Core Insights - Symbotic Inc. will release its second quarter fiscal 2025 financial results on May 7, 2025, after market close [1] - A live webcast to discuss the financial results will be held at 5:00 p.m. ET on the same date [1][2] Company Overview - Symbotic is a leader in automation technology, focusing on A.I.-powered robotics and software for supply chain management [3] - The company aims to transform warehouses into strategic assets for major retail, wholesale, and food & beverage companies [3] - By utilizing next-generation technology, high-density storage, and machine learning, Symbotic addresses complex distribution challenges, enhancing speed, agility, accuracy, and efficiency in goods movement [3]

Core Viewpoint - Opportunistic investors are seizing the chance to buy Symbotic stock after its significant decline, particularly following its 52-week low of $16.32 per share on April 4, with a subsequent bounce back of 16.1% [1] Group 1: Company Overview - Symbotic specializes in developing fully autonomous mobile robots powered by AI software for automating warehouses, distribution centers, and supply chains [2] - The company has a long-standing relationship with Walmart, dating back to 2015, and recently acquired Walmart's advanced systems and robotics business [5] Group 2: Financial Performance - Symbotic's revenue grew by 47% year over year in Q4, but only 35% growth was reported for the first quarter of fiscal 2025, ending December 31, 2024 [4] - The company reported a steady net loss of $19 million and projected around 30% revenue growth for Q2 [4] Group 3: Strategic Partnerships and Market Potential - Walmart paid $230 million at the deal's closing and will pay an additional $290 million, with Symbotic estimating that this deal could add $5 billion to its backlog in the long term [3] - The addressable market size for Symbotic's services in the U.S. is over $300 billion [3] Group 4: Market Conditions and Challenges - Despite the recent stock decline of 55% over the past year, investors view the current price as a buying opportunity [4] - Ongoing tariffs and trade wars may disrupt supply chains and increase costs, posing potential challenges for Symbotic [5]

Core Insights - Associated Food Stores (AFS) has successfully activated a warehouse modernization initiative in partnership with Symbotic Inc., enhancing its distribution center in Utah to better serve nearly 500 independent grocers in the Intermountain West [1][5]. Group 1: Warehouse Modernization Initiative - The initiative involves the implementation of Symbotic's end-to-end automation system, which includes robotic case pick capabilities, aimed at improving supply chain efficiency and retail experiences [2][4]. - The automation system will enhance product delivery accuracy, increase speed to shelf, and improve SKU availability, thereby optimizing inventory utilization for AFS [2][5]. Group 2: Company Commitment and Future Plans - AFS emphasizes its 85-year commitment to efficiency and service, positioning itself at the forefront of supply chain innovation through this partnership with Symbotic [1][5]. - The initiative is expected to create growth opportunities for distribution center team members, ensuring job security and continued support for independent grocers in the region [5]. Group 3: Event and Stakeholder Engagement - AFS will host a special event to celebrate the activation of the new system, inviting media representatives and industry partners to witness the advanced automation technologies in action [3]. Group 4: Company Background - Established in 1940, AFS has grown to serve nearly 500 independent retailers, focusing on empowering them to compete against larger chain stores [6]. - Symbotic is recognized as a leader in automation technology, providing AI-powered solutions to transform supply chain operations for major retail and wholesale companies [7].

Core Viewpoint - Symbiotic Inc. (SYM) shares have decreased by 41.9% over the past year, underperforming its industry and the broader market, raising questions about the timing for potential investment in the company [1][4]. Group 1: Stock Performance - SYM's stock is currently trading below its 50-day moving average, indicating bearish sentiment among investors [4]. - In contrast, industry peers Aurora Innovation, Inc. (AUR) and Allot Ltd. (ALLT) have seen significant gains of 175.6% and 172.9% respectively over the same period [4]. Group 2: Strategic Acquisitions and Expansion - Symbiotic completed the acquisition of Walmart's advanced systems and robotic business in January 2025, which is expected to enhance its backlog by over $5 billion and expand its total addressable market [5][6]. - The company also acquired OhmniLabs in December 2024, aiming to integrate its automation expertise with OhmniLabs' mobile robots and AI solutions for healthcare applications [7]. - Additionally, SYM has entered a commercial agreement with Walmex to deploy its warehouse automation systems in Mexico, further contributing to revenue growth [8]. Group 3: Financial Outlook - The Zacks Consensus Estimate for SYM's fiscal 2025 revenues is projected at $2.3 billion, reflecting a year-over-year growth of 21.9% [9]. - The consensus estimate for SYM's fiscal 2025 earnings is 25 cents per share, indicating a more than 100% year-over-year increase [9]. Group 4: Liquidity and Cost Considerations - SYM's current ratio of 1.22 is below the industry average of 2.21, although it still suggests the company can meet its short-term obligations [10]. - Steel prices significantly impact SYM's cost of goods sold, with management implementing pass-through clauses to recover costs from customers [12]. - Rising steel prices due to tariffs could increase project costs for retailers, potentially affecting SYM's return on investment [13]. Group 5: Valuation and Investment Considerations - SYM's stock is currently considered expensive, trading at 67.5 times forward 12-month earnings per share, which is higher than the industry average of 39.8 times [14]. - Despite the recent stock decline, the company's long-term prospects appear solid due to its acquisitions and strategic expansions, though a cautious investment approach is recommended [16].

