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DATE

Wednesday, Aug. 5, 2026, at 5 p.m. ET

CALL PARTICIPANTS

• Vice President of Investor Relations - Charles Lowell Anderson
• Chairman and Chief Executive Officer - Richard Cohen
• Chief Financial Officer - Izilda Martins

TAKEAWAYS

• Revenue -- $721 million, up 22% year over year and 7% sequentially, driven by the expansion of systems in deployment and recurring revenue growth.
• Net Income -- $55 million, representing a significant improvement from a net loss of $21 million in the third quarter of fiscal year 2025.
• Adjusted EBITDA -- $95 million, more than doubling the $45 million reported in the prior-year period due to expanding margins and operational efficiencies.
• Systems Revenue -- $671 million, increasing 20% year over year as the company started 11 new system deployments during the quarter.
• Software Revenue -- $13 million, representing 57% year-over-year growth as the base of operational systems continued to expand.
• Operation Services Revenue -- $37 million, up 49% year over year, reflecting the increasing number of systems reaching operational status.
• Non-GAAP Gross Margin -- 25.0%, expanding from 24.5% in the previous quarter due to project execution, cost discipline, and revenue mix.
• Backlog -- $22.5 billion, remaining stable despite revenue recognition, partly offset by the addition of a second site for Southern Glaciers Wine & Spirits.
• Cash and Cash Equivalents -- $1.7 billion, down from $2.0 billion in the second quarter, primarily due to the timing of cash receipts and usage related to project activity.
• System Deployments -- 77 systems, with 11 new starts in the third quarter following 12 new starts in the prior period.
• Operational Systems -- 56 systems, with four additional systems becoming operational during the quarter.
• GAAP Operating Expenses -- $128 million, including $43.8 million in research and development and $84.2 million in selling, general, and administrative costs.
• Strategic Investment Gain -- $19 million, resulting from an unrealized non-cash gain on the fair value of an investment in Nyobolt.
• Fourth Quarter Revenue Guidance -- $760 million to $780 million, reflecting steady sequential improvement in deployment activity.
• Fourth Quarter Adjusted EBITDA Guidance -- $100 million to $105 million, as the company expects continued operating leverage.
• Bot Deployment -- 1,000 larger bots, deployed into operational systems this calendar year to handle a wider variety of SKU types and payloads.
• GreenBox Operations -- The Atlanta site is live and receiving product from its first customer, while the Lathrop, California, site is expected to be live within 60 to 90 days.
• Walmart Micro-fulfillment -- High-single-digit million revenue was recorded for the development of micro-fulfillment systems, with the first prototype installation beginning at a Walmart store.
• R&D and SG&A Expenses -- $85 million on an adjusted basis, with management noting that research and development remained flat sequentially.
• LiDAR Integration -- Costs for LiDAR technology have fallen below $500 per unit from $5,000 four years ago, enabling the company to plan deployment on all bots within two years.
• Acquisitions -- The company completed tuck-in acquisitions of Box Robotics for dock automation and ARMS Innovations for warehouse operations optimization.
• Capital Expenditures -- $17 million, focused on property, equipment, and the capitalization of internal-use software development.

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RISKS

• Martins noted that cash and cash equivalents decreased by approximately $300 million during the quarter "due primarily to timing of cash receipts related to project starts along with the timing of cash usage related to project activity."
• Martins warned that fourth quarter adjusted EBITDA margins could remain flat sequentially because "OpEx to just increase slightly" while gross margins are "expecting stabilization."
• Martins indicated that the number of new system starts in the fourth quarter could be "just a little short of the third" quarter's 11 starts.

SUMMARY

Management reported that Symbotic (SYM -1.20%) achieved GAAP profitability and more than doubled its adjusted EBITDA compared to the prior-year period. The company is evolving toward a software-centric model, highlighted by the acquisition of ARMS Innovations and the integration of AI-driven maintenance tools into its core operating system. Strategic growth is supported by a $22.5 billion backlog and the expansion of the GreenBox joint venture, which is now live in Atlanta. The company indicated that revenue and margin inflection points are expected in the second half of fiscal year 2027 as next-generation storage structures and micro-fulfillment systems reach broader deployment.

• CEO Cohen described the company's technology as an "operating system" where "we add apps to enhance its functionality for customers," such as the new ARMS software.
• The company deployed over 1,000 larger bots this calendar year, utilizing new modularized software tools to manage varied tasks and payloads.
• Management noted that the first SymMicro system installation at a Walmart store marks a significant step toward unlocking the e-commerce fulfillment category.
• Martins described the third-quarter free cash flow headwind as a timing issue that would not require the full fourth quarter to resolve.
• Symbotic expects to begin building and testing its first prototypes for perishable goods automation within the next six months due to high customer interest.
• The company appointed Steve Pagliuca to its board of directors to leverage his experience in technology and M&A as the firm plans to remain acquisitive.
• Cohen attributed the Southern Glaciers Wine & Spirits agreement for a second site to the "success of their first facility" in 47 markets across the United States and Canada.

