. It depends. If you take the midpoint, we're kind of flat to exactly where we achieved in the fourth quarter. Internally, as you could imagine, we're trying to get past this lumpiness and really be continuing on continual improvement. Although I guided right in between, guided slightly under where we are in the fourth, the guide was $610 to 630.

Izzy Martins: That's fair. If you take the high end of the range we just gave for the first quarter, we would sort of break the trends that we've been typically seeing, at least from what I saw the last two years. Clearly, that's our main focus. If you take, call it, the bottom end of the range I gave you, then that's really just about 1% less than where we landed in the fourth quarter. It depends. If you take the midpoint, we're kind of flat to exactly where we achieved in the fourth quarter. Internally, as you could imagine, we're trying to get past this lumpiness and really be continuing on continual improvement. Although I guided right in between, guided slightly under where we are in the fourth, the guide was $610 to 630.

Speaker #4: If you take the high end of the range we just gave for the first quarter, we would sort of break the trends that we've been typically seeing, at least from what I saw the last two years.

Speaker #4: So clearly, that's our main focus. But if you take the bottom end of the range I gave you, then that's really just about 1% less than where we landed in Q4.

Speaker #4: So, it depends. But if you take the midpoint, we're kind of flat, to exactly where we achieved in the fourth quarter. But internally, as you can imagine, we're trying to get past this lumpiness and really be continuing on continual improvement.

Speaker #4: And so, although I guided right in between, I guided slightly under where we are in the fourth quarter. So, the guide was $610 million to $630 million.

Speaker #4: But if you take that midpoint, that's really where I go about this less pronounced sequential improvement. But the overall goal, to be clear, is not to have that lumpiness in the first quarter going forward.

Izzy Bartons: If you take that midpoint, that's really where I go about this less pronounced sequential improvement. The overall goal, to be clear, is not to have that lumpiness in the first quarter going forward.

If you take that midpoint, that's really where I go about this less pronounced sequential improvement. The overall goal, to be clear, is not to have that lumpiness in the first quarter going forward.

Speaker #11: Okay. No, that's very helpful, Carl. I appreciate that. And then secondly, for my follow-up, we are hearing some more comments from hardware-related manufacturers around higher DRAM pricing.

Nicole DeBlase: Okay. No, that's very helpful, Color. I appreciate that. For my follow-up, we are hearing some more comments from hardware-related manufacturers around higher DRAM pricing and memory shortages. Rick, can you maybe just remind us how memory intensive are the Symbotic deployments? Any comments on what you're seeing broadly from chip availability and pricing as it relates to your ability to kind of keep margins stable, even though I'm sure you're able to pass through the pricing. Is there a risk of just nominally margins kind of stepping down?

Ken Newman: Okay. No, that's very helpful, Color. I appreciate that. For my follow-up, we are hearing some more comments from hardware-related manufacturers around higher DRAM pricing and memory shortages. Rick, can you maybe just remind us how memory intensive are the Symbotic deployments? Any comments on what you're seeing broadly from chip availability and pricing as it relates to your ability to kind of keep margins stable, even though I'm sure you're able to pass through the pricing. Is there a risk of just nominally margins kind of stepping down?

Speaker #11: And memory shortages. Rick, can you maybe just remind us how memory-intensive the SIM bot deployments are? And just any comments on what you’re seeing broadly from chip availability and pricing as it relates to your ability to kind of keep margins stable, even though I'm sure you’re able to pass through the pricing?

Speaker #11: Is there a risk of just nominally margins kind of stepping?

Speaker #11: down? No, not for us.

Rick Cohen: No, not for us. I mean, our bots are, I mean, basically, what our bots are doing is transmitting data back to us, which we then process in the cloud, and with different various algorithms, which are mostly proprietary. Yeah, we're buying more cloud storage, but not significantly like the super big guys are. It's coming down in price. We're not doing that directly on the bots. What we're doing is we will take the information that the bots transmit back. That's a controllable expense, though it's going up. We then reprogram the bots for different various edge case behaviors. A bot will see something and say, I don't know what to do, and it'll transmit back to us. The bots are being trained, but the bots are not truly independent AI machines.