Company Analysis - Symbotic's Q1 results and forward guidance were disappointing, leading to a sharp drop in share price due to a lack of growth in system deployments, which is expected to result in continued softening of growth in upcoming quarters [1] Industry Insights - Narweena, an asset manager, focuses on identifying market dislocations caused by poor understanding of long-term business prospects, aiming for excess risk-adjusted returns through secular growth opportunities in markets with barriers to entry [1] - The research process emphasizes company and industry fundamentals to uncover unique insights, with a high risk appetite and long-term investment horizon targeting deeply undervalued stocks, particularly in smaller cap stocks and less obvious competitive advantage markets [1] - An aging population with low growth and stagnating productivity is expected to create a different set of investment opportunities, with many industries facing stagnation or secular decline, potentially improving business performance as competition decreases [1] - The economy is increasingly dominated by asset-light businesses, leading to a declining need for infrastructure investments, resulting in a large pool of capital chasing limited investment opportunities, driving up asset prices and compressing risk premia over time [1]

Financial Data and Key Metrics Changes - First quarter revenue grew 35% year-over-year to $487 million, driven by solid progress across 44 systems in deployment and over 80% year-over-year growth from recurring revenue [12][16] - Adjusted EBITDA for the quarter was $18 million, exceeding forecasts, while the net loss was $19 million [16][17] - Cash and equivalents increased to $903 million from $727 million in the previous quarter, primarily due to cash from operations of $205 million [16] Business Line Data and Key Metrics Changes - Software revenue more than doubled year-over-year, achieving software margins over 65% for the first time [12][14] - Operations Services posted a negative gross profit as the company invested in additional resources to support customer success [14][15] - The backlog of committed contracted orders remained consistent at $22.4 billion, with the addition of the Walmex contract offset by revenue recognized during the quarter [13] Market Data and Key Metrics Changes - The company is seeing increased inquiries from manufacturers and suppliers, indicating a shift in customer spending behavior towards automation solutions [45][46] - Walmart's commitment to deploying technology in 400 stores represents over $5 billion of future backlog, contingent on meeting performance criteria [10] Company Strategy and Development Direction - The company aims to scale for growth and invest in innovation while delivering high-quality systems to customers [5][6] - Recent acquisitions, including Walmart's Advanced Systems and Robotics business, are seen as transformative, enhancing the company's technology position in supply chain automation [9][10] - The focus on reliability and ease of use is expected to yield long-term benefits that outweigh short-term expenses [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the operating environment, noting increased customer inquiries and a willingness to invest in automation [46] - The outlook for the second quarter includes expected revenue of $510 million to $530 million and adjusted EBITDA between $26 million and $30 million, reflecting continued growth [17] Other Important Information - The company has made significant investments in technology, including the hiring of a new CTO and the acquisition of Omni Labs to enhance simulation capabilities [7][8] - The integration of recent acquisitions is underway, with expectations for a smooth transition due to proximity and existing relationships [62] Q&A Session Summary Question: OpEx expectations for 2Q - Management expects OpEx to increase by $5 million to $10 million in the second quarter, driven by long-term investments and acquisitions [22][23] Question: Operations Services loss - The loss in Operations Services is attributed to supporting customer resource needs as large systems go live, with expectations for moderation in the near term [26][27] Question: In-sourcing progress - The transition to in-sourcing is on track, with all engineering, procurement, and construction work now managed in-house [35][36] Question: Customer budget discussions - There is an increase in inquiries from potential customers, indicating a willingness to invest in automation solutions [45][46] Question: Tariff impacts - The company has minimal exposure to China, with contracts typically allowing for pass-throughs of tariff costs [48][52] Question: Control procedures post-audit - Remediation controls have been implemented, and testing results are encouraging, with no deficiencies noted [56][57] Question: Software subscriptions decline - The decline in software subscriptions was due to a one-time benefit in the previous quarter; overall software revenue is expected to continue growing [107][108] Question: GreenBox demand - Demand for GreenBox technology is increasing, with expectations for revenue ramp-up in the latter half of the year [95][96] Question: Walmart Robotics acquisition - The integration of Walmart's robotics technology is expected to accelerate rollout and enhance capabilities [160] Question: International market activity - Increased interest and inquiries from international markets, particularly in Mexico, indicate potential growth opportunities [163]