INDUSTRY GLOSSARY

• ARMS Innovations: A recently acquired technology company specializing in software that optimizes warehouse equipment and personnel movement.
• GreenBox: A joint venture between Symbotic and SoftBank that provides automated warehouse-as-a-service solutions.
• LiDAR: Light Detection and Ranging, a remote sensing method used by Symbots for high-speed navigation and obstacle detection.
• Nyobolt: A supplier of advanced, high-power battery technology in which Symbotic holds a strategic investment.
• Symbots: Autonomous mobile robots that travel at high speeds to store and retrieve products within the Symbotic system.
• SymMicro: A specialized micro-fulfillment robotic system designed for e-commerce and retail back-of-store applications.

Full Conference Call Transcript

Operator: Good day, and thank you for standing by. Welcome to Symbotic Third Quarter Financial Results Conference Call. At this time, all participants After the speakers' presentation, there will be a Q&A session. To ask a question during the session, you will need to press star 11 on your telephone. Will then hear an automated message if the light in your hand is raised. To withdraw your question, please press star 11 again. Please limit your questions to 1 question and 1 follow-up. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Charlie Anderson, Vice President of Investor Relations. Please go ahead.

Charles Lowell Anderson: Hello. Welcome to Symbotic's third quarter of Fiscal Year 26 Financial Results Webcast. I am Charlie Anderson, Symbotic's Vice President of Investor Relations. Some of the statements that we make today regarding our business operations and financial performance may be considered forward looking. Such statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties. Actual results could differ materially. Please refer to our Form 10-K, including the risk factors. We undertake no obligation to update any forward looking statements. In addition, during this call, we will present both GAAP and non GAAP financial measures.

A reconciliation of GAAP to non GAAP measures is included in today's earnings press release which is distributed and available to the public. Through our Investor Relations website located at ir.symbiotic.com. On today's call, we are joined by Rick Cohen, Symbotic's founder, chairman, and Chief Executive Officer, and Izilda Martins, Symbotic's chief financial officer. These executives will discuss our third quarter of fiscal year 2026 results and our outlook, followed by Q&A. With that, I will turn it over to Rick to begin. Rick?

Richard Cohen: Thank you, Charles. Good afternoon, and thank you for joining us to review our most recent results and business updates. We delivered strong third quarter results highlighted by continued revenue growth, and expanding margins leading to continued GAAP profitability, and adjusted EBITDA that more than doubled year over year. Thanks to another strong quarter, we remain well on track to achieve the objectives we laid out at the start of the year. As a reminder, our first objective was to leverage our growing product portfolio and capabilities to broaden our opportunities with customers.

We are clearly seeing this play out as our brake pack product to handle individual items or eaches has now begun deployment at half of Walmart's regional distribution centers. In addition, we recently began installation of our FirstSim Micro system for ecommerce fulfillment at the back of a Walmart store, a significant step forward towards unlocking this exciting new category of our business. We are also continuing to drive additional value for our customers that have existing operational systems by providing higher levels of performance through software to further optimize their supply chains. A recent example is using our software to more intelligently layer palettes, and dynamically optimize freight deliveries specifically for seasonal events like back to school.

By doing so, we believe our customers can realize shorter delivery times and faster restocking during these critical periods. We believe customers are increasingly recognizing the impact our systems can have And as a result, we are seeing additional opportunities to broaden the scope of our work with both existing and prospective customers. For example, in the third quarter, we signed an agreement with Southern Glaciers Wine & Spirits for a second site after the success of their first facility. Southern Glaciers is a leading total beverage distributor serving 47 US markets in Canada.

As we drive additional value for our customers, it is allowing us to realize the second objective we laid out at the beginning of the year, which was to enhance our margins and profitability. Our forecast for the year implies full year adjusted EBITDA that is more than double that of last fiscal year. This continues to be a key focus area for us and we see clear levers to continue enhancing our profitability, driven by value creation for our customers and further operational efficiencies. The final objective we laid out was to continue to invest in our innovation engine to expand our capabilities and support future growth.

The analogy I often use here is that our automation is like an operating system, and we add apps to enhance its functionality for customers. For us, this is playing out both organically and inorganically. Organically, we are making several functionality upgrades to our Symbots to enhance the performance of our system. For example, we deployed over 1 thousand larger bots into our operational system this calendar year to handle a wider variety of SKUs. With this new bot, we have also built new modularized software development tools to give us enhanced flexibility to create different bots for different tasks and payloads. With our SymMicro bot being a perfect example.

We are also in the process of rolling out LiDAR, enhanced camera systems, Nyobolt advanced batteries, and other updates, all with the aim of driving enhanced efficiency and performance for our systems. Inorganically, we have made 2 tuck in technology acquisitions that expand our capabilities. Box Robotics for dock automation and most recently, ARMS Innovations for warehouse operations optimization. With ARMS, we have an opportunity to expand the reach of our software beyond our automation system to the entire warehouse operation optimizing the movement of both equipment and people. In summary, we are focused on meeting our objectives and in turn creating ravingly happy customers and expanding shareholder value. We also continue to have a solid balance sheet and backlog.

As always, I wanna thank our team for all their hard work. Along with our customers and our investors for their continued support. I will now turn it over to Izzy, who will discuss our financial results and outlook. Izzy?

