Symbotic Inc. — Fiscal 2024 Second-Quarter 10-Q
Reporting period: Three and six months ended March 30, 2024; comparisons are with the periods ended March 25, 2023. Amounts are in U.S. dollars. Symbotic develops and installs warehouse automation systems, with related software support and operating services.
Financial performance
| Metric | Three months | Six months |
|---|---|---|
| Revenue | $424.3 million, up 59% | $792.8 million, up 68% |
| Gross profit / margin | $44.2 million / 10.4%; prior-year margin 16.1% | $114.3 million / 14.4%; prior-year margin 16.5% |
| Operating loss | $51.0 million; prior year $57.7 million | $70.0 million; prior year $127.3 million |
| Net loss | $41.0 million; $6.6 million attributable to common stockholders | $53.9 million; $8.5 million attributable to common stockholders |
| Adjusted EBITDA (non-GAAP) | $22.5 million; prior year loss $11.2 million | $36.6 million; prior year loss $27.5 million |
Systems generated $401.7 million of quarterly revenue, up 56%; operation services revenue rose 158% to $20.1 million. Management cited more systems under deployment—37 versus 28 in the comparable quarter—and growth in operational sites and spare-parts sales. Systems represented 95% of quarterly revenue.
GAAP gross margin contracted despite higher revenue. Management attributed lower quarterly systems gross profit in part to a $34.2 million restructuring charge related to outsourcing bot assembly and component inventory management and standardizing the bot platform. Adjusted gross margin, which excludes specified items including restructuring, was 19.7% for the quarter versus 18.3% a year earlier. Adjusted EBITDA and adjusted gross profit are non-GAAP measures and should be considered alongside GAAP results.
Cash, liquidity, and obligations
- At March 30, 2024, cash and cash equivalents were $901.4 million and marketable securities were $50.0 million. Current assets were $1.484 billion and current liabilities were $1.091 billion.
- For the six months, operating cash flow was negative $9.1 million, versus positive $132.4 million a year earlier. Investing cash flow was positive $235.5 million, mainly reflecting $290.0 million of Treasury maturities; financing cash flow was positive $416.9 million.
- Financing included $258.0 million of proceeds from a Class A share offering and $158.7 million from Walmart’s warrant exercise. The share issuance and warrant exercise increased equity and contributed to potential dilution.
- The balance sheet presents no borrowings or other debt balance. Deferred revenue was $856.9 million, including $44.7 million classified as long-term; it reflects customer payments ahead of performance and is not debt.
- Vendor commitments totaled $1.200 billion, of which $1.187 billion was due within one year. Operating lease liabilities totaled $18.6 million.
- Management expects cash, unrestricted marketable securities, working capital, and forecast operating cash flows to cover foreseeable needs for at least 12 months.
Backlog, changes, and key risks
- Remaining performance obligations for contracts longer than one year were $22.8 billion, substantially related to Walmart’s 42 regional distribution centers and the GreenBox commercial agreement. The company expects to recognize about 9% within 12 months and 60% within five years. These estimates depend on installation timing and exclude certain cancellable contracts.
- Customer concentration remains pronounced: one customer accounted for 84.2% of quarterly revenue and 80.5% of accounts receivable at period-end. Management reported no known specific event expected to materially harm liquidity or results, but loss or reduction of this business could have a material effect.
- Operating cash flow shifted from positive to negative year over year, amid working-capital timing and a $34.3 million six-month provision for excess and obsolete inventory. Verify whether cash conversion and inventory quality improve.
- Management cited continued investment in engineering, including next-generation autonomous electric-vehicle robots and expanded AI and analytics capabilities. It provided no specific revenue or earnings guidance in the supplied filing text.
- The company reported a $443.8 million estimated future Tax Receivable Agreement payment amount, but recorded no liability based on current projections and stated payments depend on realizing cash tax savings. It also reported full valuation allowances on domestic deferred tax assets.
- GreenBox is a 35%-owned venture with SoftBank; Symbotic does not consolidate it and reported no carrying value or maximum loss exposure at March 30, 2024. The filing notes an April 15, 2024 amendment to the GreenBox LLC agreement.
- Symbotic expects to cease qualifying as an emerging growth company at fiscal year-end 2024 because its non-affiliate market value exceeded the applicable threshold. Management said disclosure controls were effective; it will continue monitoring controls following implementation of a new SAP ERP system.
Investor verification priorities
- Validate the timing, cancellation terms, and conversion to revenue and cash of the $22.8 billion remaining performance obligations, especially the Walmart and GreenBox portions.
- Track customer concentration, deployment progress, system acceptance, and the effect of any customer delays or scope changes.
- Reconcile the $34.2 million restructuring charge and inventory reserve to future cost trends; monitor GAAP gross margins alongside the company’s non-GAAP adjusted measures.
- Assess operating cash flow against the $1.2 billion vendor commitments and planned capital needs, including the amount due within one year.
- Review dilution from equity awards, the share offering, warrant exercises, and any future warrant vesting; confirm the assumptions underlying TRA payments and GreenBox exposure.