Core Insights - Symbotic Inc. reported revenue of $486.69 million for the quarter ended December 2024, reflecting a year-over-year increase of 32.1% [1] - The earnings per share (EPS) was -$0.03, slightly worse than the previous year's EPS of -$0.02 [1] - The revenue fell short of the Zacks Consensus Estimate by 0.60%, while the EPS exceeded the consensus estimate by 25.00% [1] Revenue Breakdown - Software maintenance and support revenue was $5.53 million, surpassing the two-analyst average estimate of $5.25 million [4] - Systems revenue reached $464.06 million, slightly above the two-analyst average estimate of $461.94 million [4] - Operation services revenue was $17.11 million, below the two-analyst average estimate of $19.97 million [4] Stock Performance - Shares of Symbotic Inc. have returned +18.4% over the past month, outperforming the Zacks S&P 500 composite's +1.7% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Core Viewpoint - Symbotic Inc. reported a quarterly loss of $0.03 per share, which was better than the Zacks Consensus Estimate of a loss of $0.04, indicating a 25% earnings surprise [1]. Financial Performance - The company posted revenues of $486.69 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 0.60%, but showing an increase from $368.45 million year-over-year [2]. - Over the last four quarters, Symbotic has surpassed consensus EPS estimates three times and has also topped consensus revenue estimates three times [2]. Stock Performance - Symbotic shares have increased approximately 27.8% since the beginning of the year, significantly outperforming the S&P 500's gain of 2.7% [3]. - The current consensus EPS estimate for the upcoming quarter is -$0.01 on revenues of $525.57 million, and for the current fiscal year, it is $0.13 on revenues of $2.28 billion [7]. Industry Outlook - The Technology Services industry, to which Symbotic belongs, is currently ranked in the top 35% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8].