Izilda Martins: Thanks, Rick. Fiscal third quarter revenue reached $721 million near the high end of our forecasted range and was up 22% year over year and up 7% quarter over quarter. We also improved GAAP profitability with $55 million in net income. Adjusted EBITDA of $95 million was above our forecasted range due to expanding margins and operational efficiency. Our revenue growth was driven by the continued expansion in the number of systems in deployment and the growth of operational systems that generate recurring revenue. We started 11 new system deployments in the third quarter. Including the new Southern Glaciers site highlighted by Rick. Bringing us to a total of 77 systems in deployment at the end of the quarter.

This expansion in the number of deployments drove systems revenue growth of 20% year over year and 6% sequentially to $671 million. We also had 4 systems go operational during the quarter, bringing us to a total of 56 operational systems. As our base of operational systems continues to expand, software revenue grew 57% year over year to $13 million and operation services revenue of $37 million grew 49% year-over-year both in the fiscal third quarter. Turning to margins. In the fiscal third quarter, Gross margin expanded both sequentially and year over year, due to strong project execution, cost discipline benefits from scale, and revenue mix. Operating expenses on a GAAP basis were $128 million in the fiscal third quarter.

Combined adjusted R&D and SG&A expenses totaled $85 million with SG&A down sequentially due to operational efficiencies. Net income for the fiscal third quarter was $55 million an improvement from a net loss of $21 million in the third quarter of fiscal year 2025. This included an unrealized noncash gain on the fair value of our strategic investments of $19 million in the quarter, which was primarily driven by an increase in the value of our investment in Nyobolt, our next generation battery supplier. GAAP net income improved both year over year and sequentially. Reflecting this impact as well as expanding margins and operating leverage.

As Rick highlighted, adjusted EBITDA of $95 million was more than double the $45 million in third quarter of fiscal year 2025. Our backlog of $22.5 billion remains strong. The slight decrease from last quarter primarily reflects revenue recognized in the quarter, offset by final pricing adjustments on projects started in the quarter and the addition of the new Southern Glaciers site. We finished the quarter with cash and cash equivalents of $1.7 billion down from $2 billion last quarter due primarily to timing of cash receipts related to project starts along with the timing of cash usage related to project activity. Now turning to the outlook.

For the fourth quarter of fiscal 2026, we expect revenue between $700 million and $780 million and adjusted EBITDA between $100 million and $105 million With that, we now welcome your questions. Operator?

Operator: Please begin the Q&A. Thank you. As a reminder, to ask a question, you will need to star 1 on your telephone and wait for your name to be advanced. To withdraw your question, please press star 1 again. Please remember to limit to 1 question and 1 follow-up question. Please stand by while we compile Q&A roster. Our first question comes from the line of Andy Kaplowitz of Citigroup. Your line is now open.

Andy Kaplowitz: Close enough. How's everyone doing?

Richard Cohen: Greg.

Andy Kaplowitz: So Rick, I know you said that you have now installed a SyMicro prototype into a Walmart store. So maybe you can give more color into where you are in that development process. I think you said previously, you could see conversion on the 5 going to Walmart backlog before this at the end of the calendar year. Is that still the right time frame? And then as SyMicro has evolved, have you thought about the ultimate opportunity even beyond the initial 5 billion? I think instance, you have been working on solving perishables with a smaller system. So maybe just an update would be helpful.

Richard Cohen: Well, I think you have covered up the whole waterfront there. So, yeah, SymMicro, we are installing. It will take I do not know, about 6 months into our first Walmart the new version of our system into the first Walmart store. We are running 19 of the old versions, but we have been working with Walmart to develop this so that will come to life about 6 months from now. That should trigger expanded We expect that will work very well. We have a second site that will follow shortly after that, and then that should trigger a bunch more sites once Walmart actually sees the system working.

Your second question on perishables, got a lot of interest in perishables. It seems like something clicked in the rest of the world. And so I think the realization that with the new structure that you can save so much money on the construction cost of these perishable buildings, and they are so expensive to start with. We have had a lot of interest so we would expect within the next 6 months, I guess, I would say, to begin building our first prototypes and testing.

Andy Kaplowitz: So Very helpful.

Izilda Martins: And Izzy, maybe just revenue is beginning to accelerate now in Q4 as per your guidance? Given the new store structure, it seems like it is allowing you to accelerate deployments. Ultimately, continue to see continued acceleration in FY 27 in revenue. At least how do we think that if you do not want to give specific guidance?

Andy Kaplowitz: Yeah.

Operator: I think as Rick said, you covered it, but in your question, obviously, as we unveiled the next generation storage structure, we were expecting that inflection point.

Izilda Martins: I think we are just at -- just starting that out. I think, the sequential improvement quarter over quarter, including our guide, is call it steady. I think, though, the real inflection point of the next generation storage structure will really happen in the second half of next year. As we proceed with the installation of that. Helpful.

Andy Kaplowitz: Thanks, guys.

Operator: Our next call comes from the line of Matt Summerville of D.A. Davidson. Your line is now open.

Matt Summerville: Couple of questions. Can you maybe provide an update on where you are with customer acquisition for GreenBox and maybe update where you are at with site launches. And then I am also curious as to what initial inbound interest is with respect to that ARMS acquisition you referenced earlier.

