Symbotic - Earnings Call - Q2 2025
May 7, 2025
Executive Summary
- Revenue of $549.7M grew 40% YoY; adjusted EBITDA of $34.7M more than tripled YoY, with gross margin expanding to 19.6% on improved deployment execution and mix.
- Q3 FY25 guidance calls for revenue of $520–$540M and adjusted EBITDA of $26–$30M; management noted the guide excludes tariff effects and expects a modest sequential margin step-down primarily from lower ASR contribution in Q3.
- Record operational momentum: 10 system starts and 8 completes in Q2, taking operational systems to 37; backlog edged up to $22.7B; free cash flow was $249.0M and cash rose to ~$955M.
- Stock-relevant narrative: execution improvement and margin expansion are positives; near-term top-line guide below Q2 likely reflects starts timing and mix, with tariffs a gross margin drag despite pass-through revenue, and ASR development revenue stepping down in Q3 before re-ramping.
What Went Well and What Went Wrong
What Went Well
- “Our execution has improved, and our margins expanded” — CEO Rick Cohen; Q2 gross margin reached 19.6% vs 7.7% a year ago, with adjusted gross margin 22.2%.
- “We delivered a record number of system starts and completes” — CFO Carol Hibbard: 10 starts and 8 completes, installation-to-acceptance timelines ~2 months shorter on Phase 1 vs historical average despite larger systems.
- Strong cash generation: free cash flow of $249.0M in Q2 (cash from ops $269.6M) and cash balance increased to ~$955M.
What Went Wrong
- Sequential revenue guide down for Q3 ($520–$540M) primarily due to the smaller cohort of starts a year ago and lower near-term ASR development revenue; adjusted EBITDA margin implied ~100 bps down vs Q2 per management.
- Operating expenses stepped up in Q2 (R&D and SG&A tied to acquisitions and growth), with management signaling SG&A should step down by $4–$5M in Q3 but OpEx leverage remains an area of focus.
- Tariffs are a gross margin headwind: most contracts allow pass-through, which lifts revenue but compresses margin; primary exposure from Europe started in April, with mitigation efforts underway in supply chain.
Transcript
Operator (participant)
Thank you for standing by. Welcome to the Symbotic Second Quarter 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Charlie Anderson, Symbotic Vice President of Investor Relations. Please go ahead.
Charlie Anderson (VP of Investor Relations)
Thank you. Welcome to Symbotic Second Quarter of Fiscal 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. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release, which is distributed and available to the public through our Investor Relations website located at ir.symbotic.com.
On today's call, we are joined by Rick Cohen, Symbotic's Founder, Chairman, and Chief Executive Officer, and Carol Hibbard, Symbotic's Chief Financial Officer. These executives will discuss our second quarter fiscal year 2025 results and our outlook, followed by Q&A. With that, I'll turn it over to Rick to begin. Rick.
Rick Cohen (CEO)
Thank you, Charlie. Good afternoon, and thank you for joining us to review our most recent results. In the second quarter, we delivered strong results both financially and operationally. Our revenue grew by 40% year over year, and our gross margins expanded significantly, reflecting our focus on project execution while controlling costs and delivering high-quality deployments. Carol will give more detail on the level of improvements in her remarks, but at a high level, the changes we have made to improve our deployment processes are beginning to pay off. These include a more streamlined and predictable workflow and installation, closer coordination with contractors by insourcing construction management, and a strong emphasis on quality management principles to minimize errors and rework, among others. With stronger project execution, we are well-positioned to access future growth and are adding talent to do so.
That includes Brian Alexander, our new Senior Vice President Commercial, who joined us recently from HUB Group, where he served in roles including Chief Operating Officer and Chief Marketing Officer, serving multiple Fortune 500 clients with specialized supply chain solutions. Additionally, Greenbox, our warehouse as a service joint venture with SoftBank, recently hired Ashfaq Chowdhury as CEO. Ashfaq joins Greenbox from Seva Logistics, where he oversaw the third-largest contract logistics business in the world as its Global Managing Director. Greenbox also began a third site during the quarter, and we remain excited about our prospects. During the quarter, we also closed our acquisition of Walmart Advanced Systems and Robotics, or ASR, which expands our product portfolio to include a micro-fulfillment solution both for ambient and perishable environments.