Speaker #2: I mean, our bots are, I mean, basically what our bots are doing is transmitting data back to us, which we then process in the cloud.

Speaker #2: And with various algorithms, which are mostly proprietary. So yeah, we're buying more cloud storage, but not significantly like the super big guys are.

Speaker #2: So, and it's coming down in price. But we're not doing that directly on the bots. What we're doing is we will take the information that the bots transmit back.

Speaker #2: That's a controllable expense, though it's going up. And then reprogram the bots for various edge case behaviors. So, like a bottle sees something and says, "I don't know what to do." And so it'll transmit back to us.

Speaker #2: But the bots are being trained, yet the bots are not truly independent AI machines. We kind of take that information back, do the processing, run the algorithms, and then send it back out in a software release.

Rick Cohen: We kind of take that information back, do the processing, run the algorithms, and then send it back out in a software release. Chips are not really a problem for us as we get bigger and better. I mean, I think this time next year, we'll have over 20,000 bots. We're a major factor for some of the medium and smaller-sized companies. Even Nvidia, there's a certain amount of the lower-priced chips are what we're using. We may upgrade some of those chips, but they're not the $25,000 chips that other people are buying. We don't use that many of them.

We kind of take that information back, do the processing, run the algorithms, and then send it back out in a software release. Chips are not really a problem for us as we get bigger and better. I mean, I think this time next year, we'll have over 20,000 bots. We're a major factor for some of the medium and smaller-sized companies. Even Nvidia, there's a certain amount of the lower-priced chips are what we're using. We may upgrade some of those chips, but they're not the $25,000 chips that other people are buying. We don't use that many of them.

Speaker #2: So, chips are not really a problem for us as we get bigger and better. I mean, I think this time next year, we'll have over 20,000 bots.

Speaker #2: So we are a major factor for some of the medium and smaller-sized companies. And even NVIDIA, there's a certain amount of the lower-priced chips that we are using.

Speaker #2: We may upgrade some of those chips, but they're not the $25,000 chips that other people are buying. And we don't use that many of them.

Speaker #2: them. That's

Speaker #11: super helpful. I appreciate that.

Nicole DeBlase: That's super helpful. I appreciate that.

Ken Newman: That's super helpful. I appreciate that.

Rick Cohen: Yep.

Speaker #1: Thank you. One moment for the next question. Our next question will be coming from the line of Mike Lattimore of Northland Capital Markets.

Operator: Thank you. One moment for the next question. Our next question will be coming from the line of Mike Lattimore of Northland Capital Markets. Your line is open.

Speaker #1: Your line is

Speaker #1: open. Hi, great.

Speaker #12: Yeah, I guess I'll just build off that last answer. I guess if you're expecting 20,000 or so bots in a year, can you give us kind of a baseline of where we are now?

Rick Cohen: Great. Yeah. I guess I'll just build off that last answer. I guess if you're expecting 20,000 or so bots in a year, can you give us kind of a baseline of where we are now?

Mike Latimore: Great. Yeah. I guess I'll just build off that last answer. I guess if you're expecting 20,000 or so bots in a year, can you give us kind of a baseline of where we are now?

Rick Cohen: Yeah, I mean, we have about 15,000 bots right now. We expect to keep growing, and there'll be different kinds of bots that we'll use. There'll be different versions. The back-of-store mini system will use a similar bot, so there'll be different versions of our bots as well.

Speaker #2: We have about 15,000 bots right now, so we expect to keep growing. There will be different kinds of bots that will use those to create different versions. Back to store mini system, we will use a similar bot.

Speaker #2: So there'll be different versions of our bots as well.

Speaker #12: Yeah, that makes sense. And then I guess just on the new system starts in the quarter, I think you said there were 10. Were there any break packs in there?

Rick Cohen: Yeah, that makes sense. I guess just on the new system starts in the quarter, I think you said there was 10. Were there any break packs in there? I think last quarter, you had guided to sort of mid-single, upper single digits. Should we still think about that as kind of the run rate for a while?