Richard Cohen: So on GreenBox, our Atlanta site has gone live. We are receiving product there. Customers asked not to be named yet, but that site is now live and receiving product, and our Lathrop site the customer is CNS, that Symbotic system is now complete.

Izilda Martins: And so that site will go live within the next 60 or 90 days, and that will be a nice revenue producing site. Because right now, we have the system in there, but we are not getting any revenue as the cases go through Symbotic.

Richard Cohen: So we are feeling good about these sites are coming online. It has been a journey to get these sites filled up, but the reality is we had to get the buildings built and show people. So and we have a lot of incoming interest. We have 5 buildings. And so the fact that we have 5 buildings, we are able to talk to bigger customers as well as smaller customers. But it is a process. But the answer to your first question is we are live in Atlanta and receiving product. And in Lathrop, California, we will start filling out about a 100% of what we plan there within the next 60 to 90 days.

Izilda Martins: And then on ARMS, we are doing the integration of the ARMS software with the operating system from Symbotic We have a site -- our first site that we are doing the integration will be the testing, and then we will be able to show people how that will work. And we think that will be a very nice revenue software revenue business for us. Because we think it creates great value in improving the efficiencies of the maintenance whole system and process.

Matt Summerville: that is helpful with that color. As a follow-up, I am--

Operator: Go ahead.

Richard Cohen: Go ahead. No.

Izilda Martins: That will actually be 1 of the best examples of it. Of integrating AI with a software because that system will actually be able to tell an operator what is wrong, where the inventory is, which operator should go fix it. So that is that is gonna be a very sweet little business for us.

Matt Summerville: Appreciate that color. Curious if Southern Glaciers is using that next gen storage structure And maybe remind us what the site opportunity may ultimately look like with that customer.

Izilda Martins: So in Southern Glacier specifically? Yes.

Richard Cohen: Southern Glaciers is not using it. Their second site is not using the newest structure in part because the way that the liquor industry works the cases are more standardized. And so I think the third and fourth sites probably will, but the second site was already started and designed And these are these are heavy-- are liquor heavy bottles and the case sizes are pretty standard. So it is not the new structure is beneficial to them, but with more varied box sizes, it is even more beneficial. But the real answer is they would have used it, but we already started with the old structure when we designed it, and it is just too far down the road.

Izilda Martins: And then for the potential there, as Rick mentioned in his prepared remarks, we are starting the second 1. And as you know, they serve 47 US markets, including in Canada.

Matt Summerville: Got it. Thank you, guys.

Operator: Thank you. Our next call comes from the line of Joe Giordano of TD Cowen. Your line is now open.

Joe Giordano: Hey, guys. Thanks for taking my questions. Just a couple of clarifications.

Richard Cohen: The Atlanta site for GreenBox, is that like, a 1 customer site? I know you mentioned the customer does not want to be named. Is that customer planning on taking, like, the whole-- that is a multi customer site. We are we are just receiving the first customer, and we have not determined how much space they are gonna need, but they are building up pretty quickly.

Joe Giordano: So Uh-huh.

Richard Cohen: It will be a multi-tenant site.

Joe Giordano: And then on the micro fulfillment, I am just curious as you said you are going to deliver-- you are building it out 6 months. And then you will do a second like, what is the mechanism in the contract? Mike, I thought the contract was kinda like once they accept it, it, automatically triggers the 5 billion and the 400-store order. What is required to have that hit?

Richard Cohen: The way we have done things with Walmart in partnership is we build a prototype We build them so that they work. But we also know that we already can tell from the prototype. We are building it into a store. I am not sure I am supposed to announce the store, but it will it will become obvious pretty soon. But we will build it into the store, and then we will overbuild it to make sure that it works. And then we redesign it to make sure that we have got the cost out In this case, make it smaller, make it more efficient. Walmart may add items. They may delete items.

And so and when we do the second version, that is usually what triggers okay. We want 400 of these. Got it. Okay. The most important thing with these sites is there is the coordination of the hardware, but most of the time, what is happened with these micro fulfillment sites is that the software has not been flexible enough, and the software and automation have not been coordinated enough. So we are gonna overbuild this but we probably will not build 400 of the version we are building now. But I think the 1 after this, we will.

Joe Giordano: Great. Izzy, just how should we think about the pacing of system ads maybe for next quarter and into the near future?

Izilda Martins: Yeah. So as you noticed, right, we had a we had a great 3 quarters in a row. I had originally mentioned a couple of quarters ago, maybe the fourth would be a little light. Actually, now as I am seeing the trajectory, I think the fourth quarter will be in line with the third, maybe just a little short of the third. So great, great expectations. Where we have been in the last 3 quarters and where we are going to land for the year.

Joe Giordano: Great. Thanks, guys.

Operator: Thank you. Our next question comes from the line of Kenneth Newman of KeyBanc Capital Markets. Your line is now open.

Ken Newman: Hey. Good evening, guys.

Izilda Martins: Maybe for my first question, Izzy, maybe you can help us just think about I will ask the new storage system or the revenue question on systems a little bit differently. As you think about the new storage system now being fully implemented, how should we think about the cadence of segment gross margins on improvement, just given that you do expect that to maybe ramp, it sounds like, maybe later in the back half of next year. But just trying to think about the opportunity for gross margin improvement there and the cadence of that in coming quarters?