Beyond this addition, we have compelling innovation on our roadmap to deliver even more value to our customers while also building upon the progress we've made to deploy systems more efficiently. I'm excited to share more in the coming quarters. In summary, Symbotic is in an advantageous position going forward. We have a strong multi-year opportunity with nearly $23 billion of backlog. Our margins have expanded due to improved execution, and we continue to attract impressive talent. I want to close my remarks by thanking our customers for their continued trust, our team for their strong execution, and our investors for their support of our company. Now, Carol will discuss our financial results and outlook. Carol.
Carol Hibbard (CFO)
Thank you, Rick. Second quarter revenue grew 40% year over year to $550 million, with revenue growth driven by solid progress across our 46 systems in deployment, and we more than doubled the number of operational systems from a year ago. We also benefited from two months of contribution from the acquired Walmart Advanced Systems and Robotics. Higher revenue than forecast, combined with improving gross margins, drove a reduction in our net loss to $21 million in the second quarter versus $55 million in the second quarter of fiscal 2024. Adjusted EBITDA in the quarter of $35 million was also above our forecast and more than tripled year over year from $9 million in the year-ago quarter. In our second quarter, we began a record 10 new system deployments, which included one new Greenbox site in Southern California intended for multiple tenants, along with multiple breakpack deployments.
We also completed eight systems in the quarter, doubling our previous record of four, bringing us to a total of 37 operational systems. As Rick mentioned, we are improving our installation performance. You have heard us talk in the past about total deployment timelines of roughly 24 months, defined as time between the signing of a statement of work for a system to customer acceptance of that system. However, the portion of a deployment most in our control is the time between the start of its installation and its acceptance by a customer. This also happens to be where we see most of the cost and revenue recognition, which impacts our margin performance. The largest sample size we have for comparison are the Phase One deployments for our largest customer.
In the second quarter, our installation to acceptance timelines were roughly two months shorter for phase one systems than our historical average. Notably, these systems were 15% larger in size than our historical average for phase one systems. Normalizing for size, which also equates to revenue, our improvement level is more than 30% better than our historical average. With the increase in operational systems, we saw our software revenue grow by over 160% year over year to $6.7 million, and operation services revenue grew 47% year over year to $29.6 million. In terms of the backlog, our backlog of $22.7 billion grew sequentially from $22.4 billion last quarter. This increase was primarily due to the addition of our development contract with Walmart associated with accelerated pickup and delivery, or APD systems, offset by the revenue recognized.
Turning to margins, system gross margin improved significantly on a sequential basis as we gained the expected improvement from completing lower margin systems while also improving our overall project execution, as both Rick and I highlighted. Revenue from Walmart ASR was also accretive to our system margins. Gross margin on software maintenance and support again exceeded 65%, trending toward typical industry software margins as we gained scale. In operation services, we swung back to a gross profit thanks to a more favorable mix due to training revenue associated with the large number of new systems that went live. We also saw modest benefits in the Walmart ASR acquisition, where we are now providing services for the existing APD sites in operation. Operating expenses were up sequentially due to acquisitions and the investments we are making to support our growth.
We finished the quarter with cash and equivalents of $955 million, which increased from $903 million in the first quarter, primarily due to cash from operations of $270 million in the quarter, offset by the $200 million paid for Walmart ASR and $21 million of capital expenditures. Now turning to our outlook. For the third quarter of fiscal 2025, we expect revenue between $520 million-$540 million and adjusted EBITDA between $26 million-$30 million. In summary, our execution has improved, resulting in improved gross margin performance, and we are investing to drive future growth and product innovation. With that, we now welcome your questions. Operator, please begin the Q&A.
Operator (participant)
Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. We ask that you please limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question comes from the line of Andrew Kaplowitz of Citigroup. Your line is now open.
Andy Kaplowitz (Senior Analyst)
Good afternoon, everyone.
Carol Hibbard (CFO)
Hello.
Andy Kaplowitz (Senior Analyst)
Rick and Carol, I know one of the big focal points this year was scaling for growth. Does Q2 foreshadow where you want to be in terms of, I think you said, 10 system starts, eight completions? If it does, how do we think about system starts and completions given the ramp-up in Q2? Carol, I know you've said in the past it's lumpy, but should we assume that you've turned the corner, you'll continue to ramp up from here, and is the improvement really a function of getting your arms around EPC insourcing?
Carol Hibbard (CFO)
Thanks for the question, Andy. Our system starts will continue to be lumpy. I do think the number that we start is a combination of ourselves as well as our customers being ready to go ahead and launch and demo in a new building or a new phase. It is a mutual decision between the two of us to go ahead and start. With that being said, we do see the trajectory with the backlog ahead of us that we will continue to see the number of system starts improve as we go through the coming quarters and the coming years.
