Symbotic (SYM) 2 Aug 222022 Q3 Earnings call transcript

Company Profile

Participants

Jeff Evanson	VP, IR and Corporate Development
Rick Cohen	Founder and Chairman
Michael Loparco	CEO
Tom Ernst	CFO
Matt Summerville	DA Davidson
Mark Delaney	Goldman Sachs
Mike Latimore	Northland Capital Markets
Nicole DeBlase	Deutsche Bank
Derek Soderberg	Cantor Fitzgerald
Rob Mason	Baird
James Ricchiuti	Needham
Joe Giordano	Cowen

Call transcript

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Operator

Good day, and thank you for standing by. Welcome to the Symbotic Third Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator instructions] Please be advised that today's conference is being recorded. turn over to today, your like Evanson. Jeff now the to conference speaker I'd ahead. go Please

Jeff Evanson

Investor everyone. afternoon, fiscal am President at update. quarter for 'XX I Corporate of Symbotic. Vice Evanson, Good Jeff you financial Thank joining and development Relations Symbotic's third

release described cause by in will forward-looking Our in projected Symbotic's during differ from actual factors statements on results forward-looking presentation statements and risks in discussion subject as and statements, regulatory those in a the are their result made factors are to cautionary financial filings that risk to of qualified statements call and including this with the uncertainties based which today and press include assumptions entirety. release that forward-looking could materially the SEC, any

guidance Symbotic's measures the most by the and filings measures comparable in may We this that non-GAAP planning, certain most EBITDA. GAAP today, management non-GAAP to included Accounting required of not able including and these for reconciliations financial Principles, our adjusted outside is Cohen, used by Q&A. Today, in our measures providing during release, call, SEC. discussed provide These Officer. and executives financial financial of We're which recognized US and Michael I'll to measures on the provide reported Symbotic's to call, turn allocating These refers reconciliations that, to with On Tom Rick. control measure over believe fiscal evaluating financial Founder Chief forecasting measures. EBITDA. not measure we'll SEC performance which resources. will Loparco, and be to financial certain as on such XXXX Generally furnished Reconciliations and yearend to third be such is predicted by for been Rick? other available under may are Executive addition, press Financial guidance We're because Rick non-GAAP for today our their compensation. adjusted stock-based financial these Chief in adjusted net provision which GAAP our Accepted and followed Officer With our not be quarter not EBITDA business of section comparable and Investor has items our cannot and are Relations discuss to are as assist our joined website GAAP SEC In to measures in Chairman; Symbotic's we'll reasonably measures including loss comparable non-GAAP it the the results revenue 'XX issuers. Ernst,

Rick Cohen

Thank you, listed, and success. believe in Jeff. market becoming publicly Becoming publicly value our is growth the validation company tremendous and investors have since shown Symbotic's our for a and future they a potential of

feat in the not us the every XX years and has possible listing customers. public and our best achieving to Our help employee Symbotic without been be was develop this partners making to invaluable working solutions hard

members to to of biggest who and the us reward succeed. have wanted reasons take opportunity give was of team the so our us owners help public, One our be to to Symbotic hard worked employees I

we are Now, together success. future in all invested our

Symbotic can executive all talent. Michael that company company attract supply his and innovator in helping among supply into improved to our to is a equity recruit is talent us many things top potential ability accomplished example from In addition, transform Loparco best leadership our partners. chain employees and of Michael public validation the chain help and parallel. CEO Hiring already really is liquid one an do well a as

team in technology production-oriented in a partnerships in can supply rapidly rapidly at range expertise into Michael's wide evolving chain [indiscernible] our manufacturing build scale system continue, developing the a infrastructure mass will execute platform over innovation its experience a helping at we in have of management While and and with we Walmart's environment. of US that all success the deployments distribution also deep along our to XX The achieve an deal are today us automation are The expanded with regional robotics Walmart company entire helped implement coming us to scale. centers critical software accelerate helps Symbotic's to becoming years. public. and successfully Symbotic commercial agreement

the transformational the Now the chain the and supply lead, we pursuit of know can to and our keep we how of are customers and we're rapidly deployments line innovate investors you deliver Michael, just the now our billion $XX.X is Symbotic, transforming to industry some term. prove our in relentless starting will This beginning long can further so making marathon, thoughts our scale in system share changes against we at journey. and successful that backlog? we more just we to be to as can

Michael Loparco

my and also only the real Thanks, Since Symbotic, market you It's Rick. I'm for the strengthened. privilege excitement technology and team, thank our opportunity here. about to, happy our joining kind to be has been words. a