Ken Newman: Okay.

Operator: So let me unpack your question a little bit.

Izilda Martins: First with just let me repeat what Rick was saying on the micro fulfillment. So we are starting now the first prototype. We expect to get into after that. Or maybe in the middle of that, getting the second prototype. I really am not expecting just yet. The micro fulfillment, call it, the store order, that is mentioned in the contract probably until early 28. So then when you think about margins, right, our whole journey of improving margins, right, this contract is more profitable from that perspective. So you just have to think of it as we continue the mix. Right?

The first step, as I have been talking about, is probably closer to the second half of next year. We get the inflection point of really having installation of the NextGen system, which will improve margins. Then you also then end up adding in the back of stores and that being also a big part of the mix, which gets us to, in this journey, how our margins continue to improve. The 1 thing I will say about margins, we had a great quarter from a margin perspective. As I said last quarter, I was expecting stable margins.

Ken Newman: The quarter was really, really strong. I think the fourth quarter will behave very similar to our exit trend in the second. So I hope that helps.

Izilda Martins: Sure. Third quarter.

Ken Newman: Yep. that is very helpful. I appreciate that. Maybe for the follow on here, Rick, it was interesting to see a couple of bolt on deals this quarter. You did a bolt on last quarter as well. As you look at the forward innovation pipeline, there any color you can give on just other types of deals that you are looking to maybe help you drive faster deployments? And I would also be curious just if there is anything you can kind of talk about on what you are spending on AI development in terms of token spend versus the hardware spend on R&D?

Richard Cohen: Yeah. So we are looking at more bolt-ons. it is an interesting time. As you guys know, there is so much money chasing AI. That a lot of the traditional automation companies are running into funding problems or and so we become a very good place for people to approach us as investors or acquirers. So that is why we built up our balance sheet We guessed right about that. I think we will see continued opportunities there. To acquire hardware. In the case of ARMS, it was software. So and some companies we are looking at are a combination of interesting technology, both hardware and software in vision.

Ken Newman: The question you asked about AI, the way I would describe it is, I think we were doing AI 5 years ago before anybody called it AI. So we have been we have been doing self driving cars.

Richard Cohen: We have been doing vision. We have been doing LIDAR. We generate, I think it is, a trillion bits of data every day at every site. Maybe it is 100 billion. it is incredible amount of data at every site. And so we are looking to economically store it in the cloud, and then we are writing our own AI So, yes, we are using some AI to audit code. And that is helpful.

But mostly, what we will do is we will develop our own AI agents that will actually be able to predict and tell us what is gonna go wrong with our systems before they go wrong, and then actually communicate to the robots drive them out of the system, tell the maintenance people what is wrong with them, and fix them. So that is that is not something that we are gonna pay a lot of money for outside.

Ken Newman: that is something that we have been building here for a long time. And that is why you know, I think most people consider us 1 of the leading companies in the world with physical AI. And I think there is a lot of misnomers about that, but we are actually doing it. And we have been doing it for a long time. Before we used to call it machine learning. They used to call it a whole bunch of other things. But now we are actually learning how to use AI, not just to generate reports, but actually to communicate directly with our robots and, in some cases, fix them, in some cases, tell them what to do.

In some cases, tell them where to go to the exit ramp and get fixed. So let me just if I could just clarify that last point, Rick.

Richard Cohen: When I when you talk about scaling that infrastructure on the AI software side, does that require an incremental or scale up in tokens needed to operate that system? Or is that really just on the inference that, that you get to scale? Yeah. So that is a great question. We are using some tokens. But there is a lot of open source AI there is a lot of AI that and we are also looking at different forms of AI. there is some AI that we can actually not have to go to the cloud. We can actually imbue that technology right into our bots.

Because with the new NVIDIA chips we have 4x as much storage, and we will have more storage on our bots that we did not have 2 years ago. So I do not think tokens, I do not think AI expense is gonna be a major issue for us, and we are very focused on doing as much as we can internally ourselves. So, 1 of the things that we have learned is that about 80% of the AI that maybe looked at using last year was a lot of formatting.

It was not actually using the data that we needed So 1 of the things we are focused on is because we generate so much data, because we have always mined our own data, We are actually looking at what is the most efficient way to use our data that is cost effective.

Ken Newman: Thank you. Appreciate it.

Operator: Our next question comes from the line of Mark Delaney of Goldman Sachs. Your line is now open.

Mark Delaney: Good afternoon. Thank you very much for taking the questions. I think better margins was 1 of the key highlights from the quarter. I believe was $11 million above the midpoint of your guidance, but you got even $12 million better. So can you share more on what led to the degree of margin improvement in 3Q and the upside relative to your forecast? Sure.

Izilda Martins: I will take that. So just to unpack the margins. Right? If you think about it, just in the amount of revenue we had in the systems, those margins came in quite solid. Quarter over quarter, they actually came a little bit better than, expecting originally. But those really come down to the project execution and the mix of business we had in the quarter. I think the other thing that came in nicely this quarter was that our services right, it continued to deliver profitability.