Andy Kaplowitz (Senior Analyst)
Got it. Carol, you're forecasting EBITDA margin down a bit sequentially in Q3 versus Q2 at the midpoint. Is there anything in the forecast for tariff-related impact? Maybe it's mixed. Can you talk about the puts and takes in margin going into the second half? Do you have an estimate for tariff-related expense or how you're thinking about it moving forward in terms of price versus cost?
Carol Hibbard (CFO)
Okay. Yeah. You've got a lot wrapped up in that question. I'll start with the overall gross margin performance. This quarter's gross margin performance was driven by three key things. It was project mix. We had eight projects that we completed. Many of those were our lower margin projects, and those will be moving off. Overall project execution improved. We also had contribution, as I mentioned, from our ASR business, which is bringing accretive margin to our overall systems revenue. As I think about our EBITDA guide for 3Q, it would imply roughly 100 basis points down from what we just posted this quarter. Primarily, the difference there is the ASR business for this quarter was higher than what we expect to see in the next quarter.
Some of that business, as we work through overall design, we'll see that ramp back up in the coming quarters when we start building prototypes. You're seeing the impact of that, which is why we're at roughly 21% for the coming quarter. In terms of tariffs, our guide, both for top line and for bottom line, does not include the impact of tariffs. If I think about tariff impact for us, with most of our contracts allowing tariffs being passed through, you'll actually see increases in revenue associated with that, but it'll be a drag on gross margin because it's passed through revenue.
Andy Kaplowitz (Senior Analyst)
Got it. It'd just be dollar for dollar passed through.
Carol Hibbard (CFO)
Yes. Yep.
Andy Kaplowitz (Senior Analyst)
Thank you.
Carol Hibbard (CFO)
Thanks, Andy.
Operator (participant)
One moment for our next question. Our next question comes from the line of Nicole DeBlase of Deutsche Bank. Your line is now open.
Nicole DeBlase (Managing Director and Senior Equity Research Analyst)
Yeah. Thanks. Good afternoon, guys.
Carol Hibbard (CFO)
Hello.
Nicole DeBlase (Managing Director and Senior Equity Research Analyst)
Just a follow-on from Andy, is you guys are also kind of modeling revenue down sequentially in the third quarter, which is unusual from a seasonal perspective. Is that also to do with the timing of acquisition impacting the P&L, or is there something else going on there?
Carol Hibbard (CFO)
Thanks for the question, Nicole. There is a little bit of impact because we did have modest revenue this quarter associated with ASR. We'll see that drop a little bit in the next quarter. The primary driver for our third quarter revenue is really a function of the number of starts that we had a year ago. If you remember, 2Q and 3Q last year were our lowest system starts, and we're now a year into where they would be really heavy in system implementation. That's the primary driver in terms of what you're seeing for our guide for the third quarter.
Nicole DeBlase (Managing Director and Senior Equity Research Analyst)
Okay. Understood. With respect to the OpEx, R&D and SG&A stepped up pretty significantly sequentially. Are we now kind of at a good R&D and SG&A run rate, or should we expect further step-ups in the second half?
Carol Hibbard (CFO)
For our R&D run rate, I'd say that's a good run rate going forward. The SG&A run rate was higher this quarter, primarily related to acquisition. So our acquisition costs were higher in SG&A. You're going to see that step back down in the next quarter and see that slide.
Nicole DeBlase (Managing Director and Senior Equity Research Analyst)
Okay. Any quantification of how much we should expect that to step down?
Carol Hibbard (CFO)
Yeah. I would expect somewhere between $4 million and $5 million of a step-down in the SG&A OpEx.
Nicole DeBlase (Managing Director and Senior Equity Research Analyst)
Thank you. I'll pass it on.
Carol Hibbard (CFO)
Thanks.
Operator (participant)
One moment for our next question. Our next question comes from the line of Jim Rishuti of Needham Company. Your line is now open.
Jim Rishuti (Analyst)
Hi, thanks. Good afternoon. Wasn't sure if you gave this in your script. Did you say what ASR contributed in the quarter to revenue?
Carol Hibbard (CFO)
No, we did not. Thanks for the question, Jim. So we are a single-digit percentage of revenue associated with ASR.
Jim Rishuti (Analyst)
Okay. And.
Carol Hibbard (CFO)
We'll see that.
Jim Rishuti (Analyst)
And.
Carol Hibbard (CFO)
Go ahead.