Now to execution with effectively to enhance and end, our technology just innovate, further and not greater To aggressively to to organization speed. even partnerships the scale we're move efficiently capabilities and but we this need investing cost our operations. hone in people,

we improving market growth in the us years with ahead. become and the Given in investments truly areas margins opportunity and a reward the these creator, the believe incredible to will revenue rapid penetrate category

to, just faster our for happy talented capabilities partnerships adding at capable Rick and dedicated, bots braggingly sales, of lifts is systems to the and innovative and making maniacally $XX world-class in install fully and we sites an of accelerated to third of beginning, than more structures and additional and faster this As like our time, ramp with deployment on our ultimately on and our believe but team people an to expanded helping as backlog accomplished nothing that growth These XX de-risk easier and alluded more a is are next At a begins of and of team focuses the much parallel party point. more reliably, into has build in are and enforcing help you now been for short disciplines us continuous ecosystem we business many same more functioning doing team improvement with the the operations have passionate it's that efficiently, This stage predictably. of us thank customers, I'd to a what's At date attainment well transformation creating to the company, in focus company brought and things we systems this measure. scale. to already what billion partnerships improve amazing. say, as larger we who

systemic actively processes regularly feedback building management that we and data-driven measuring, identify our business issues, culture. our of root evaluating By identifying loops we enhancing investigations and on metric-driven are data, key solve reporting are critical So metrics problems. drive quickly causes and and building systematically

management partnerships supply us on construction and is and best to and will always project services these Lastly, Symbotic manufacturing enhanced at to focus innovate. that chain, across complex new allow what we've done

roughly are pack hour full the with We're time, system field benefits our call to daily scale Symbotic testing, we block-like release through proof cases. techniques. handle six concept autonomous per of break will continue system, more case and of also addition new increased improved we're our refining At example, innovating the [ph]. transactions deploying handling. robot, allow release enabled on our platform and each advance a flowing ninth to modular to items installation For we This terabytes AI and of in designed eaches which same from partners or data single Lego that we

to R&D accomplished. faster talk are profitability. innovations efficiently stream and of more hand more over what about designed Tom work couldn't our our growth All already revenue direction and it these now and to and quickly serve our customers has I'll Tom? performance. lead and I team investment financial company be initiatives to about to the excited and

Tom Ernst

Michael. you, Thank

prior quarter. XX% Our third revenue quarter grew over the

revenue is growth, the This public revenue systems are business with with field. doubled cash growth scale rapid developments. allowing nine deployments and various fully to These of systems listing ramped transition recognized stage deployment this from customer the now progress. are but and on in expansion contracted quarter XXXX the was four revenue acceptance, for system We that from level are of validation. six and through This transaction parts and up in driver in XX top last the range more the streams revenue operational percentage of strong us basis raised third Michael through quarter cost important confidently XX% deployment of and software, to have phases and currently represent completion of on combination and systems formal revenue public goods recurring build our than in System and our begin. during XX The a increased our listing operations from of backlog which sold and visibility described. equally just backlog, of of to upon revenue then testing move anywhere systems now early systems in the We and ahead was the growth of quarter-over-quarter. excited

growth the several intro progressed systems in during of number very accelerating the rapid projects in addition deployment period. to recognition revenue the quarter, quarter, In and strongly the growth

as greater quarter we reasons. even Operating this expenses we're a for quickly the at higher primary in innovating fast, speed admittedly moving two came highlighted, the more scale. Michael As were Accelerating and with price. business

innovation investment First, of increase to initiatives. we're in continuing our strategy key advance

transformation, in shorter we acceleration operations. and both of incremental ramp shift Second, to the and partnerships as business incurred a infrastructure costs related as support term building and system well deployments permanent processes to rapid

were are will basis of $XX was sold balance the and goods While to sequentially our $XXX the loss, XX $XX in these investments The have previous been improvement growing XX inventory more prioritized, the This EBITDA point by XX% and loss percentage Notwithstanding of adjusted a improvements XX% to We operating expenses, follow. in faster a larger in an represented strong to margin grew the financial quarter-over-quarter million cost a was operating by quarter. operational QX loss investment despite net transition adjusted from result confident spending organization. impact leverage a quarter the during to We loss reduction of EBITDA quarter. deliver able million than to our a and million. of gross benefits the during of points. for which improved we a

all of supply in at going building demand. to for and had to growing reduces equivalence we and the deployment end the $XXX customer chain of delivery. cash positions increased and disruptions the in us million growth, After rapid inventory risk continue positions quarter, raised of flexibility $XXX This and we meet us We million. debt. growing for public, In future retiring capacity preferred support no

deployment invest aggressively to operations continuing innovations capitalized reach cash sustainable confidently future while very are positive growth in revenue and opportunities. strong We well continue new to flow and

our In $XXX company. would to we implies year in the like $XXX fiscal first guidance $XXX we as public expected million Now million our to million. of $XXX quarter. of fourth to revenue ended provide This XXXX, a million expect revenue

of $XX ended $XX expect revolutionize quarter. fourth $XX implies million EBITDA year million the adjusted In fiscal an between an XXXX, helping chain. the For EBITDA our energized the million. loss we million This progress summary, of $XX in between loss adjusted in and and about supply we're

scale as As prepared we We our Operator, are we to this your our the this to now welcome building we're billion forward, you, against our company. business $XX you great of and amazing will please over Q&A? public journey, part customers work open shareholders with and questions. backlog and excited to our continue move innovate revenue rapidly