Maybe it was a little bit, you know, better than I expected, but at the end of the day, I did expect next quarter to be in line with this year with this quarter's revenue. And then last but not least, as you noted on EBITDA margin, the operating leverage was really good because when you look at the non GAAP FX year over year, it was only up 3%. So a combination of all those things, be it systems, operation services, and really the scale that we are getting in our FX really allowed us to deliver a more profitable quarter.

Mark Delaney: Very helpful. My other question was on cash flow. You cited timing as the reason the free cash flow was a headwind in the quarter?

Izilda Martins: I was just trying to understand how to think about free cash flow for the upcoming quarter, do some of those timing issues persist? Or maybe the better EBITDA will drive improved cash flow? Yeah. I would I would certainly look at the free cash flow for the quarter just as the timing item and not even timing that I have to wait for the whole fourth quarter. Those were really payments that just came in a week later, So I would say if I had a week more in the quarter, you would not see a blip in that.

I think the better way to think about it is to your question on fourth quarter, I would expect a positive free cash flow. And I think just in general, given our business, better to measure us over a longer period of time and that the free cash flow will be on an annual basis will be positive.

Operator: Our next question comes from the line of Robert Mason of Baird. Your line is now open.

Analyst: Hey. Afternoon, guys. Thanks for the question. Now that you have owned FOXROBOSY for a little bit, curious if there is any updates to their product that you have made or contemplating that improves the integration with your system. And I think you have also mentioned some of their largest customers are not Symbotic customers. So any updates on discussions with any of their customers and whether they could be potential customers?

Richard Cohen: We have been very encouraged. All of the FOXROBOSY customers are actually delighted that we bought the company. We are in talks with all of them. We have hired some new folks there. We have hired some new salespeople there. We are sitting down and doing a complete review with 2 of the larger customers and just talking about what they would like for next versions, what they would like for next steps. And so I think that is gonna be a very nice business. We have been very encouraged. We have had no headwinds. We are actually think the customers we are talking to are saying, we are really excited you own this company.

And in some cases, they might want a symbiotic system, and in some cases, they are actually really interested in the combination of FOXROBOSY, the ARMS software, some of the other software we are looking at, actually helping them with a doc management system. So it is just we just started. it is a very small company, but I think it is got a very big potential. And we have been excited about the reception that we have got from all of the FOXROBOSY customers.

Analyst: Thanks.

Izilda Martins: And for my follow-up, Izzy, you have been on a nice sequential with EBITDA margin progression for the better part of 2 years. You did mention the fourth quarter guide kind of implies flattish EBITDA margin sequentially despite higher revenue. Could you unpack maybe why margins would not continue to improve with operating leverage? I think right now, I just wanna make sure that we see it coming. So right now, based on our latest forecast, we do expect OpEx to just increase slightly, and that would be more on the SG&A side. So you know, maybe it comes in better, but right now, my expectation is that the OpEx would be just a slight uptick.

I think the other part, as I mentioned earlier, the gross margins where we landed on a non GAAP basis of 25% this quarter. Right now, I am going back to what I said, expecting stabilization at the end of the second quarter. So if they come in closer to in line with the second quarter, those are the 2 main reasons why you would see that EBITDA margin would be flat. Thank you.

Analyst: Thank you.

Operator: Our next question comes from the line of Guy Hardwick of Barclays. Your line is now open.

Guy Hardwick: Hi. Hi, guys. So, you could update us on the remaining performance obligations. I think the 10 Q says $22.5 billion and 15% realized over the next 12 months. Does not look like the changes were as significant this quarter than the previous quarter. Just were there anything unusual or just also just regular kind of contract plus ups as you begin deployments, particularly, I think there is another you said 11 starts. that is correct.

Izilda Martins: So the 22.5 and the banding of within the next 12 months of 15%, that is exactly what we put out there. I think it is just it just has once again to do with the mix of deployments. So just to before I even get into the deployment, right, the 22.5 coming off at 22.7, Got a healthy amount of revenue in the quarter. You decreased it As you know, we have pricing adjustments when we redo the backlog. Plus the fact that we added Southern Glaziers. But it really then comes down when you are tracking it just really comes down to the 11 deployments we are putting in the quarter. Just what those pricing adjustments work.

So it could be lumpy at any given time. I think the more promising thing is that despite the revenue that we are generating every single quarter, our backlog still remains very, very stable. And as we said before, that backlog still does not include the contract for the 400 back of store system.

Guy Hardwick: And Izzy, it looks like revenue per deployment has been falling now for at least 4 quarters. Is that kind of a mix effect? What is the kind of driver? it seems a little odd at system sizes in the Walmart business is actually going up.

Izilda Martins: Right? Agreed. But it also just has to do with, at what point in the cycle we are in the installation phase. Right? Because the revenue is gonna come in as we get you know, get closer to month 13 forward. So there is there is a little bit of lumpiness, but I think it is better instead of focusing on 1 given quarter, if you look at the multiple of the quarters and where we are and what the expectation is going forward. Given that the 15% banding is at 15% for the next 12 months.

Guy Hardwick: So it is just, does that mean that you would expect revenue per deployment to start going up again, or will it continue to sort of trend down?