Jim Rishuti (Analyst)
No, please. Go ahead. I'm sorry to interrupt.
Carol Hibbard (CFO)
Yeah. As we build out the development program over the coming eight to 12 quarters, you'll see our revenue for ASR in the back half of this year, early next year, start ramping up as we start building prototypes.
Jim Rishuti (Analyst)
Got it. That's helpful. Are you able to tell us what the installation time looks like for your large customer? I mean, you clearly are making progress there, and I know some of these are different, but is there any, in rough terms, can you tell us what the installation to acceptance time looks like right now?
Carol Hibbard (CFO)
We quantify from start or signature of a project to when we hit project acceptance, about 24 months. The install to acceptance, which is what we indicated where we have the most ability to impact, is about half of that time. What we saw this quarter is a couple of months' improvement. If you think we were at 12 months from install to accept, on a couple of the projects that we had this quarter, we saw two months shaved off of that.
Jim Rishuti (Analyst)
Got it. Thank you.
Carol Hibbard (CFO)
Okay. Thanks, Jim.
Operator (participant)
One moment for our next question. Our next question comes from the line of Matt Somerville of DA Davidson. Your line is now open.
Matt Somerville (Managing Director and Senior Research Analyst)
Thanks, Sim. I was hoping maybe you could talk a little bit more about your technology and innovation roadmap, Rick. You've obviously touched on the development of Perishable in the past, so maybe an update there and maybe some of the other projects you're able to talk about that you're working on, maybe some milestones you may be achieving along the way there with some of those things. I have a follow-up.
Rick Cohen (CEO)
Yeah. Thanks, Matt. With the ASR projects, which we're developing, we will have bots that can do both Perishables and Frozen. That will eventually—we're now beginning to talk to people about actually building Perishable warehouses for them. That's on our roadmap. Can't say exactly when that'll happen, but it's a lot sooner than it was two months ago. There's demand for it, and people are very interested in that. We have to do it for the back of the store. That's moving right along. We're doing a couple of other things to make the structures smaller, which is giving us opportunities to talk to customers that want smaller systems. Also, it actually will accelerate the installation of some of the bigger systems because we can actually put more in a smaller space and get it built faster.
Technology is moving right along. We're starting our second design of our Breakpack system. The first one is working well. The second one will be better. We're now really able to offer three products. One is the big system, and that can come in anywhere from very, very large to a couple of inbound and outbound cells on the smaller side. A Breakpack system can be large or small. Now we're talking about a third module, which will be the really, I mean, a 15,000 sq ft system in the back of a store. Or even we've had some people now come and say, "Could you do a 30,000 sq ft system for us for special needs?" As our product offering is expanding, we're generating a lot of interest in that. We'll be going—the development will be continuing to speed up.
Matt Somerville (Managing Director and Senior Research Analyst)
Thank you for that. As a follow-up, Carol, I just want to be clear. The Walmart ASR revenue was a single-digit millions or single-digit percentage? Because if it's a single-digit percentage, that could be anywhere from like $5 million to $50 million. If you can maybe help us triangulate on that a little bit. Also, if you guys can give an update on when you think you'll be able to make some announcements regarding potential Greenbox tenants. Thank you.
Carol Hibbard (CFO)
Yeah, to clarify, ASR was single-digit percentage. I'd say that's mid to high single-digit percentage of revenue.
Matt Somerville (Managing Director and Senior Research Analyst)
Thank you. And then the Greenbox question.
Rick Cohen (CEO)
Yeah. The Greenbox, we now have a CEO, and so we're accelerating our sales efforts, looking at a number of strategic opportunities. Now talking to early customers about involvement in Greenbox. Our first customer will be the Lathrop site, and that will be C&S will be the very first customer, plus we may be able to add some other customers onto that site compared to incorporating all the capacity that's available. Second site's in Atlanta. The third site will be in California. Getting more interest because we're on both coasts now.
Matt Somerville (Managing Director and Senior Research Analyst)
Understood. Thank you, guys.
Operator (participant)
One moment for our next question. Our next question comes from the line of Joe Giordano of TD Cowen. Your line is now open.
Joe Giordano (Managing Director and Senior Equity Research Analyst)
Hey, guys. Good evening. Thanks for taking my questions.
Carol Hibbard (CFO)
Hi, Joe.
Joe Giordano (Managing Director and Senior Equity Research Analyst)
Just curious on the tariffs. Is there any—how hard is the language on this stuff with passages? I know we had some in the past, some stuff that was thought to be reimbursable was not. I'm guessing these contracts, when they were written, were not contemplating something like this necessarily from a policy standpoint. How much debate or ambiguity is there around, "Hey, is this kind of accepted? Is something from Eurozone? How do we think about this?" How certain are you on that?