Mike Latimore: Yeah, that makes sense. I guess just on the new system starts in the quarter, I think you said there was 10. Were there any break packs in there? I think last quarter, you had guided to sort of mid-single, upper single digits. Should we still think about that as kind of the run rate for a while?

Speaker #12: And I think last quarter you had guided to sort of mid-single, upper single digits. Should we still think about that as kind of the run rate for a while?

Speaker #4: So there's a mix of the 10 in the 10 deployments we had in the fourth quarter. Yeah, there were a couple of break packs.

Izzy Bartons: There's a mix of the 10 in the 10 deployments we had in the fourth quarter. Yeah, there were a couple of break packs. Sorry. Your next question was, can you repeat your latter part of your question?

Izzy Martins: There's a mix of the 10 in the 10 deployments we had in the fourth quarter. Yeah, there were a couple of break packs. Sorry. Your next question was, can you repeat your latter part of your question?

Speaker #4: Sorry, and your next question was, can you repeat your latter part?

Speaker #4: of your question? Sure, sure,

Rick Cohen: Sure, sure. Sorry. Yeah. Last quarter, I think you had guided the system starts being in the kind of mid to high single-digit range. You did 10 this quarter. I guess any new view on the system start number?

Mike Latimore: Sure, sure. Sorry. Yeah. Last quarter, I think you had guided the system starts being in the kind of mid to high single-digit range. You did 10 this quarter. I guess any new view on the system start number?

Speaker #12: sorry. Yeah, last quarter, I think you had guided I think you had guided the system starts being in the kind of mid to high single digit range.

Speaker #12: And then you did 10 this quarter. So I guess any new view on the system start number?

Speaker #4: It's something we don't typically guide to is what our call-it system starts are going to be or which ones are going to be moving into operational.

Izzy Bartons: It's something we don't typically guide to is what our, call it, system starts are going to be or which ones are going to be moving into operational. I think the best way to think of it is, although I said historically I want to get away from the lumpiness in the revenue, I do think, though, sometimes we do have more of a tail end of those deployments in the fourth quarter. Now, we have a healthy amount that we have throughout all the quarters of next year, but I think it's less about trying to manage what they are and more about, okay, the size and how much is going to be coming through in the revenue. More importantly is the guide of the $610 to 630 in the top.

Izzy Martins: It's something we don't typically guide to is what our, call it, system starts are going to be or which ones are going to be moving into operational. I think the best way to think of it is, although I said historically I want to get away from the lumpiness in the revenue, I do think, though, sometimes we do have more of a tail end of those deployments in the fourth quarter. Now, we have a healthy amount that we have throughout all the quarters of next year, but I think it's less about trying to manage what they are and more about, okay, the size and how much is going to be coming through in the revenue. More importantly is the guide of the $610 to 630 in the top.

Speaker #4: I think the best way to think of it is, although I said historically I want to get away from the lumpiness in the revenue, I do think, though, sometimes we do have more of a tail end of those deployments in the fourth quarter.

Speaker #4: Now we have a healthy amount that we have throughout all the quarters of next year. But I think it's less about trying to manage what they are.

Speaker #4: And more about, okay, the size and how much is going to be coming through in the revenue. So more importantly, is the guidance of $610 million to $630 million in the...

Speaker #4: top. Yeah, okay.

Rick Cohen: Yeah. Okay. Great. Thank you.

Mike Latimore: Yeah. Okay. Great. Thank you.

Speaker #12: Great. Thank

Speaker #12: you. Thank you.

Operator: Thank you. One moment for the next question. Our next question will be coming from the line of Greg Palm of Ken Newman. Newman, your line is open.

Speaker #1: One moment for the next question. Our next question will be coming from the line of Greg Palm of Craig Needham. Hillum, your line is open.

Speaker #11: Yeah, thanks. I want to go back to systems gross margin because that was certainly a highlight. And it sounds like you're pretty confident that that can continue to improve.