Operator

DA question first Our with Davidson. [Operator comes from Matt Summerville instructions]

Your open. line is

Matt Summerville

A Thanks. couple questions.

cost you was have in and how curious the gross been little and margin minuses a as of I I a have in to on quarter dilutive, that if on in pluses put I'd margin some dynamic the Tom, impacted quarter point follow particular, finer up. input be the First, then may the wondering could

Tom Ernst

you Thank good evening. Matt. the for Sure and question

prototypes. system for margins our in are a had know, gross statements our basis This and margins, associated Matt, our prior gross for about with margins if you services reported is has the So XX% were financial point -- as gross we XXX all see generation the gross quarter. you services from margin impact

in streams are were targeted businesses to those you those general generally as associated at not expected know, and those to be with also parts streams, expected were be software the experience businesses So and operations and negative profitable and for margin. really

system XX revenue period. deployments have deployment, as basis next services you customer point revenue overall So XXX the those look in today, acceptance These and which we know, services we the we deflection various about a for Also, start that's, transitioned. forward They in at stages. upon point upon phase. systems accounted start for

to Two the XX% in margin two closer the we been recurring. service would've system don't have XX% really things from gross quarter. revenue revenue, in Working happened, quarter; So we in much with the any drove a business a period things or the

First, through those previous the our customers the lags pass as you you over the months. input for steel -- to costs been as costs us in expect also and steel had know, we index would revenue ordered the as as in-period

we That impact. So there. basis was have of a somewhat a lag material

The the gas is of growing function second us and impact putting a foot the on really faster.

So in to more we're putting prepare. fuel cost growth as faster, we're growing that and

of bit a inefficient and just scale. So, the it's that's fast of our bit of go function a just early

much So margin Matt? Does two in versus to closer that those gross answer a the the XX% question, would as things have XX% us period reported.

Matt Summerville

quarter nine process, the Michael, some curve, but Yes. can will you about, that if appreciate one Thank that that's as have specific this then can you quarter, maybe either people, prior, you quickly you. to you've point talk I actually, to that. from ramping technology, for maybe gone ago XX, deployment four in things you happened for enabled guys. to you up of pretty what's start, And

congrats is success maybe be factors I'd to here Symbotic? as that, you? So curious what term specifics linear point but for can Thank you to in on

Michael Loparco

for Thanks pedal putting backlog. meet the it's the bit really people in an bring question. and We did systems three and to Matt. and part it's $XX been Thanks, backlog, course, on infrastructure billion of gas with that this, of us amazing of to step XX. the additional right deployment Yeah. into to Yeah, we're scale the remarks and my in I an Sure. of our that's And this a total four mentioned quarter, approach kind investing to as processes. prong people expanded prepared

of culture a creating excellence. really So operational

improvements place our things as be I predictable flexible new scaled augment can't product management our that's partners. our have incorporate on to and source, management the you and our putting who think products so the internal And and so we're team that in right? one quality or and systems, cost putting for chaos, of enhancing and we're ramp that technology change folks We're place with adaptable enhancing of business really scale can management enhancing like reduction systems regardless We're workflow. opportunities. in Matt, leaders system, board defect free whether So before. bringing for and standardization we of is our we

technologies system So, we're leveraging and our with working components really velocity of tier one partners designed for and for speed we're the on them integral installation.

leverage of intent the reduction. partners cost and to is So course, compress the for and our schedule for innovation

So lots heavy infrastructure but, foundation the and the confident of scale. right I'm Matt, taking we're the build to for ahead lifting steps

Matt Summerville

color. Great. Thank Appreciate guys. you the

Operator

with have We question Citi. Piyush from [ph] Awasthi a

is open. line Your

Unidentified Analyst

that So spend right. automation few of somehow our warehouse is companies reported some shifting have

few concern over changed months? a has with your Now, but There's you last months? strong recession sitting backlog, few with guys the are Has, mounting clients the new changed very conversations anything through. over of last the coming a

Michael Loparco

the begins billion, our Piyush backlog, think, order $XX answer right. I Well, with to right of question that

have wallets. their voted with I think customers

excited think really about think pretty the being is I opportunity I So and the we're embraced. technology

to tasks, our benefits we've yeah, technology And, or Piyush, redesigned So goods efficiency stores. automate the operation. the automation transforms center advanced but optimize remember solution, rethought and mechanize speed, human and companies, or that it operator and or through brings warehouse merchandise warehouse unlike But, to really warehouse flow to distribution solution really instead a got activities doesn't of just radically really other entire it's accuracy operations. how how

Tom, increased don't asset really seen overall have the I to yeah, anything strategic a helps our add. folks if in wanted and warehouse solution think you the I I So, that know you supply we've make for interest recognizing chain. sure think are

Tom Ernst

Piyush, in at of efficient in backbone transforming Yeah. much really our we've the comments you as retailers I investing and been in know center. I of know, e-commerce out some making backlog that marketplace. commerce make we of certainly pointed the bulk more the watching the from comments know fulfilment the watch think We've over sits upstream seen and you fulfilment about

and feeling the demand labor them. supply demand changing So, of there, chains handle customers the and shortages on still pain extreme just that the can't are prospects and our broken

just So with I presses the in other about lot some happening hearing not think terms that's of something of that a we're what retailers.