Carol Hibbard (CFO)
We are certain. In general, these costs will be passed through for us. We have gone through and done an analysis of all of our contracts over the last quarter or so. I'll take this opportunity, Joe, to highlight a bit on tariffs because I really just answered the portion related to guides. If I think about the current environment we have now, our overall exposure is a single-digit percentage of a typical system. We have coverage for USMCA for our box production in Mexico. Our primary exposure comes from Europe. As I indicated, the costs are passed through. We recognize that this equates to higher system costs, though. We are in the process of identifying with our supply chain what else we can go do to work offsets so that we're not passing all those costs on to our customer.
From a contractual perspective, we're protected.
Joe Giordano (Managing Director and Senior Equity Research Analyst)
Got it. That's clear. Rick, I know it's early days with ASR, but any updated thoughts on how you might be able to leverage kind of technology and best practices to take the best parts of each of the three types of modules you have to make the three best things you can build?
Rick Cohen (CEO)
Yeah, sure. I think we're talking to some people about putting all three in the same building. We're also talking to some people about just putting them in the back of the store. Essentially, ASR is—and this is a potential big plus for Greenbox—it is a modified e-commerce solution because we're actually—the goal of this system is to pick an each, put it in the bag in the back of a store, customer picks it up, or you deliver. You could put it in a box and ship it to a customer. Of course, e-commerce, the top 300, 400, 500 thousand items that sell in e-commerce are the same top 400, 500 thousand items that sell in the store.
We've had a lot of incomings because micro-fulfillment, which is what other people call it, was really only looking at doing 5,000-6,000 items in the back of a store. We think we can do in 15,000 or 20,000 sq ft. We think we can do 50,000 or 60,000 items. In 100,000 sq ft, we might be able to do a million items. The opportunity is that it uses the same basic software platform. There are some changes we would make to the bot. The reason that people are interested is because this is an existing technology that's modified. The example I keep using is this is just another app on the iPhone using the same iOS. That's the way we position the technology. It solves different problems for different customers. There is shipping cases, there is shipping inner packs, and there is shipping eaches.
We think we're the only ones that actually offer with the same software and the same supplier all three levels of integration. People are interested in that.
Joe Giordano (Managing Director and Senior Equity Research Analyst)
Sounds good.
Operator (participant)
One moment for our next question. Our next question comes from the line of Mark Delaney of Goldman Sachs. Your line is now open.
Mark Delaney (VP)
Yes. Good afternoon. Thank you very much for taking my questions. The first question is hoping to better understand what you're seeing for the potential to bring in additional customers, not only with Greenbox but with Symbotic. You spoke a little bit around the momentum and having a Greenbox CEO, but maybe you could elaborate a bit more on potential incoming demand. Have you seen it change at all with the tariff landscape and some of the supply chain challenges it may be creating for some of the potential new customers?
Rick Cohen (CEO)
Yeah. We've seen two things. We've seen some people just—the world is so unknown. We've had a lot of incoming. We've had people probably say, "We want to study this. We want to understand it." Not sure we want to go forward to some. The flip side is in places that have a lot of visas or foreign labor that was coming into the U.S., we've seen a significant uptick in places where large customers that are doing well are very concerned about labor shortages. On balance, I would say we're seeing more incoming. Plus, we've also increased our sales force. We probably made twice as many sales calls in the second quarter as we did in the prior one. In general, I think the amount of incoming is increasing. We're not. First thing we get is, "How affected are you by tariffs?
What's the pricing?" Most of our stuff comes from the U.S. We make a lot of stuff in a trade-free zone in Mexico. I think there's like, "Oh, okay." I think people think inflation's coming. I think they think labor's going up. A lot of incoming for those reasons. On balance, I would say we're seeing more incoming than we are seeing people holding off.
Mark Delaney (VP)
That's very helpful. A follow-up on that. I mean, what's the likelihood, in your opinion, of material new customers being announced this year, either for Greenbox or, of course, Symbotic? You recognize you always want to be selective and take the right kinds of projects on, but do you expect to be able to announce meaningful new customers this year?
Rick Cohen (CEO)
We don't.
Mark Delaney (VP)
Okay. Helpful. We'll stay tuned. My other question was for you, Carol, on free cash flow. Very strong in the quarter, I think $249 million against EBITDA of $35 million. Maybe elaborate a bit more on what drove the degree of free cash flow strength and how to think about free cash flow from here. Thank you.