Joe Giordano: Yeah. Thanks. I want to go back to systems gross margin because that was certainly a highlight. It sounds like you're pretty confident that that can continue to improve. Any way to maybe, Izzy, if you can sort of break out or bucket out some of the positive impacts in the quarter and just sort of broadly what's happening from an improvement standpoint relative to maybe the last 12 or 18 months?

Greg Palm: Yeah. Thanks. I want to go back to systems gross margin because that was certainly a highlight. It sounds like you're pretty confident that that can continue to improve. Any way to maybe, Izzy, if you can sort of break out or bucket out some of the positive impacts in the quarter and just sort of broadly what's happening from an improvement standpoint relative to maybe the last 12 or 18 months?

Speaker #11: So, any way to maybe, Izzy, if you can sort of break out or bucket out some of the positive impacts in the quarter and just sort of broadly what's happening from an improvement standpoint relative to maybe the last 12 or 18 months?

Speaker #4: Yeah, I mean, I think that we keep going back to the same thing. But I think we actually have seen it over multiple quarters. And really, the way I would think about it is we thought a little bit of, call it, a decline in our operation services, but yet overall we had a terrific gross margin on the bottom line.

Izzy Bartons: Yeah. I mean, I think we keep going back to the same thing, but I think we've actually seen it over multiple quarters. Really, the way I would think about it is we saw a little bit of, call it, a decline in our operation services, but yet overall, we had a terrific gross margin on the bottom line. If you just go through all the math in our earnings release, and I know it's not the easiest thing to track to, you'll come back to that the systems is really where the powerful improvement is. I think if you unpack the quarters, really what it comes down to, last year at this time, we did have some cost creep.

Izzy Martins: Yeah. I mean, I think we keep going back to the same thing, but I think we've actually seen it over multiple quarters. Really, the way I would think about it is we saw a little bit of, call it, a decline in our operation services, but yet overall, we had a terrific gross margin on the bottom line. If you just go through all the math in our earnings release, and I know it's not the easiest thing to track to, you'll come back to that the systems is really where the powerful improvement is. I think if you unpack the quarters, really what it comes down to, last year at this time, we did have some cost creep.

Speaker #4: So if you just go through all the math in our earnings release, and I know it's not the easiest thing to track, you'll come back to that the systems are really where the powerful improvement is.

Speaker #4: I think if you unpack the quarters, really what it comes down to is that last year at this time, we did have some cost creep. And I think if you walked the halls here in Wilmington, what everybody reminds me of is that we did have that really disciplined cost management for the entire year.

Izzy Bartons: I think if you walked the halls here in Wilmington, what everybody reminds me of is that we did have that really disciplined cost management for the entire year. With no cost creep in how the supply chain team installed the systems, that's really what's driving the overall systems gross margin, and not to mention what it will become as we deploy the more denser systems. Even before that, I think that's really what's the highlight, not only in the quarter, in the highlight of what we feel bullish about what the systems margins will be going forward.

I think if you walked the halls here in Wilmington, what everybody reminds me of is that we did have that really disciplined cost management for the entire year. With no cost creep in how the supply chain team installed the systems, that's really what's driving the overall systems gross margin, and not to mention what it will become as we deploy the more denser systems. Even before that, I think that's really what's the highlight, not only in the quarter, in the highlight of what we feel bullish about what the systems margins will be going forward.

Speaker #4: And with no cost creep in how the supply chain team installed the systems, that's really what's driving the overall systems gross margin. Not to mention what it will become as we deploy the more denser systems.

Speaker #4: So even before that, I think that's really what's the highlight—not only in the quarter, but in the highlight of what we feel bullish about regarding the systems' margins going forward.

Speaker #11: Okay. Yeah, that makes sense. And I guess, Rick, I'm fairly certain that Medline was a pretty large user of another competitor in the warehouse automation space.

Joe Giordano: Okay. Yeah. Makes sense. I guess, Rick, I'm fairly certain that Medline was a pretty large user of another competitor in the warehouse automation space. I'm curious, does this have potential to be a competitive displacement, something that could be expanded from this initial site? I know they've already automated a big chunk of their footprint already. Just want to hear what the actual opportunity with them could be over the years.