Unidentified Analyst

investment given follow And Helpful. to it. you're your prices provide even? higher making commodity a question you my do Got up is that expect the when little of EBITDA and like, bit their can you are, color, break

Tom Ernst

Yeah.

of spend, and for the of some our as and the this spend bigger systems XX sight thus really think clear much might company. report and to have a year. being outlook say stepping and I It's helpful and progress about for in say into quarter, ability nature. we was the feel good we we about very drive more to in the model fiscal providing bigger traction little spend one term we Perhaps vote we leverage invest bit leverage it about we're QX, bit. we QX. permanent that next a customers the comment as a you, line the to the a now scale to these you deployment shorter a company our with look more in of traction One clearly about clearly are intended the fiscal be stepped can when in us gives model. Other the But, clear and we with to early suspect the give the is up little so right be target confidence is far our guidance expect and thing to -- for a we IPU a on excited that even. our being as So, that investment along do up can we break

the the here on in down quarter. we're really term and short putting as very in the gas it nature fiscal third foot over XXX% of Some growing

So a comes some bit of growth just little efficient. in that of

at do printing as So in levels that see big we our cresting might implicit forward. help that OpEx our in about we're here you and little we could QX leverage picture, a bit think QX guidance. the our the And move

Operator

Our next from Sachs. comes question Goldman with Mark Delaney

Your open. line is

Mark Delaney

you on very broader is team and to Yes. people, where role. Michael able first and go scale Michael better think or taking public thanks be some chain. transaction questions. going shipments and on you on you and, new can on terms before the all progress on those supply you looking to not of stands is the step being processes to growth and things and congrats do question you think you understand to all the spoke My Congratulations I'm grow working work more the can for the company the for and of company continue consistently much the in doing are function chaos and higher the to that make time there do? the can next take relatively period steady

Michael Loparco

what's Thanks Yeah, opportunity Mark. even taking this the the the question. aligned, and time the interesting I strategy. role and of Hey spent before to with the Yeah. on lot Rick for board I think, a market management team note executive I is and really think the and really in

when we're a at we So, scaling. look have dual do how you strategy

and to manufacturing scale. to schedule and suppliers We existing ensure on are optimizing tier we're internal one Mark really systems to adequately on the capacitized deliver that our bringing

bought on lot structure, bringing strategy is the the date. a and tier completely been We're in for organization. So collaboration these for this to of partners, cells, everybody in for good for there's one bots, lifts, early of stages dual etcetera think by I in

it's supplier at taking to we've down couple continue together, in going to to how sites a going we're play schedule, the a and Day is techniques where innovate, plug the orchestrate a installation at going our things we're that full a So, one a how and of to multi-day site. to we're can collaboration weeks and system Summit very place becomes how of work got and how to compress get going our we're we so interesting to introduce modular constructive really like position

we're I we're think, taking of as the stages on get we partners. to confident the Mark, suppliers undertaking the effect tier with in we we're of that one with this So multiple right we categories. strategies expect these but bring the are steps a each and in early And multiplier that

Mark Delaney

expecting investor my now question And and in grown materially That's the you've on helpful. billion, to as you Thank $XX to recently long-term was over but billion. XXXX, target over the company provided to financial has term backlog grow get given, was that the mentioned. you. backlog, backlog its presentation significant as December, when was the longer second already Maybe since $XX initial targets progress made company more the was

the the all? term so longer XXXX targets such have So, you. have they changed as model, at directionally those question thank is Even

Tom Ernst

Yeah. Thanks Mark.

that have the confidence mentioned success way XXXX the was in of in it and various vote from of we deployment, rolled customer's and deployments, in the that three the invest testing. has of the prepared aggressively. quarter, completion is have followed balance had the strong and third confident the sheet of right. and things than Backlog in you're XX which Mike with really build backlog $X.X we little bit with we've a doubling to is piece at happened really there's progress so, along now whereas system more our along on, early billion, posture more as puzzle, public the of And That listing been of late one great end our backlog we're traction in remarks think those third just that validation to stages to about $XX.X the means from his since

and opportunity confidence you ourselves opportunity see we think, what the the much the to future provide 'XX term model taking has a level long in more We that a company, not tonight taken is and developed bigger sometime to strategic the five-year do. in about I is a an that to opportunity Nano the step framing model, appropriate but to invest the we're outlook bit of as on think little we've what's talk might out saw back rolled state. the merger So since in

Operator

Mike comes question Next from Northland Capital with Markets. Latimore

Your line is open.