Izilda Martins: I think in the coming quarters. We do not guide to backlog. Think the expectation for the next quarter, given the guide we gave, that is really where our expectation. But, of course, we are always looking to not only have stable backlog, but to increase our backlog.

Richard Cohen: Well, the revenue's going up. We expect revenue to go up.

Izilda Martins: Yeah. And we do expect revenue to go up, of course.

Richard Cohen: that is where the 15% comes in.

Guy Hardwick: Thank you.

Operator: Our next question comes from the line of Colin Rusch of Oppenheimer and Company. Your line is now open.

Colin Rusch: Thanks so much, guys. You know, now with the ARMS technology platform, purchased, can you talk a little bit about the opportunity to, start introducing new offerings with semi-automation or, robots that are more interactive with humans and existing assets. Might be a little bit lower barrier to entry for some of the customers that you might want to grow? I am not sure I understand your question.

Richard Cohen: I am just looking for, you know, a sense of opportunities that you guys could bring to market that would be a little bit lower price point? Yeah for customers.

Colin Rusch: They are a little bit lower barrier to entry to get them started. and then move to fully automated systems.

Richard Cohen: Yes. So I think the ARMS software is something we could sell to a customer The company actually does not make anything except software.

Colin Rusch: So we could sell that to customers and introduce our software The other thing is that the Fox robots, these are $100 thousand machines.

Richard Cohen: And so I think that is the way I look at it is we will become our hardware will continue to grow. Our sales are gonna continue to grow, but we will become much more of a software centric company that is selling machines that basically perform for what we want our software to do. So for instance, some of the FOXROBOXY customers there is a company, it is no secret, it is DHL, 1 of the largest 3PLs in the world. They really like the FOXROBOSY robots. They want us to help them manage the dock.

They may never buy a Symbotic system, but you know, if you sell I do not know, you sell 20 thousand of these $100 thousand machines. that is a pretty good sale. So they are not saying we sell that to DHL, but it is a huge market out there. And it is a much easier point of entry.

Your question is, is appropriate because the last 2 weeks we have had 2 major potential customers, retailers who are interested in automation great companies, well known names, and they are really they are really looking at that they are really looking at how they can enter into the automation space without a lot of experience so we can sell them a very small system. We can sell them small system and a dock system. So that is 1 of our focuses is to get some of these very large customers in with an entry level product.

So it could be a single 1-in and a 1-out cell, That could be in the tens of millions low tens of millions number. And so, yes, that is what we are looking at. And not to mention that the back-of-store system is another opportunity.

Colin Rusch: Perfect. And then, there is certainly been a lot of investment around perception technology, and notably, 1 of the LiDAR vendors is now selling LiDAR with color capability and functional safety. I am just curious about how much leverage you might get from those sorts of perception solutions into simplifying bot design. And optimizing performance, you know, and how we should think about the adoption cycle and some of those newer perception technologies going forward?

Richard Cohen: Yeah. Yeah. So there is a number of people that are doing LiDAR slow moving bots to interact with people. I will not mention names of companies, but you know who they are. What we are doing is bots with LiDAR that are that are that are fast moving, and weigh a lot. The change in technology and the reason we will expect to have LiDAR on all our bots within the next I do not know, 2 years on the outside is that these LiDARs used to cost 4 years ago, they were $5 thousand. Now they are under $500.

So they become very affordable for our bots, and then it really enables our software So while other people are using LiDAR, for basic like, a Kiva bot that moves slow, follows a line, meant to be used with humans. What we are really doing is putting LiDAR on bots like a self driving vehicle. That wants to go fast, And so we are really trying to have bots that are now combined with ARMs and AI. Really getting much closer to, within our structure, a lights-out facility that really we do not we may go long periods of time before humans actually have to go in and interact with a bot.

That kind of technology does not exist out there for warehouse automation. And that is our goal. Perfect.

Colin Rusch: Thanks, guys. K.

Operator: Thank you. Our next question comes from the line of Derek Soderberg with Cantor Fitzgerald. Your line is now open.

Derek Soderberg: Yeah. Hey, everyone. Thanks for taking my question. Wondering, Rick, if you can expand on the Arms acquisition a bit. You talked about a little bit in the prepared remarks and during the Q&A. I was wondering how you will monetize that. Is that gonna be a subscription or bundled through the system's price? And is this more for GreenBox, or is the plan to deploy this with your large existing customers as well?

Richard Cohen: No, we will deploy this with as an option for all of the Symbotic customers, including GreenBox. So it will be a software add-on.

Derek Soderberg: Got it. And, Rick, could you just talk about where this acquisition kind of started? Was this something customers were asking about? And then just high level, was curious if you think eventually a large retailer might in a sense, cede control of the distribution facilities to Symbotic or GreenBox, as you sort of really fully automate the supply chain here, if maybe it makes more sense for you guys to take on the facilities and they would just pay you per case, or any of those types of conversations happening. Thanks.

Richard Cohen: Yeah. So GreenBox is definitely getting those inquiries, and we have been funneling them through GreenBox. We also have a number of sites, number of customers where we sold them a system and then we run the system at a cost per case. And ARMS just means that if we were to do that with this kind of maintenance, that we would charge them, and our operating costs would be lower. And so we would be the beneficiary both of the software and of the more efficiencies.