Carol Hibbard (CFO)
Yeah. Two Q. Similar to where we were in one Q, benefited by timing of receipts. As we've talked about, when we have a quarter where we're high in terms of the number of signatures, we had 10 new starts this quarter. Our contracts are pretty much set up. We get cash flow early on. That is what you're seeing levered. We also had the acquisition take place this quarter. Both the incoming cash and the outgoing cash, which was net benefit for Symbotic. I would expect our free cash flow position between now and the end of the year to be stable as we head into the end of the year.
Mark Delaney (VP)
Thank you.
Carol Hibbard (CFO)
Thanks, Mark.
Operator (participant)
One moment for our next question. Our next question comes from the line of Colin Rusch of Oppenheimer. Your line is now open.
Colin Rusch (Managing Director, Head of Sustainable Growth, and Resource Optimization Research)
Thanks so much, guys. As some of the perception technology begins to evolve at a little bit faster rate, how quickly can you start to integrate some of that improvement into your systems? How should we think about that impacting the productivity of the overall system?
Rick Cohen (CEO)
Yeah. I mean, great question. Because we are in 20, 30 warehouses now, but we can also each level of a warehouse. Let's say there are 10 levels in a warehouse, there might be 300 or 400 levels where we will have 100 bots on each level. We now have bots in warehouses with LiDAR. We have bots in warehouses with vision. We have bots in warehouses that we can run remotely. The level of technology and the incoming—I mean, it is very interesting. The incoming talent is accelerating. We would expect that the level of innovation will increase, not decrease. I think we are just getting started with the learnings for what the bot can do. Eventually, our fleet will be pretty much—I do not know if it will be 100%, but pretty much a significant portion of our fleet will include LiDAR.
We also have a new battery, which has 10 times the energy. I think what is going to happen and what we have been working on as we scale is much more reliable machines and therefore fewer operators, therefore lower operating costs, and therefore higher returns for our customers and for us, and easier to sell the system. I think when we started the technology, there was always concern about, "Where are you with Walmart? Where are we with the first systems?" The word of mouth that we are getting back is why I think our incoming is increasing. There is just nobody doing—there is nobody that has LiDAR that we know of on a bot that runs in a warehouse of this scale. Nor can you tell you have bots, nor do you have vision. All of those things are things that we are accelerating.
Colin Rusch (Managing Director, Head of Sustainable Growth, and Resource Optimization Research)
That's super helpful. Then just in terms of the scalability as you get into the back half of the decade and early next decade, I'm curious about the work that you're doing with finance partners in terms of underwriting these things or underwriting these assets with that and helping kind of seed some of the education. At this point, I guess, how mature is that process? Is it anything that you really need to invest a fair amount of time on at this point?
Carol Hibbard (CFO)
Yeah. We haven't encountered very many customers that have inquired about a financing arm. When you think about what Greenbox is designed to do, with Greenbox being warehoused as a system, that's one of the opportunities for customers who might have less CapEx capability. They could come in and be able to utilize part of a warehouse. We've used Greenbox as that part of the leverage, but we have not seen a lot of incoming to date from our customers looking for financing.
Colin Rusch (Managing Director, Head of Sustainable Growth, and Resource Optimization Research)
Great. Thanks so much, you guys.
Operator (participant)
Thank you. One moment for our next question. Our next question comes from the line of Guy Hardwick of Freedom Capital Markets. Your line is now open.
Guy Hardwick (Managing Director of Equity Research)
Hi. Good evening.
Hi. Just wondering what the Q3 revenue guidance assumes in terms of systems and deployments because, obviously, as pointed out earlier, it is a step down. So I'm just wondering what you have in terms of deployments and progress as well as completions and starts in the quarter.
Carol Hibbard (CFO)
Thank you for the question. We typically do not guide with specific numbers of systems that are in deployment. If you think about three, we signed a year ago. Four were signed a quarter after that. It was a lot. 12 months in, those are not, there is not a large number contributing to the heavy install at that point. We have 10 that we signed this quarter. Associated with our revenue ramp, typically, we see revenue first quarter where we sign, and then we are pretty stagnant on that 10 for the next couple of quarters. We typically do not guide in terms of total number of systems in deployment.
Guy Hardwick (Managing Director of Equity Research)
Okay. Just a follow-up on Greenbox. Can you kind of update us in kind of the progress of building out the sales capability and what stage you think Greenbox as a company is at this point?