Mike Latimore

of, Congrats growth require guess, Tom, guess I Great. a more certain Thanks. the believe strong very level XX%, I I year each by here. I can vary on guess. commitment the contracts than

and how think fact, are Just or we're that? in XX% we variation case, the that results should also clarify then about sort well that, seeing, of the above

Tom Ernst

Yeah, thanks Mike, question, for the you're hope and well.

So even you're us to timeframes same in as make with we favorable that durations our customers you times, significant right, possible. over contracts customers well, our clamouring very restrict modifications. within fast ability to for do long have and make the that to their our as change are terms short restrict move the ability as At

So, commitment to the we're at roadmap lock where not visible visibility of an $XX.X But about but billion having that's move in deploying when choice we and obviously kind backlog, that only that a rapid plan us ability plan the a faster. gives to for. of mutual clear growth

Mike Latimore

opposed asking was that talked inter acceleration symbolic specifically it things. motivated to think here, the And it? to guess as customers sounds as or way like I then quarter more for you to, that like about about opposed Is

Tom Ernst

the third deployments One strong Yeah, flight. just are couple was really in quarter. a execution there in on fiscal

all basis basis through has revenues a from recognize the we moment completion that what and these of So, revenue on percentage what moment a deployments acceptance the on that from Mike, of through is process of we building forward. I you typically revenue recognize looking been building of of the recognized start when early as acceptance early percentage start we know, system think these completion we charging month of about begin expect an and for deployments of be recurring to to XX revenue

and of was the first of third terms bit a execution. that quarter some of of saw progress was that systems this a second relative well we're here, number second a key those cycles we deploying stacking key of in chunky a that quarter. factor A systems really with the these fiscal of both some to as of progress kind what deployment some So rates concentration wave of there provided gates. during of fourth In fiscal strong hit was revenue perfect the

that So I the growth think in see you third sequential really in quarter. fiscal can accelerated momentum our

being implies Our that over even fourth quarter despite the fiscal fourth XXX% quarter apples-to-apples sequentially basis. an fiscal down up we year-on-year on be in might

Operator

Nicole Our DeBlase next Bank. question Deutsche comes from with

open. is line Your

Nicole DeBlase

Yeah. Thanks. afternoon, Good Good evening. everyone.

So or just answer suspect last seasonal that do there's why maybe about implied stepped some you we'd get of to the a that's think into are outlook? you on the revenue the I thing. true revenue, that kind Is baked question are that Q-on-Q sequentially? some on color piggybacking conservatism step quarter, love that on the you, fourth in expecting Just down to to guys

Rick Cohen

of Yeah. basis. Thanks a a had those bit is question Along they that wave really have this the much recognition in in It We revenue systems. progress systems do first a for on with the Nicole. had of that a revenue concentration really business. to we deployment of these a seasonality hit had first a the No, not of key have more moments a where stronger the in QX. impact stacking number of systems

playing So that we did expect that way. out and it's

year. to to just be such as you for that where look the start from second quarter second expectations a even look our Our half expected picked the here we in to about at a million as and we start to expected up half we the $XX or year ago perhaps and relative the momentum it significantly total half where QX up at is is

well. there and thought help pickup that more by as at significant driven you One might seasonality. momentum both in all not So

that QX, of some on we're in and seeing here of be move first think deploy quarter much quarter I more quarterly and and QX wave these diminish we beginning lumpiness past expect as we to to begin as that deployments, to systems that smoother. you're basis, on a QX

Nicole DeBlase

Got really on step it. And just up, is the helpful. not Thanks. uncommon. inventory That's this

function with has inventory what's higher we of you a sense happened kind more seen I chain, but with you've similar as company levels as I levels inventory step of to think cover thinking view every running of seen of single of in are the supply well? the to run higher kind up it guess, OpEx your guys makes maybe with past that on

Tom Ernst

Thanks really question, class in initiatives our supply Michael manufacturing for remarks mentioned are Yeah. the chain. building Nicole. a his world prepared

bit that is investing chain, up as is a want though, of significant. how in inventory ourselves second it designed part a chain So to Mike, that. -- around that? visibility. clearly a environment a de-risk challenging supply more comments little make to extra you greater we any being step we're And is Part well building of supply the part on some are we're what's all give

Michael Loparco

as yeah. Nicole, I'll little fashion to on a systems focusing maybe environment into a oriented the capacity as a in is model. his Sure. forecast mentioned things really multiple build serial comments of or production a And parallel. to migrate really in really in I doing just part that, are color from Tom, build employing a of think to and add that, Rick we mass really moving shift

which will very result has intentional better. and some So inventory, recently entire for increased is our changed I in with again, think suppliers relationship, the

work and robotics suppliers. it, very as I if sectors areas software seen enabled market in just playing we're are and a growth and automation, a hot about these desirable company we're with. -- We're think of to desirable I think pretty for

long suppliers, just better $XXX IPO and it high of outlook, suppliers their gives give and because just you credibility, market financial few And who at our the We we to get simply load that's raised to really for look ago, a can forecasts demand and the cash, right. the guess also, factories of course, weeks of in I have, support more million us efficiencies fact if then our cash. transparency profile we level the and Nicole process. Of can us attractive

to out go expect times our items to installation overall compressed in up and and lead inventory new time systems. So bulk secure lead we build times with as this confidence us of model in result allows long and