Greg Palm: Okay. Yeah. Makes sense. I guess, Rick, I'm fairly certain that Medline was a pretty large user of another competitor in the warehouse automation space. I'm curious, does this have potential to be a competitive displacement, something that could be expanded from this initial site? I know they've already automated a big chunk of their footprint already. Just want to hear what the actual opportunity with them could be over the years.

Speaker #11: So I'm curious, does this have potential to be a competitive displacement, something that could be expanded from this initial site? I know they've already automated a big chunk of their footprint already.

Speaker #11: So, I just want to hear what the actual opportunity with them could be over the.

Speaker #2: The answer is yes. Our technology does things that other people's technology doesn't do. We also can augment some of the other technologies that we've seen in some of their facilities.

Rick Cohen: The answer is yes. Our technology does things that other people's technology doesn't do. We also can augment some of the other technologies that we've seen in some of their facilities. We would do bigger projects. I think if they like what we're doing, and I don't want to mislead anybody, we don't have a contract for any more than one. If they like what we're doing, I think we have a huge opportunity with them.

Speaker #2: But we would do bigger projects, and I think if they like what we're doing— and I don't want to mislead anybody— we don't have a contract for any more than one.

Speaker #2: But if they like what we're doing, I think we have a huge opportunity with them.

Speaker #11: Okay. Fair enough. I appreciate the color.

Joe Giordano: Okay. Fair enough. Appreciate the color.

Greg Palm: Okay. Fair enough. Appreciate the color.

Speaker #2: Yeah.

Rick Cohen: Yeah.

Speaker #1: Thank

Speaker #1: You. And our next question will be coming from the line of Keith Housem of North Coast Research. Your line is now open.

Operator: Thank you. Our next question will be coming from the line of Keith Housem of North Coast Research. Your line is open.

Speaker #1: open. Good afternoon.

Rick Cohen: Good afternoon. Hey, Rick. I know it's kind of new news here, but the largest retailer in the US is scaling back some of their investments with, I guess, a smaller competitor of yours. I guess any thoughts on what was perhaps driving that? Does that dampen any of the enthusiasm that you see from your customers about the use of this type of technology for the fulfillment centers going forward?

Keith Housum: Good afternoon. Hey, Rick. I know it's kind of new news here, but the largest retailer in the US is scaling back some of their investments with, I guess, a smaller competitor of yours. I guess any thoughts on what was perhaps driving that? Does that dampen any of the enthusiasm that you see from your customers about the use of this type of technology for the fulfillment centers going forward?

Speaker #12: Hey, Rick, I know it's kind of new news here, but the largest retailer in the U.S. is scaling back some of their investments with, I guess, a smaller competitor of yours.

Speaker #12: I guess any thoughts on what was perhaps driving that? And does that dampen any of the enthusiasm that you see from your customers about the use of this type of technology for the fulfillment centers going forward?

Speaker #12: forward? Yeah.

Rick Cohen: Yeah. No, actually, it's actually supercharged the interest in our technology. What's happening in the e-commerce space and in the supermarket space in particular is the congestion from all the people picking orders in the store. DoorDash and that stuff, Instacart was a great convenience, but it's really very confusing and messing up the stores. What we're talking to people about is how can you put 20,000 or 30,000 items in 10,000sq ft and deliver in a marketplace or a city that could be actually used, the fresh produce from the store? E-commerce is evolving in the way of the biggest guy in e-commerce delivers 1.2 packages or 1.2 items per delivery. The retailers in the food space are delivering probably 15 or 20 package orders.

Speaker #2: No, actually, it's supercharged the interest in our technology. So what's happening in the e-commerce space, and in the supermarket space in particular, is the congestion from all the people picking orders in the store. The DoorDash and Instacart services were a great convenience.

Speaker #2: But it's really very confusing and messing up the stores. What we're talking to people about is how can you put 20,000 or 30,000 items in 10,000 square feet and deliver in a marketplace or a city that could actually use the fresh produce from the store?

