Symbotic Inc. Q4 FY2024 earnings call

• Strong finish to the year with record system deployments in Q4 and reacceleration of system starts. Full year revenue grew 55%, with more than double the number of sites in operation and software revenue more than doubled.
• Announced new customer Walmex in Mexico, executing on growth vectors laid out at Investor Day, expanding addressable market.
• GreenBox continues to make progress, with deployment of a second installation in Georgia and vision capabilities added for remote bot control as a key differentiator.
• Targeted investments in people and products to support growth in new products and geographies, focusing on high-quality system deployments.

Fourth quarter revenue grew $577 million, with full year revenue reaching $1.8 billion. Backlog of committed contracted orders was $22.4 billion, largely consistent with the previous quarter. System margins rebounded strongly, with gross margin on software maintenance and support up 50% for the quarter. Operation services experienced a slight negative gross margin but is expected to improve as the fiscal year progresses. Revenue contribution from different segments was driven by solid progress across 44 systems in deployment, with strong fourth quarter results reflecting vendor and customer collaboration.

• For the first quarter of fiscal 2025, expect revenue of $495 million to $515 million and adjusted EBITDA between $27 million and $31 million.
• Expect to maintain a high rate of year-over-year revenue growth while continuing to stabilize gross margin in the first quarter, with a trajectory to improve schedule, costs, and expand gross margins throughout the year.

Q: Margins in the quarter were better than guided, and first quarter guide calls for stable growth margin. Can you bridge what's pressuring the margin?

A: Our 3Q margin was depressed due to long-dated construction schedules and improvements, same occurrence in 4Q. 1Q '25 guide reflects transition to higher gross margins as we focus on milestones across larger systems, with trajectory to improve schedule, costs, and expand margins.

Q: Updates on Europe and Walmex in Mexico?

A: No new updates on Europe. Walmex in Mexico is not a one-off, as it shows value creation in new geographies different from the U.S., with potential for more opportunities beyond the first two sites.

Q: What drove Q4 revenue above guidance?

A: Strong quarter driven by significant progress on 44 systems in deployment, completing 4 systems (record) and starting 9 systems (record), with scheduled delays correcting faster than planned.

Q: GreenBox in Georgia, financing and capacity expansion?

A: GreenBox in Georgia has CapEx for infrastructure and ongoing R&D investment. It's a multi-tenant solution for recruiting customers, with potential for growth in the market.

Q: Targeting new customers and sales force expansion?

A: Targeting one to two new customers per year, with Walmex as the first in 2025. Expanding sales force is in process of design and implementation.

Q: Walmex deal impact on backlog and pricing?

A: Walmex adds about $400 million to backlog for two sites, which are large greenfield sites, different from existing contract geography, with potential for further opportunities but focus on performing on existing contracted sites first.

Q: OpEx increases in 1Q and EPC in-sourcing?

A: OpEx increases in 1Q relate to R&D and SG&A as we scale. EPC brings in-sourcing with no increase in OpEx flowing through COGS, with phase-out of prior and resourcing/hiring for taken-over sites ongoing.

Q: Gross margin and steel costs?

A: Majority of steel contracts have pass-through clauses, protecting gross profit dollars, with focus on maximizing pricing power to handle potential steel price increases and tariffs.

Q: Walmex potential beyond two sites?

A: Walmex has multiple distribution centers in Mexico, with potential for expanding opportunities, but focus on performing on existing contracted sites first.

Q: Metrics on systems ongoing, completed, started in 2025?

A: Expect to continue with around 4 completions per quarter, and additional starts beyond 2024 levels but not at the record 9 per quarter seen in Q4, as 9 was an unusual amount due to multiple factors aligning.

Q: Remote bot capability and non-ambient system development?

A: Vision capability improves robot reliability, allowing remote control and machine learning for better handling of packaging issues, increasing efficiency. No new updates on non-ambient system development at this time.

Q: GreenBox Georgia facility and SoftBank agreement?

A: Atlanta GreenBox facility is a multi-tenant site for testing and growth, with potential for filling distribution centers. SoftBank agreement with $11 billion in orders by 2029 is still in framework, with progress on track.

Q: GreenBox revenue margin and Symbotic content?

A: GreenBox site's Symbotic portion is similar to other customer systems in revenue and gross margin, with GreenBox being a 35% JV partner, and revenue and margin opportunity similar to other customers.

Q: New leader for transformation initiatives?

A: New leader to help develop new products faster and champion R&D efforts, focusing on identifying most valuable R&D projects for customers.

Q: Walmex in lower cost regions and TAM?

A: Walmex in Mexico shows ROI in lower cost geographies, emphasizing inventory improvement, transportation costs, and quality, expanding TAM potential in regions with different supply chain dynamics.

Q: Restructuring charge and operation services margin?

A: Restructuring charge was a benefit from settling obsolete inventory. Operation services had negative margin due to adding resources at large project sites, expected to improve over time as run rate adjusts.

Q: Cash flow from operations and EPC project managers?

A: Cash inflows are front loaded, expected to rebound in 2025. EPC has hired resources for first 5-7 sites, with program managers and other resources in place for taken-over sites.