Rick Cohen

and very Maybe a have as deferred more represented Mentioning well of Yeah. to cash you strong can know, that Nicole, cost revenue see from that in know, the we so I'll benefit significant our side also sheet. I balance Mike. float one on you point the it,

start payables, as you better to fund this can look is metrics see start strategy. start well get accounts able One of move we're we at our payables to are this to getting, payable as the other the you terms around to to much help our in benefits

should expect those So both trends see continue. you to are

Operator

We question Soderberg Cantor with have a Fitzgerald. from Derek

open. is line Your

Derek Soderberg

in on questions congrats Tom, taking want Hey dig a strong I as and my in guys bit more margin. well Mike thanks to quarter. gross for systems

we a you sort what expect of had that systems, a here? bucket maybe you in the quarter-over-quarter. quarters. few provide next some systems You few over slight in Can uptick gross to Is Where good about, margin gross quarters? takes that XX% think talk detail Can place margin next on over should up from the about margins, that? more

Rick Cohen

Yeah. a to talk Derek, little bit more. let

were two from had being system to closer margin factors I think that earlier much primary something different that said XX%. our there I XX% of gross

I So mentioned had the first was index. steel

steel index, to Our in happen settling you, have index back more do costs a due input predict to only to We much but spike ago and going up few for we down watching it settle that range. down Derek. XXXX. what's lag, months been a steel saw the normalized Can't

the future, indicate settling think would market expected future's I down. continue we can't predict the to So, it that while is

So input we're leg goods. model steel-based we in purchasing our natural as do a have

many in sometimes weeks, Sometimes months advance.

market benefit that that flow that you But margin we know gross if know, reported basis. just well I effect leg for does expect, we So apply. does what the is us. through natural a a from steel as this should on

cost. are those to on through steel our that flow So, prices passed as customers

of to getting regardless But gross the the margin that, gross steel, impact we're profit does dollars. happens to visibility percent. So it what same

equation scale and micro well decisions of The deployments on for fast, bias, experience go are We've decision. been growth, side efficiency. each we're making system going optimizing rapid rather at get as here process the really early our our our other the each than

So as getting at get in efficient more and of we opportunity each getting see bats systems. these lots we of for more with

just of In investment been that been bigger. addition, putting and scale we've -- dollars we've to at spend kind get

for less. that you not think about diminishing put and time. as should efficient, year, too talk to expect should think trend, timeframe on you would systemically over about but next we a it's So more see a us get to want I those, I early general to don't that,

Derek Soderberg

my helpful. up, follow And Tom. That's that Okay. is

should the curious about think Just we software and ramped. support how revenue

bucket to modules wide ramp being right going fee it's I'm got, accepted, think production consistently? that we I grow guess see up. the or modules going to software that the to Is pretty now. think I Thanks. new How piece so six see when You've we're ramping? case should But really it wondering that take coming online start that about to

Tom Ernst

Derek. thanks Yeah,

growth also maintenance software, led contribution along in That with the build operate by going from business transfer some to You recurring which you're margin what's our healthy include are parts drive services. particularly revenues, typically but right. and

revenues. as, going ramping that that post think to forward, expect to it on number mind, We led the team and, those as to as can Michael, the is trigger the of rapidly double event about and those as our then expectation of we well by looking systems to for systems, this keep again. you and this to growing we're around is modeling XX at room One thing yet start acceptance call, in Rick is our be and grow here those XX goal as fast

recurring and gross system our are So as to to means from strong fast, intend recurring these stream unlikely becoming growth. our today being the in profitable of components future highly as to revenue over down of revenue overall actual a growing our economics That we for down don't to but the see magnitude you're said business, a long slow the you're businesses timeframe, really overall system percentage profit order when break that similar that of in -- contribution our you revenue. the

of lag very business important the So timing. happens that part a just model in to

Operator

Mason Rob question a Baird. have from with We

line Your open. is

Rob Mason

may are your think was the as The value And that roughly system of know again the that, that past, both I more what good the just, as afternoon. as million. had good talked well we desire think Yes, average I technology. have variability the customers like you've talked about $XX they to influencing aspect be congratulations but there's the that on around you inflationary question a as in about or start. that requesting, which for about, we've seems it

You're well Walmart talked at upsized about the I enhanced as working as things understand, well. opportunity that think some on capabilities I as

be that some $XX can change that can, million, maybe give use you extent may for technology number, that just So to want over around how inflationary if context there. we time that you how the may and the aspect to

Tom Ernst

the Yeah, the probably obviously can you deploy timeframe. XX on can period it when the sure. math, And, over you in material the scores Rob, the you systems for do revenue higher average -- do thanks sure I'm projected for the question. and spread