What ARMS does is it creates a database combined with the operating system, which is inherent in every Symbotic system, but it says to somebody, that so these everybody all the maintenance people, people in the front of the structure or working there have a handheld device. And it would say, lift 606 and here and then and geolocate it in this particular part of the building. And remember, some of these buildings are a million square feet. This lift has a failed valve I need you to go there. here's a picture of what it should take to fix it. I have already checked before you go. This is what AI does.

I have already checked these 2 parts are in inventory, so do not go to the lift and then go to the inventory room. Go to the inventory room, get these 2 parts, go to the lift, The whole thing should take you 40 minutes. That we have we have been struggling with how do we make these maintenance systems more efficient. And we could sell this kind of system along with some of the Symbotic software to a lot of people in the world. This is the ultimate warehouse management maintenance system. Got it. Thank you.

Derek Soderberg: Yep.

Operator: Thank you. Our next question comes from the line of Greg Palm of Craig-Hallum. Your line is now open.

Greg Palm: Yeah. Thanks. I wanted to go back to the OpEx and maybe honing a little bit more on R&D. I mean, in light of a lot of these kinda newer opportunities, yeah, perishables and micro fulfillment, it was, maybe a little bit odd to see R&D come down quite as much. It does not sound like that might go up, I think, as you said, maybe more stable. So I guess, is that just are we really peering things back, or is that more kind of a reallocation of expenses? Just wanted to get a little bit more color there.

Izilda Martins: Yes. Yes. Hi, Greg. So let me let me step back. First and foremost, R&D expense quarter over quarter was flat. All the things that Rick mentioned are the things that we are gonna get started on. So hence, when I said earlier, I expect overall OpEx to go up. My expectation is that between R&D and SG&A, we do expect a little bit of an uptick. But as always, we wanna maintain the ultimate flexibility in being able to increase our R&D. that is where I make that comment of that is when I EBITDA margin staying flat quarter over quarter is really to give us that flexibility there. So I would not say R&D has come down.

It has stayed flat. We have gotten, you know, call it to a rhythm on the things we are investigating, but I expect a little bit of an uptick. Not only in the fourth quarter, but in the quarters to come.

Greg Palm: Okay. That makes sense. And I guess maybe just shifting topics entirely just in light of the other news. Steve's joining the board of directors. I am curious. Maybe you can give us some thoughts on, given his background, what he brings to the table and how he might sort of help you scale to the next level.

Richard Cohen: Yeah. So I met Steve through 1 of 1 of my other board They were on a board together, spent a bunch of time with Steve. Steve, with his background. strategically M&A. I think will be very, very helpful in helping us look at We plan to be acquisitive. We built a balance sheet to be acquisitive. And so that is what we are working on. And so Steve is a perfect -- a perfect Board member for that.

Greg Palm: Yep. Okay. Makes sense. Thanks.

Richard Cohen: And his background and his background when he was at Bain was in the tech sector.

Operator: Thank you. Our next question comes from the line of Michael Latimore of Northland Capital Markets. Your line is now open.

Michael Latimore: Great. 2 questions. I guess, on the ARMS acquisition, how might you price that? You know, like,, per warehouse? How much might you charge for that or whatever metric you use there? And then also, in the in the third quarter, how much revenue came from just developing the revenue around micro fulfillment?

Izilda Martins: I will take the ARMS -- I mean, the ARMS will be-- ARMS will be a classic value pricing.

Richard Cohen: If we can save somebody $1 million in warehouse maintenance We are gonna charge them a portion of that. Yeah.

Izilda Martins: On the micro fulfillment side, the amount of revenue in recorded in the quarter is in the high single digit range. Which is really kind of the average that I would expect going out.

Michael Latimore: Okay. Great. Thank you.

Operator: Our next question comes from the line of Joe Giordano of TD Cowen. Your line is now open.

Joe Giordano: Hey. Thanks for letting me have the follow-up here. Just a quick 1, Rick, on GreenBox. I am just curious what the final, design looks like for this customer. Like, what did you guys what did they decide to do in terms of like, trucks and who is responsible for that and how things are getting to and from the site? Just I think that was kind of up in the air potentially as a lot of different ways you can go? I am curious.

Richard Cohen: We know how the inside of the building looks, but how is the whole operation being -- what is the what is the flow sheet? Yeah. So we made an announcement. We partnered with Manhattan on the software piece because so many people in that we have talked to are already familiar with the Manhattan integration layer We are also doing our own integration layer But the inside of the building is pretty straightforward. It will do-- we will move pallets. We will move cases. We will do each picking. And we are both hired some of our own transportation people and also engage with some potential transportation brokerage or transportation companies that actually can bring customers into us.

So we will manage freight when the customers want us to manage the freight. We will have that capability. Both in and out of the building. But probably more so out of the building.

Joe Giordano: Good. Thank you.

Operator: This concludes the Q&A session. I would now like to turn it back to Charles Lowell Anderson for closing remarks.

Charles Lowell Anderson: Yes. Thanks, everybody, as always, for joining our call tonight. We really appreciate your interest in Symbotic, and I hope everybody has a good day. Thanks so much.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.