Revenue and Profitability - Total revenue for the three months ended December 28, 2024, was $486.7 million, a 35% increase from $359.9 million for the same period in 2023[151] - Systems revenue increased by 33% to $464.1 million, driven by 44 Systems in Deployment compared to 37 in the prior year[155] - Software maintenance and support revenue surged by 155% to $5.5 million, attributed to an increase in Operational Systems under support contracts from 15 to 29[156] - Operation services revenue rose by 70% to $17.1 million, reflecting an increase in Operational Systems and related contracts[157] - Gross profit for the three months ended December 28, 2024, was $80.0 million, up from $64.1 million, with Systems gross profit increasing by $18.5 million[158] - The total cost of revenue increased to $406.7 million, resulting in a gross margin of 16% compared to 18% in the prior year[153] - Adjusted gross profit margin decreased to 17.7% for the three months ended December 28, 2024, from 18.8% for the same period in 2023[173] Expenses - Research and development expenses were $43.6 million, a 3% increase from $42.1 million, with employee-related costs decreasing due to lower stock-based compensation[160] - Selling, general, and administrative expenses rose to $61.1 million from $47.0 million, reflecting increased operational costs[151] - Selling, general, and administrative expenses increased by $14.1 million, or 30%, to $61.1 million for the three months ended December 28, 2024, compared to $47.0 million for the same period in 2023[163] - The company incurred $3.8 million in business combination transaction expenses during the three months ended December 28, 2024, related to strategic acquisitions[173] Cash Flow and Financial Position - Free cash flow increased significantly to $197.7 million for the three months ended December 28, 2024, compared to a negative free cash flow of $33.1 million for the same period in 2023[173] - Net cash provided by operating activities was $205.0 million for the three months ended December 28, 2024, compared to a cash outflow of $30.2 million for the same period in 2023[178] - As of December 28, 2024, the company had a cash and cash equivalents balance of $903.0 million, sufficient to fund operating activities and strategic investments[187] - The company expects its current cash and cash equivalents, working capital, and forecasted cash flows from operations to be sufficient to meet foreseeable cash needs for at least the next 12 months[188] Operational Outlook - The company expects continued revenue growth from the Walmart MAA, with installations ongoing at all 42 regional distribution centers through fiscal year 2029[155] - Future capital requirements will depend on growth rate, spending for R&D, and potential acquisitions[189] Internal Controls and Compliance - The company has identified material weaknesses in internal control over financial reporting related to revenue recognition and cost of revenue recognition as of December 28, 2024[197] - Management has developed a remediation plan to address material weaknesses, which includes enhanced controls and employee training[200] - Management's evaluation of disclosure controls and procedures indicated they were not effective at the reasonable assurance level due to material weaknesses[196] - There have been no significant changes in critical accounting policies and estimates during the three months ended December 28, 2024[190] - As of December 28, 2024, the company had no off-balance sheet arrangements[191] - Management concluded that the consolidated financial statements present fairly the financial position and results of operations, despite the identified material weaknesses[198] Employee-Related Costs - The increase in employee-related costs of $5.5 million was primarily due to headcount growth to support system deployments and business transformation[163] Other Income - Other income, net rose by $1.6 million, or 26%, to $7.8 million for the three months ended December 28, 2024, primarily due to higher interest earned on invested cash balances[165] Adjusted Performance Metrics - Adjusted EBITDA for the three months ended December 28, 2024, was $17.9 million, compared to $8.1 million for the same period in 2023, reflecting improved operational performance[173]

Financial Performance - Symbotic reported Q1 fiscal 2025 revenue of $487 million, a 35% increase year-over-year from $360 million in Q1 fiscal 2024[3] - The company experienced a net loss of $19 million in Q1 fiscal 2025, consistent with the net loss reported in Q1 fiscal 2024[3] - Adjusted EBITDA for Q1 fiscal 2025 was $18 million, up from $8 million in Q1 fiscal 2024[3] - For Q2 fiscal 2025, Symbotic expects revenue between $510 million and $530 million, with adjusted EBITDA projected at $26 million to $30 million[4] - For the three months ended December 28, 2024, Symbotic reported a net loss of $18,520,000 compared to a net income of $15,954,000 for the previous quarter[21] - Adjusted EBITDA for the same period was $17,904,000, a decrease from $42,380,000 in the prior quarter[21] - Gross profit for the quarter was $80,039,000, with an adjusted gross profit of $86,217,000, resulting in a gross profit margin of 16.4% and an adjusted gross profit margin of 17.7%[21] Cash Flow and Assets - Cash and cash equivalents increased by $176 million to $903 million at the end of Q1 fiscal 2025[3] - The company generated $205,027,000 in net cash from operating activities, a significant increase compared to a cash outflow of $99,383,000 in the previous quarter[27] - Free cash flow for the quarter was $197,670,000, contrasting with a negative free cash flow of $120,750,000 in the prior quarter[21] - Total current assets increased to $1,458,426,000 from $1,355,537,000 in the previous quarter, driven by higher cash and cash equivalents[24] - Cash and cash equivalents at the end of the period were $903,034,000, up from $727,310,000 at the end of the previous quarter[28] - Symbotic's total assets increased to $1,715,622,000 from $1,578,552,000, reflecting growth in both current and non-current assets[24] Operating Expenses - Research and development expenses for Q1 fiscal 2025 were $43.6 million, compared to $40.1 million in the previous quarter[18] - Total operating expenses increased to $104.7 million in Q1 fiscal 2025 from $85.5 million in the previous quarter[18] Strategic Developments - The acquisition of Walmart's Advanced Systems and Robotics business has been completed, enhancing Symbotic's market position[3] - The company is deploying 44 systems, contributing to its revenue growth and operational expansion[3] Shareholder Information - The company issued 106,521,915 Class A common shares as of December 28, 2024, an increase from 104,689,377 shares in the previous quarter[23] Liabilities - Total liabilities rose to $1,321,697,000 from $1,188,422,000, primarily due to an increase in deferred revenue[24]