Rick Cohen (CEO)
I think Greenbox is—it's early stage. We have two sites beyond the initial site that we're building out the sales force for, and we're prospecting. We have hired people from the 3PL space, one from HUB Group, one from Seva. We have some time because the buildings are still being built out for the Symbotic system. We have about a year, a year and a half before we're really concerned about filling them up. The prospecting is going well, and we're continuing to make a lot of sales calls. It just takes time.
Guy Hardwick (Managing Director of Equity Research)
Thank you.
Operator (participant)
One moment for our next question. Our next question comes from the line of Derek Soderberg of Cantor Fitzgerald. Your line is now open.
Derek Soderberg (Director and Senior Equity Research Analyst)
Yeah. Hey, guys. Thanks for taking the questions. On the ASR business, can you provide some color as to what sort of revenue that is? I think you mentioned you're providing services. Curious if you're paid based off of each unit that you're handling. I might have missed it, but are we going to be seeing that ASR revenue in operation services, or is there a systems component to that as well?
Carol Hibbard (CFO)
The development associated with ASR is running through our systems line. That is where we saw the revenue for this quarter primarily. We talked about that being mid to high single-digit percentage of what we posted for the quarter. That is the development activity and the design activity. For the next three years, as we work through develop and build of our three prototypes, that is where you are going to see the primary revenue. We do have some revenue running through recurring because associated with the acquisition, we are responsible for maintaining the existing APD systems. We have a small amount of software running through software, and then we have parts and services similar to how we operate our core business that you are going to see in the op services. It is a very small amount of revenue.
Derek Soderberg (Director and Senior Equity Research Analyst)
Got it. That's helpful. Rick, you mentioned your scale and capabilities and just sort of being at multiple layers in the supply chain. Seems like you can find some pretty valuable insights with that data. Curious if you're exploring new avenues to monetize some of that data. Has there been an environment where you've kind of found certain insights and plugged that back into the ROI of the system and that longer term can improve kind of the wallet share with your customers? Any ways to sort of monetize that data at this point? Thanks.
Rick Cohen (CEO)
Yeah. We are doing that. The selling of the customer's data, the customer owns the data, so that's very tricky for us. I get asked this question a lot. We can't sell their data. It's their data. What we've learned is, surprisingly, we probably know more about the shape and size of boxes than anybody in the world at this point. It's actually helped us redesign our system to be smaller, and that allows the customer to store more. We're actually taking advantage of that in our pricing.
Derek Soderberg (Director and Senior Equity Research Analyst)
That's helpful. Thanks.
Operator (participant)
One moment for our next question. Our next question comes from the line of Ken Newman of KeyBanc Capital Markets. Your line is now open.
Ken Newman (VP and Equity Research Analyst)
Hey, guys. Thanks for fitting me in.
Carol Hibbard (CFO)
Hi, Ken.
Ken Newman (VP and Equity Research Analyst)
Hey, Carol. Maybe back on the tariff question. I know it sounds like the guide isn't reflecting any impact from pass-through pricing, but I am curious if you're already seeing some of your larger suppliers push price to you. I am curious if you have a sense of just how much that pass-through could look given the early notifications you may or may not be getting from your suppliers.
Carol Hibbard (CFO)
Yeah. Our primary impact is from Europe. Their tariffs went into effect in April. 3Q will be the first where we're actually seeing the impact of that. As I indicated, we're a single-digit percentage of a typical system. What we're in the process doing right now is discussions with our supply chain because we also are interested in making sure we're focused on continuing to reduce the cost. Where we'll start seeing the impact is as the suppliers deliver equipment here in the third quarter. We're in discussions to figure out other ways to offset.
Ken Newman (VP and Equity Research Analyst)
Right. Okay. Maybe as a follow-up there, just on that pass-through conversation, I get that pass-through protects gross profit dollars. Given all the talk that you had on improving the efficiencies and lowering the amount of time it takes to deploy a system, I would imagine you could also drive stronger SG&A leverage on the higher revenue base, even if you keep price-cost neutral on the gross profit line. I know there are a lot of moving pieces, but do you think it's possible to drive EBITDA margin expansion even if the gross margins are nominally weaker just from tariffs?
Carol Hibbard (CFO)
Yeah. We continue to focus on our SG&A leverage. I think the step up you saw this quarter was primarily related to our acquisition. As we get the synergies between the two companies better understood and work through that integration, we hopefully will be able to identify additional synergy going forward. As you indicated, as we continue to scale, we're seeing the benefit of that scale on overall program management and on just the performance of what we did for insourcing on our EPC contract. We are starting to see the benefit as we continue to ramp.