Speaker #2: So, e-commerce is evolving. In the way that the biggest player in e-commerce delivers 1.2 packages or 1.2 items per delivery, retailers in the food space are delivering probably 15 or 20 package orders.

Speaker #2: And so it actually allows them to do a lot of things that you can't do when you're just delivering 1.2 eaches. The reason I can't speak fully—I mean, I'm on view, but I won't express it here.

Rick Cohen: It actually allows them to do a lot of things that you can't do when you're just delivering 1.2 eaches. The reason I can't speak fully, I mean, I have my own view, but I won't express it here, why that retailer made a change of mind with that technology. I think what you're starting to see and where we are is that we can actually use the same bot but pick each and pick eaches or bring a tote. A bot can bring an item or a number of items to a pick station, very similar to what we do in our break pack installs, and actually do customer orders, which is initially this is what we've been trying to explain to people. Three years ago, we did a break pack where a bot would bring a tote to a person.

It actually allows them to do a lot of things that you can't do when you're just delivering 1.2 eaches. The reason I can't speak fully, I mean, I have my own view, but I won't express it here, why that retailer made a change of mind with that technology. I think what you're starting to see and where we are is that we can actually use the same bot but pick each and pick eaches or bring a tote. A bot can bring an item or a number of items to a pick station, very similar to what we do in our break pack installs, and actually do customer orders, which is initially this is what we've been trying to explain to people. Three years ago, we did a break pack where a bot would bring a tote to a person.

Speaker #2: Why that retailer made a change of mind with that technology? But I think what you're starting to see in where we're is that we can actually use the same bot but pick each and pick eaches or use or bring a tote a bot can bring an item or a number of items to a pick station very similar to what we do in our break pack installs.

Speaker #2: And actually do customer orders, which is initially what we've been trying to explain to people. Three years ago, we did a break pack where a bot would bring a tote to a person, the person would pick it, and then we would batch pick it.

Rick Cohen: The person would pick it, and then we basically batch pick it. The same, more or less, concept can be deployed in the back of a store, except you're picking a customer order. The real problem that people are trying to solve with e-commerce now is speed of delivery and much more local. I think our commitment and our largest customer asked us to develop this for them. We're really excited. This is a very, very big market.

The person would pick it, and then we basically batch pick it. The same, more or less, concept can be deployed in the back of a store, except you're picking a customer order. The real problem that people are trying to solve with e-commerce now is speed of delivery and much more local. I think our commitment and our largest customer asked us to develop this for them. We're really excited. This is a very, very big market.

Speaker #2: The same, more or less, concept can be deployed in the back of a store, except you're picking a customer order. And so, the real problem that people are trying to solve with e-commerce now is the speed of delivery.

Speaker #2: And much more local. So, I think our commitment—and our largest customer asked us to develop this for them. We're really excited. This is a very, very big.

Speaker #2: market.

Speaker #12: Great. Thank you. Appreciate

Rick Cohen: Great. Thank you. Appreciate it.

Keith Housum: Great. Thank you. Appreciate it.

Speaker #1: Thank you. And that does conclude today's Q&A session. I would now like to turn the call back over to management for closing remarks.

Operator: Thank you. That does conclude today's Q&A session. I would now like to turn the call back over to management for closing remarks. Please go ahead.

Speaker #1: Please go

Speaker #1: ahead. Yeah.

Speaker #2: Thank you, everybody, for joining our call tonight. We appreciate your interest in robotics and look forward to seeing some of you in the coming weeks at investor conferences that we'll attend.

Operator: Thank you, everybody, for joining our call tonight. We appreciate your interest in Symbotic and look forward to seeing some of you in the coming weeks at investor conferences that we'll attend. Goodbye.

Charlie Anderson: Thank you, everybody, for joining our call tonight. We appreciate your interest in Symbotic and look forward to seeing some of you in the coming weeks at investor conferences that we'll attend. Goodbye.

Speaker #2: Goodbye.

Operator: Thank you all for joining today's conference call. You may all disconnect.

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