So I think you hit some of issues. the

handful average typical million talked system $XX a meant you wasn't quarterly first cost see about to So a would reasons. on represent what might as necessarily for we a of

throw First such in deployment a terms bigger as in second, of a basis that average stacking this period generally quarter, systems minutes bit. that ago a on significant within it your are going the numbers you our bit comments But few events are timing just a in to off I quarterly are are scope look and the made at little about there as the really then little planning.

our Inflation the analysis sense. the more steel a in specifically around biggest over inflation, about So the few bit questions costs that a index. terms systems some about Then already bit timeframe, your think, this make does model a of input we've little as one smooth out of of and impact talked impact typical afternoon, as well. that's it'll little a, quarter I them you to do

Now lumpiness we timing that bit our customers, may have inflation of are there protection but little events provide do some just that. with to a

like this the terms kind to as marketplace, relative last on like, look a that flow the well year broad cost of So, I we through costs, starts up else see of impact revenue definitely and year in flow business. think as is of marginal across in through everybody the input we inflation pick

Rob Mason

Sure, operating current would over to sure. most this quarter. expenses to here reference had in past And than mentioned, quarter start operating off. think you assumption plane or you quarter that bringing next the capabilities, that I'll market as we just next, Tom, bot the about generations Should expect the the of about but and the we've Those again, expenses pack break talked included cleaning well. are out enhanced costs to

Tom Ernst

think very talked of about, Rob, mentioned on gave pack and initiatives break you're a in amount couple right that prepared that this [ph] do innovation prominent our significant Michael Yeah, I remarks you we're that examples Symbot of some a his a little we've that R&D and working represent bit are spend.

that specifics investing expense into our perhaps programs. done what thing were in to of of actually and the I I here get in One yeah, investments don't as is on add period, well. want addressing as we've So all those will direct terms we

our CapEx started relative that's we've think have we full that, is I might profile versus year-to-date where as So -- helpful been $XX year financial we we million of but million. the about our for been to to a plan $XX the think year when about

you we innovation. will that think I to want to should So continue expect fund

Our way. innovation, our say me let another

innovation new is Our pointed think there. extensively portfolio and at budget R&D I about we're excited the

break do budget? sense about R&D bit to Symbot, maybe couple a give of I a more want a are can't little think talk, pack you Mike, While about around important specifically we our us and that to things

Michael Loparco

four just when got, tasking from optimal but, We in case whether that for information from and that of based on the couple of through can predict software is of of of system we're that color case this on motors go not the open a at, take and intelligent really things And, the it on by use robotics which really we've palletizers for on in data issue. build and think breakpack, you programs four driven, got at, just And, we you an a vision of a or remove issues scanning I these the AI robots we've potential pallet put prevent look flap. an but of into pallets. of failures. with and dynamically look applications systems, a potential. like take artificial system or, they into twin just self-learn when a building the product intelligence, by a of and for and proactively build, Simat the like type routing it vehicles gather give in goes in patterns sensors information our they and or our looking as system. use there Tetris, created of modeling be or to indoctrinated up massive a the Rob, this, you to a first lot eight where account that software speed crush order fashion use scan performance ability here you to and drives degradation our some our or high autonomous I'll Robin examples [ph], entire enabled our pick future past anticipate or for to We think cases they information the algorithms and these is mover pallets. bots, the think example investments gets can bots, digital Sure. advantage AI, of every the maybe like behaviors or we And key And then course, software or that system that adjust tunnel I and fragility, unlock fleet bot upcoming then and may

think we're about we continue thinking when to absolutely R&D going generally, innovate. are to I So

going key down roadmap company. is Rick personally founded are on that our for Rick what something we're heavily. the scale speed this really, of we're $XXX just think and pivot R&D of, There's north and not rate slowing a But is technology on to of company really innovation I that's product innovation. the and run roadmap that's think lots and of that areas and a we're wild million towards on annually leading and I our

Operator

you. Thank

Ricchiuti with Needham. Our from next question James comes

open. is line Your

James Ricchiuti

can you're if because questions, systems Hi, customer makeup progress, of just in how some on deployments that you that the as thank to be and the one XX large I have give if may, up of flavor that, might follow you presumably you. the some play going module question or some you're be talk customers? XX following and that expand with say there this curve recognize XX I challenges strategy, scaling have but is again, you about plugin that and will learning new as doubling as you from I Couple to

Rick Cohen

have think, customers customer, that our we've disclosed but the James backlog as with contract Yeah, the multi-site -- given one and $XX.X to a is we've to. across our five question, I thanks a largest you strong today that for billion our does concentration know a

we think more particular. So than customer towards about that a systems is the as that one are customer, today, but it one in XX with represent strength deployed in does

want your learnings? to on his how prepared remarks. that does you installation, same question little we to little So deploy addressed apply in towards we're speak our It be Michael it Michael, think focused maybe I system bit a on Lego might of a different just bit the like Lego the customer that being system B. block, A customer a goes to blocks. configuration more,

very across So I in would customers say deploying high. to is verticals our confidence

