Q1 2024 Earnings Summary
- Symbotic expects to accelerate its recurring revenue growth due to the addition of new systems coming online and efforts to improve attach rates with new customers.
- The company is reducing deployment times significantly, with a recent system completed in just 20 months, and aims to reduce this further to 12 months or less, enhancing their ability to scale and recognize revenue faster.
- Symbotic is poised to expand into new markets like non-ambient food, which represents a substantial growth opportunity not included in the current backlog, potentially unlocking new revenue streams.
- Adjusted EBITDA margins are expected to decline in the second quarter, as Symbotic guides for adjusted EBITDA between $12 million and $15 million, which is modestly below Q1 levels ,. Increased spending to accelerate deployments and ensure high-quality systems is impacting margins, potentially delaying profitability improvements ,.
- Capacity constraints limit Symbotic's ability to take on new customers, with the company planning to add only 1 to 2 new customers per year to ensure it can deliver on its existing $23 billion backlog. This cautious approach may hinder revenue growth from new customer acquisitions.
- Delays in GreenBox joint venture revenue generation and management team buildup, as management for GreenBox is still being recruited , and while the company expects to recognize the first revenue from GreenBox in fiscal 2024, the lack of a fully staffed management team may delay progress.
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Margin Outlook
Q: What is impacting margins, and when will they improve?
A: Management is increasing spending to accelerate deployment schedules and ensure high-quality deployments, impacting margins in the short term. They expect profitability to improve in the second half of the year and continue improving year-over-year. -
Deployment Timeline
Q: What's the long-term goal for deployment length reductions?
A: The company aims to reduce deployment cycles from 20 months to 12 months or lower over the long term. This will be achieved through continuous learning, collaboration, and standardization. -
GreenBox Revenue
Q: When will GreenBox start contributing to revenue?
A: GreenBox deployments or revenue recognition are expected to start in fiscal 2024. They anticipate initial deployments to start slowly and then accelerate rapidly. -
Supplier Network
Q: Are supplier issues resolved, and impact on lead times?
A: Supplier challenges are resolved, with better inventory and higher-quality products. This has led to faster implementations and deployments exceeding customer expectations. -
SymBot Advancements
Q: How is SymBot better than previous bots?
A: SymBot handles tapered boxes, has vision capabilities, picks and places packages 10 seconds faster, and can handle multiple packages on outbound, increasing efficiency. -
Deployment Constraints
Q: Why not increase system deployments significantly now?
A: Focused on delivering on the $23 billion backlog and providing excellent customer service, the company plans to add 1 to 2 new customers per year. -
Recurring Revenue
Q: How should we think about recurring revenue growth?
A: Recurring revenue will grow as more systems come online, with improving attach rates from new customers. -
BreakPack Revenue
Q: Will BreakPack contribute to revenue in fiscal '24?
A: BreakPack may impact revenue at the end of fiscal 2024. The proof of concept is already contributing revenue, and expansion is expected. -
Non-Ambient Market
Q: What's the size of the non-ambient food opportunity?
A: The non-ambient market is significant. The company is piloting perishable testing and expects to offer solutions within 12 months. Current backlog does not include non-ambient systems. -
Guidance Precision
Q: Is guidance more precise due to more projects?
A: Scaling with more projects reduces revenue variance from single projects. Implementing controls like SAP helps tighten prediction ranges. -
Spending and Bottlenecks
Q: What's causing increased spending to support growth?
A: Increased spending is due to deploying resources, including onsite staff, during commissioning to ensure reliability. -
Working Capital
Q: What's driving working capital expansion and cash flow outlook?
A: With 37 deployments in progress, higher cash outflows are expected, but cash is expected to be flat for the year, excluding warrants. -
Outsourcing Partners
Q: Will new partners affect deployment timelines?
A: Deployment timelines won't be negatively impacted; standardization will speed up implementations. -
R&D Expense
Q: Why is R&D expense declining, and what's the outlook?
A: Fluctuations are due to quarter length differences. R&D will ramp modestly throughout the year, with potential expansion later. -
Steel Prices
Q: How are steel price fluctuations impacting margins?
A: Contracts mitigate steel cost fluctuations. Steel did not significantly impact margin expansion in the quarter.