Q1 2025 Earnings Summary
- Symbotic is experiencing increased international interest and sees a huge opportunity in Mexico, Central America, and South America, where supply chains are less advanced, presenting significant growth potential. , ,
- The company expects improvement in gross margins in the back half of the year as several lower-margin, complex systems go live, leading to a higher gross margin mix and improved profitability. , ,
- Symbotic is expanding into new verticals beyond grocery, including discussions with non-grocery customers in sectors like medical supplies and auto parts, and is seeing increased inbound interest from manufacturers looking to use their systems, which can broaden their customer base and revenue streams. , ,
- Operations Services posted a negative gross profit this quarter, and management expects this trend to continue in the near term, which could impact overall margins.
- System gross margins are not expected to exceed 20% in the first half, and operating expenses are expected to increase by $5 million to $10 million in the second quarter, potentially pressuring profitability and EBITDA.
- Revenue growth from non-Walmart customers has significantly moderated, indicating a reliance on Walmart for revenue growth, which may pose risks if customer concentration persists.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +32% | Increased system deployments and continued expansion under the Walmart Master Automation Agreement drove higher revenues. The company also benefited from greater software maintenance adoption as more systems reached operational status, boosting overall revenue. |
Systems Segment | +30% | Higher installations within Walmart’s distribution centers and other customer facilities fueled growth, along with ongoing support and implementation services. These deployments remained the main contributor to system-related revenue increases. |
Software Maintenance | +155% | Rapid growth in the number of operational systems under software maintenance contracts significantly boosted recurring revenues. The expansion of deployed sites led to more long-term support agreements, increasing this line’s contribution. |
Operation Services | +70% | Growing demand for onsite operational assistance and spare parts sales contributed to higher operations revenue. Symbotic’s efficiency improvements at existing customer locations further enhanced profitability in this segment. |
Operating Income (EBIT) | Loss up 29% YoY | Despite strong revenue growth, increased costs related to ramping new projects, higher deployment expenses, and investment in R&D widened the loss. However, growing recurring revenues from maintenance and operations could improve margins in the future. |
Net Income (Loss) | Loss up 43% YoY | Although total revenue rose, increased operating expenses and interest and financing costs weighed on net income. Continued investments in product development and capacity expansions impacted short-term profitability but aim to strengthen competitive position. |
Capital Expenditures | +146% | Infrastructure upgrades (e.g., Atlanta facility) and R&D equipment acquisitions drove CapEx higher. These expenditures align with the company’s growth strategy and automation expansion, potentially supporting future efficiency and revenue growth. |
Net Change in Cash | -23% | The lower net cash inflow YoY reflects timing of customer payments and increased outlays for operations and facilities. While operating cash flow remains positive, higher working capital needs and continued deployments led to a smaller increase in net cash. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | Q2 2025 | no prior guidance | $510M - $530M | no prior guidance |
Adjusted EBITDA | Q2 2025 | no prior guidance | $26M - $30M | no prior guidance |
Year-over-Year Revenue Growth | Q2 2025 | no prior guidance | at least 30% | no prior guidance |
Gross Margins | Q2 2025 | no prior guidance | anticipated to improve sequentially | no prior guidance |
Operating Expenses (OpEx) | Q2 2025 | no prior guidance | increase by $5M to $10M | no prior guidance |
Backlog Delivery | Q2 2025 | no prior guidance | deliver 11% of $22.4B backlog in FY 2025 | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue | Q1 2025 | $495M to $515M | $486.693M | Missed |
Gross Margins | Q1 2025 | 19.6% | ~16.4% (calculated from $486.693MRevenue and $406.654MCOGS) | Missed |
Year-over-Year Revenue Growth | Q1 2025 | 40% | 32.1% (calculated from $368.45MIn Q1 2024 to $486.693MIn Q1 2025) | Missed |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Gross margin fluctuations and improvement timelines | In Q2: Low double-digit GM weighed by lower-margin projects. In Q3: GM at 15.6%, below 20% target, expecting recovery. In Q4: Rebounded to 19.6%, stable outlook. | Slight improvement, expecting bigger gains in 2H FY25. | Ongoing focus, gradual improvement |
Operations Services margin challenges | Q2: No specific mention. Q3: No direct mention. Q4: Slight negative margin, expected to improve. | Negative gross profit due to added resources, but moderated going forward. | Continuing short-term challenges, long-term optimism |
System starts, deployments, and project implementations | Q2: 3 new, 3 completed, 18 operational. Q3: 5 new, 3 completed, 21 operational. Q4: 9 new, 4 completed, 25 operational. | 4 new, 4 completed, 29 operational; 44 in deployment. | Steady momentum in deployments |
International expansion | Q2: No mention. Q3: Talk of Europe sales staff. Q4: New deal with Walmex; minimal Europe progress. | Emphasis on Mexico (Walmex) and potential in Latin America. | Growing focus on Latin America; Europe still slower |
Expansion into new verticals beyond grocery | Q2: No mention. Q3: No mention. Q4: Mentioned as part of broader strategy. | Engaging auto parts, medical supplies, back-of-store solutions. | Increasing diversification efforts |
