Symbotic Inc. — FY2023 Form 10-K Summary
Reporting period: Fiscal year ended September 30, 2023. The company’s fiscal 2023 comprised 53 weeks; fiscal 2022 ended September 24, 2022 and comprised 52 weeks. Comparisons are therefore not exactly like-for-like.
Business context
Symbotic designs and deploys automated warehouse systems combining robotics, software, storage and palletizing. Revenue is primarily from system design and installation, with smaller contributions from software maintenance and support and operations services. Walmart was the dominant customer. The company also formed GreenBox Systems, a warehouse-as-a-service joint venture with SoftBank.
Financial performance
| Metric | FY2023 | FY2022 | Change / context |
|---|---|---|---|
| Revenue | $1,176.9 million | $593.3 million | Up 98%; system revenue rose to $1,138.1 million, reflecting 35 deployments in progress versus 17 |
| Gross profit / margin | $189.7 million / 16.1% | $99.6 million / 16.8% | Profit increased; margin declined 0.7 percentage points |
| Adjusted gross profit / margin (non-GAAP) | $216.4 million / 18.4% | $100.0 million / 16.9% | Excludes depreciation, stock compensation and restructuring charges |
| Operating loss | $(223.2) million | $(140.4) million | Operating expenses rose 72% to $413.0 million |
| Net loss | $(207.9) million | $(139.1) million | FY2023 included a $4.6 million income tax benefit |
| Net loss attributable to Class A common stockholders / diluted loss per share | $(23.9) million / $(0.37) | $(6.9) million / $(0.13) | Net-loss attribution reflects noncontrolling interests; FY2022 per-share comparison covers only the post-business-combination period |
| Adjusted EBITDA (non-GAAP) | $(17.6) million | $(89.8) million | Improved; FY2023 adjustments included $154.2 million stock-based compensation and $22.9 million restructuring charges |
Research and development expense rose 57% to $195.0 million, primarily from engineering headcount and development of next-generation robots and AI capabilities. Selling, general and administrative expense rose 88% to $217.9 million, including increased staffing, public-company infrastructure and GreenBox transaction costs.
Cash flow, liquidity and obligations
- Operating cash flow was positive $230.8 million, versus negative $148.2 million. Management attributed the FY2023 inflow in part to $252.6 million from changes in operating assets and liabilities, principally customer receipts and payment timing; it should not be assumed to represent recurring earnings-based cash generation.
- Investing cash flow was negative $299.5 million, including $408.2 million of U.S. Treasury purchases, partly offset by $130.0 million of maturities. Financing cash flow was negative $24.1 million, including $26.7 million of employee-tax withholding on net share settlements.
- At year-end, cash and cash equivalents were $258.8 million and short-term marketable securities were $286.7 million, for $545.5 million combined. Current assets were $991.8 million and current liabilities $1,025.5 million; current liabilities included $787.2 million of deferred revenue.
- The balance sheet reports no borrowings or debt. Vendor commitments totaled approximately $1.16 billion, of which $1.14 billion was due within one year. Management said cash, unrestricted marketable securities, working capital and forecast operating cash flows should cover foreseeable needs for at least 12 months.
- Backlog was approximately $23.3 billion, with about 8% expected to be recognized as revenue in FY2024 and approximately 60% within five years. Backlog is largely cost-plus fixed-profit; most significant contracts lack termination-for-convenience clauses, but performance requirements and other specified termination rights remain relevant.
Material developments, outlook and risks
- Customer concentration: Walmart accounted for 88.4% of FY2023 revenue and a significant portion of backlog. Revenue from other customers combined was approximately 12%. Customer concentration makes execution, renewal and customer demand important risks.
- GreenBox: Symbotic owns 35% and SoftBank 65%. GreenBox committed to spend at least $7.5 billion on Symbotic systems over six years, with deployments expected to begin in FY2024. The commitment is subject to the agreements’ terms and execution; GreenBox was not consolidated, and the filing reported no carrying value for the venture at year-end.
- Potential dilution: A warrant issued to SoftBank may cover up to 11.4 million Class A shares as GreenBox expenditure milestones are met. Separately, after year-end, Walmart gave notice of its irrevocable election to exercise 15.9 million warrant units at $10.00 per unit. Verify completion, share issuance and resulting dilution.
- Unusual charges: FY2023 restructuring included $22.9 million of charges used in the Adjusted EBITDA reconciliation, including $19.8 million of inventory impairment. The filing also reports $154.2 million of stock-based compensation expense. These adjustments materially affect interpretation of non-GAAP profitability.
- Tax receivable agreement: Symbotic generally owes eligible former holders 85% of specified tax savings. The filing estimates $350.3 million of future payments related to transactions through September 30, 2023, subject to realization of tax savings; no liability was recorded at year-end based on current projections and the U.S. valuation allowance.
- Principal risks: Continued losses, uneven deployment timing, supply and single-source supplier disruptions, system defects or delays, competition, cybersecurity incidents, talent needs and dependence on key customers. The company disclosed a prior cybersecurity incident involving access to and exfiltration of employee information, including names, addresses and Social Security numbers; it said the incident was not material.
- Governance and controls: The founder and related holders controlled 89.8% of voting power, according to the filing. Management concluded disclosure controls and internal control over financial reporting were effective at September 30, 2023; the auditor did not opine on internal control effectiveness. Management planned a financial-system upgrade beginning in FY2024.
- Outlook: The filing provides backlog recognition expectations and a 12-month liquidity assessment, but no specific revenue, profit or cash-flow guidance. Management’s growth plans include expanding existing customer deployments, new customers, products and geographies.
Most important facts for investors to verify
- Walmart’s continued deployment pace, performance acceptance, revenue share and warrant exercise status.
- GreenBox’s project statements of work, actual spending and deployment start, and the extent to which its $7.5 billion commitment converts to executed orders and recognized revenue.
- Backlog conversion assumptions, including the 8% FY2024 revenue estimate, and the effect of project timing, acceptance criteria and cost estimates on margins.
- Whether operating cash flow remains positive after the FY2023 benefit from customer-payment and vendor-payment timing, and how the $1.16 billion vendor commitments are funded.
- Underlying profitability after substantial stock compensation and restructuring adjustments, and the path to positive GAAP earnings.
- Actual dilution from the Walmart and SoftBank warrants, equity awards and the dual-class ownership structure.
- Future cash-tax savings, valuation-allowance changes and potential Tax Receivable Agreement payments or acceleration events.