Business context and reporting period
Symbotic develops warehouse automation systems, software and operating services. This Form 10-Q covers the fiscal quarter and nine months ended June 25, 2022; amounts below are in U.S. dollars. The business combination closed June 7, 2022 and was accounted for as a reverse recapitalization, so most operating results reflect Legacy Warehouse. Year-over-year comparisons are not necessarily indicative of future results.
Financial performance and liquidity
| Metric | Three months ended June 25, 2022 | Nine months ended June 25, 2022 |
|---|---|---|
| Revenue | $175.6 million, up 34% | $348.9 million, up 118% |
| Gross profit / margin | $31.5 million / 18%; prior-year loss of $0.3 million | $62.9 million / 18%; prior-year profit of $2.6 million / about 2% |
| Operating loss | $33.0 million | $86.1 million |
| Net loss | $32.9 million | $85.8 million |
| Operating cash flow | Not separately presented | $(96.7) million; prior-year inflow of $96.0 million |
Quarterly revenue growth was driven mainly by Systems revenue, up 35% to $169.5 million; management cited 13 system deployments in progress versus four a year earlier. For the nine months, Systems revenue rose 133% to $330.3 million. R&D and SG&A increased to $80.7 million and $68.3 million, respectively, for the nine months, reflecting hiring, product development, deployment capacity and public-company/business-combination costs. Adjusted EBITDA was a loss of $21.8 million for the quarter and $69.3 million year to date; these are non-GAAP measures.
At June 25, cash and cash equivalents were $411.7 million, current assets $591.2 million and current liabilities $445.1 million. The balance sheet reports no borrowings or debt line item. Cash rose from $156.6 million at September 25, 2021, principally reflecting business-combination and warrant proceeds. Financing cash flow was $362.4 million; the company received $84.7 million of net contributions from the business combination after a $300.0 million unit repurchase and transaction costs. Management said current cash, working capital and forecast operating cash flows should cover foreseeable needs for at least 12 months.
Material changes, outlook and risks
- Operating cash flow swung to an outflow, with increased inventory purchases a key factor; inventory rose to $127.0 million from $33.6 million.
- Gross margin improved with higher Systems deployment activity, but software support and operation services were loss-making in the quarter. Management attributed service costs to additional support staffing and temporary personnel at a customer site.
- Remaining performance obligations on contracts longer than one year were $11.3 billion, substantially associated with Walmart’s agreement covering its 42 regional distribution centers. Symbotic expects about 6% to be recognized in the next 12 months; timing depends on installation schedules. This measure excludes certain variable consideration and cancellable contracts.
- Customer concentration is substantial: one customer represented 96% of quarterly revenue and 93% of nine-month revenue. Three customers represented 94% of receivables at quarter-end. The filing warns that loss of a major customer could materially affect results and liquidity.
- Vendor commitments totaled $571.4 million, of which $553.1 million was due within one year; operating lease obligations totaled $7.9 million. These commitments are important alongside the expected installation ramp.
- Subsequent to quarter-end, all three share-price earnout triggers were achieved, resulting in issuance of 20.0 million Holdings units and matching Class V-1 shares; 3.616 million sponsor shares also vested. These events increase potential share dilution and occurred after the balance-sheet date.
- The company reported no material change to previously disclosed risk factors and no contingency expected to materially affect operations, financial position or liquidity. COVID-19 effects, deployment delays, customer concentration, competition and execution remain risks. No specific financial guidance was provided.
- Disclosure controls were deemed effective at a reasonable-assurance level. Management did not provide an internal-control effectiveness assessment in this filing under the transition rules for newly public companies.
Important facts for investors to verify
- Walmart deployment pace, acceptance milestones and the timing and profitability of the $11.3 billion of remaining performance obligations.
- Whether customer concentration declines and whether major customer relationships remain secure.
- Inventory conversion, operating cash flow recovery and the ability to meet near-term vendor commitments while funding growth.
- Gross margins by Systems and service revenue as deployment volumes expand and product mix changes.
- The dilution and governance implications of the post-quarter earnout and sponsor-share issuances, including the Up-C structure and exchangeable voting shares.
- Potential future Tax Receivable Agreement payments: estimated at $107.0 million, with no liability recorded at quarter-end because current projections did not indicate realization of the relevant tax benefits.