Michael Loparco

disciplines. many comment, here, have good control got and that do just internal doing add opportunity of in are and one introduce think speed. some with the there management change with as I tier in order to have to working We've control. errors and we've help minimize that, to we Tom's Yeah two forces kind risks James. simultaneously just the good I'll ramp about, got things to discipline, model is partners, good in things journey. And One process that

You working the don't ability wall with over just you're one when to tier throw have the things companies.

have we scale good completely all instructions speed. And and mile engineering. prints have that bombs that are us so that that ensuring done with last practices drive we allow work I Those to our discipline that doing ensuring we're standardization of that think, ensuring accurate and

The company that discipline. I and point, think a the being again, comes nature of compliance and public And that. with the just, is think, governance I that forces second

infrastructure are we and the build and really deliver and to to get to to to us model. here speed continue is yeah, time. the scale same to looking company, the and innovate idea for a at that's play scale plug allow The these invest systems So out going

James Ricchiuti

healthy innovation, what at or question, the but over you M&A spend, you of and terms plays driving growth. I'm R&D also possibly into look Just the just pretty so, if would a inorganic strategy a have areas to like final wondering clearly in next year

Rick Cohen

James. thanks, Yeah,

foremost customers said, the most business on thoughtful our a it. our and that to this the recognize being So strategic focused we technology long that customers we opportunity are and it, foremost clearly want over All to our provider effort. fast time. M&A more we be natural that market term as first provides massive and build and with clearly to be can as first our scaling going we're backlog That's in

watching that want about and thoughtful to the what priority but the being we be today, So, do. market change we clearly doesn't

Michael Loparco

light in right, have one All of I just the of for Catherine, question. caller time more we believe opportunity

Operator

from with comes Cowen. Giordano question last Our Joe

Your open. line is

Joe Giordano

think significantly do about that at process, faster have I we becoming ensure you you Tom, like doing Like, the be the you how firms think over that? months as those know had I E&T lines, more talking mentioned to discussions a XX to roadmap And national acceptance. should significantly ambitions than so XX time. to like kind you're along with to faster in of consistency you this? generally, have

Michael Loparco

deployments Yeah, these the often We're Mike that, customers inventory our to ramping and know volumes into take deployments during that. and system. the is this I'll XX super kind Joe is happy of what's with important

of lots but into are and process. given can us from and of out and in XX insights learnings you system right? along live we're So So incorporating those into it's learnings lots again, install the stages feeding to the you of will, various environments, there's back testing as that commission go and and if of capacity we're deployments, overall we validation, builds fill kind build as production these of these that think are a the deployments phase,

moving we're So, obviously, fully And is update months. kind effort going completed you on into end we'll operational the around from about XX sites. and think compressing that the to really schedule scale deployments quarter I to completions, excited of that continue deployments the every at of but those overall

manner schedule. and ensuring the do mentioned and in we deliver can this that You a consistent

Rick Cohen

just I'll is a focus something us. to long And add that, this that's Joe, for term

game. but So, about we long think this intend on should as you driving improvement, a

want them they as them coming customers can. Our and do system as fast we they deployments as the today love

compress years. Our the is meaningfully goal that coming over to

Joe Giordano

a talk more difficult one just just on I I ask pop other in when idea robotics the that one solutions generally can noticed, can that, very but up yours that similar. then thing changed process months know guess six to And you one kind all response there's very over competitors I've look good a of during I initially is the I there's the or seen in have to has the at competitive any you filed last that try you last about similar know, when your don’t the fashion? maybe move over Thanks. a

Rick Cohen

watch we AI probably and, do ones of really we're and fact difficult unique market our software replicate. solution really with time. entire to it's certainly the all is vehicles using driven, autonomous only the this Yeah, the that think in Joe, system the type I

good mover in a got the we've first think I So, advantage market.

it got and our look few then and $XX I we patents, expect Sure their probably patent speaks our I for voted to think it's pending. do I again, do that more portfolio and we I'll billion issued technology if we've imitation? on think points of among have backlog leads about guess, IP you we've the make but, think nearly, this, our of expect than with just itself, and wallets, me a think kind XXX out, close Joe, customers copycat, I protection one, built and at to

two, continuously terabytes but innovation. it improve that's to and he us and lead started this company Number of -- kind when really allows the we engine then all leadership have each our extend third one. that's helping culture that that, around number to, Rick's in analyzed think market, and that's data I that's AI the vision through again, continuing of So system helped comes of back six daily this

very But innovate competitive the to watch around and partners all roadmaps. the time certainly we in and survive. with are solutions developing to our amazing landscape collaboratively the going we're and continue who paranoid So, work products customers technology yeah,

to pretty we and we're So how our about But comfortable we'll continue investments open. making. positioned feel the keep we're wide eyes

Michael Loparco

our working call seeing conversations the on joining and one you for tonight. conference you various you, with in and ones. circuit be Thank on We'll everybody

and time your appreciate you we next talk Bye, quarter. and So we'll to bye. interest

Operator

today conference. This concludes

disconnect. may You now

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