Reliance on Walmart for revenue growth | Q2: No mention. Q3: No mention. Q4: Walmex deal noted; overall reliance implicit. | Walmart remains major contributor, non-Walmart revenue up slightly. | Still heavily dependent on Walmart |
Construction delays and management shifts (in-house) | Q2: No mention. Q3: Delays impacted margins; EPC moving in-house. Q4: Delays resolved sooner, in-house EPC on track. | EPC work fully in-sourced; improved schedule control. | Continued in-house shift, aiming for better execution |
BreakPack solution | Q2: Second installation planned for summer 2024. Q3: Second system slated for next fiscal year. Q4: No mention. | Second system deployed; mini bot redesigned for cost/margin benefits. | Active rollout, upgraded product |
GreenBox joint venture | Q2: First deployment set with C&S; revenue to start in Q3. Q3: First site in CA; building management team. Q4: Second facility in GA, multi-tenant approach. | Atlanta facility under build-out; bigger revenue ramp in late FY25. | Expanding facilities, expecting near-future scale |
Acquisition of Veo Robotics for enhanced robotics IP | Q2: No mention. Q3: No mention. Q4: Acquired Veo; valuable safety/access IP. | No mention. | Was highlighted in Q4, not discussed in Q1 |
Previously large contracted backlog | Q2: ~$23B, slightly declined due to revenue recognition. Q3: $22.8B stable. Q4: $22.4B after recognized revenue. | $22.4B remains; ~11% to be delivered next 12 months. | Stable high backlog, slight fulfillment |
Technology innovations (vision systems, routing algorithms, redesigned bots) | Q2: 40% vision-enabled bots, improved routing, standardized SymBot. Q3: Vision retrofitting, redesigned mini bot, nonambient R&D. Q4: Vision/tele-ops enhancements, Veo IP. | Smaller mini bot, AI-driven learning, cloud integration. | Iterative improvements toward AI and cost efficiency |
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Insourcing and Margin Impact
Q: Update on insourcing progress and margin impact?
A: Insourcing is making good progress. All EPC work is now in-house, with contractors completing ahead of schedule. First systems with Symbotic performing EPC will be completed next quarter , helping manage schedules and improve systems gross margin. -
System Deployment Timelines
Q: What are system deployment timeline expectations?
A: Systems are currently averaging 24 months for deployment. There's a path to streamline to 18 months and eventually 12 months, but it will take time. -
Customer Demand and Pipeline
Q: How is customer interest and spending outlook?
A: Customer interest has increased, especially as companies plan for 2025. Received more orders from Walmart, plus increased inquiries from manufacturers, suppliers, and international customers. Companies are more concerned about labor issues and ready to deploy capital now. -
Internal Controls Remediation
Q: Update on control procedures after audit issues?
A: Deficiency remediation controls have been implemented over goods receipt and revenue recording. Training and ERP enhancements are deployed; testing results are encouraging with no deficiencies noted. Full remediation will take several quarters. -
Contracts and Cost Pass-Through
Q: How are contracts handling cost pass-throughs?
A: Contract types vary, but they negotiate pass-throughs for items like material cost escalation. For factors under their control, they bear the risk. Cost increases from tariffs and regulations are typically passed through to customers. -
M&A Activity Impact
Q: How do acquisitions affect operations?
A: Recent acquisitions have been small, around 20-person companies, with minimal complexity or cost increases. The Walmart robotics acquisition is integrating smoothly, leveraging talent and technology. -
Technology Innovation and AI
Q: Updates on technology impacting performance and costs?
A: Investing in NVIDIA chips and graphic interfaces for two to three years. Focusing on "Tele-ops" bots that learn and mimic operator skills, increasing reliability and reducing manual interventions. AI and increased compute power help bots learn faster, leveraging cloud capabilities. -
GreenBox Revenue Expectations
Q: What's the update on GreenBox revenues?
A: Atlanta facility is under construction, with significant revenue ramp-up expected in the back half of the year. Implementation for Atlanta and another site will be later this year. Building out the management team and seeing interest in GreenBox technology. -
Operations Services Gross Profit
Q: What happened with operations services loss?
A: Revenue is lumpy due to varying site intensities. Resources were allocated to support customers as large systems go live. This may continue in the near term but not at the same level. Focus is on reliability and support during deployments. -
OpEx Increase Expectations
Q: Expected magnitude of OpEx increase?
A: OpEx is expected to increase by $5 million to $10 million in Q2 , driven by long-term investments and acquisitions. OpEx should moderate going forward between R&D and SG&A at Q2 levels. -
Labor Cost Inflation Management
Q: How are you managing labor inflation risks?
A: Significant costs are supply-based with long-term agreements to buffer price changes. Monitoring Symbotic labor and EPC costs, seeking opportunities to offset increases. -
Cash Flow Guidance
Q: Expect cash flow above or below EBITDA?
A: No full-year free cash flow guidance. Q1 cash flow benefited from timing of receipts and reduced AR balance. Expect cash position to rise throughout the year. -
Impact of Tariffs
Q: How are tariffs affecting costs?
A: Impact from China is immaterial. Most products are made in the U.S., with some assembly in Mexico. Contracts allow passing tariffs and government-imposed costs to customers. Monitoring potential Mexico tariffs; outcomes remain volatile.