Ken Newman (VP and Equity Research Analyst)
Very helpful. Thanks.
Carol Hibbard (CFO)
Okay. Thanks.
Operator (participant)
As a reminder to ask a question, please remember to press star one one on your telephone and wait for your name to be announced. One moment for our next question. Our next question comes from the line of Greg Palm of Craig-Hallum. Your line is now open.
Greg Palm (Senior Research Analyst)
Yeah. Thanks. Specifically on gross margin, I think, Carol, you mentioned or alluded to maybe a little bit of a benefit in the quarter from ASR. Can you just talk about whether there were any other sort of one-time benefits? It sounds like a lot of it was just due to more efficiencies. Obviously, you had much better gross margin in software and operation services. Just kind of curious how you view that going forward.
Carol Hibbard (CFO)
Yeah. The other one-time benefit is mostly in the recurring. In a quarter where we had eight systems hit acceptance, there's a significant amount of high-margin training revenue that goes along with that acceptance. That's what you're seeing in the op services revenue. We had a bounce back this quarter from last quarter. That's the one-timer. In terms of the system gross margin, the project mix shifting, that will continue going forward. Our overall improvements that we're seeing from shorter install duration, benefits from bringing the insourcing in of EPC, that will continue. The ASR is a higher margin contribution. We saw the benefit of that in the quarter. We'll have less of that next quarter, but that will come back as revenue continues to grow.
Greg Palm (Senior Research Analyst)
Okay. Perfect. You mentioned the three Greenbox locations already. I think there are another 10 that you have already specifically targeted in terms of cities. Can you just help us out with revenue contribution from Greenbox? I mean, is there a timeline associated with the startup of these additional 10?
Carol Hibbard (CFO)
What we've talked about, we've launched three. In prior quarters, we had talked about five locations where we would typically be thinking through a potential multi-tenant warehouse. One was the Atlanta region, one was Southern California. We've looked at Dallas, we've looked at Chicago, and we've looked at somewhere on the East Coast. We've identified five of those, which we have now launched two. Our Greenbox has been slower to ramp. Now that we've got the CEO and they're in place identifying additional sales folks, I think we're going to see a lot more activity on Greenbox in the coming quarters.
Greg Palm (Senior Research Analyst)
Okay. Fair enough. All right. Thanks.
Carol Hibbard (CFO)
Thank you.
Operator (participant)
One moment for our next question. Our next question comes from the line of Robert Mason of Baird. Your line is now open.
Rob Mason (VP and Senior Research Analyst)
Yes. Good evening. Carol, you may have run through this, but could you bridge the backlog again from Q1 to Q2? I know ASR was booked, but was there anything else?
Carol Hibbard (CFO)
Yeah. Thanks for the question. The addition to the backlog was for the development associated with the ASR business. That was the only addition. What you saw was the reductions associated with the revenue posted for the quarter. Those offset. Every quarter, as we talk about when we sign a final statement of work, there are puts and takes in terms of final configuration, and that is what the delta is.
Rob Mason (VP and Senior Research Analyst)
Okay. Maybe related to that, I think earlier on, you mentioned around your deployment schedules, compressing some that some phase ones are now 15% larger than some of the earlier stage deployments. I'm just curious, what's driving that? Or is that just the nature of the particular sites, or the customer wants more installed upfront? I'm just curious what's caused the expansion.
Carol Hibbard (CFO)
Yeah. It is purely the nature of those particular sites. I would not infer from that that all future phase ones are getting bigger. It really is dependent on every single location and the size and capability of that particular warehouse as we go in. As we have talked about our largest customers, we typically end up with three phases. There is a little bit of a mix of what they want to do in phase one, two, or three. I would not infer that all of our phase ones are getting 15% larger.
Rob Mason (VP and Senior Research Analyst)
Very good. Thank you.
Carol Hibbard (CFO)
Thanks, Rob.
Operator (participant)
I am showing no further questions at this time. I would now like to turn it back to Charlie Anderson for closing remarks.
Charlie Anderson (VP of Investor Relations)
Yeah. Thanks, everybody, for joining our call tonight. We really appreciate your interest in Symbotic and look forward to seeing many of you during the quarter at the various investor conferences. Thanks, and have a nice day.
Operator (participant)
Thank you for your participation in today's conference. This concludes the program. You may now disconnect.