Symbotic Inc. Q2 FY2025 earnings call

• Delivered strong financial and operational results with 40% YOY revenue growth.
• Improved project execution led to installation to acceptance timelines for Phase 1 systems being roughly two months shorter than historical average for larger systems.
• Acquired Walmart Advanced Systems and Robotics, expanding product portfolio to include micro-fulfillment solutions for ambient and perishable environments. Hired Brian Alexander as Senior Vice President Commercial and Ashfaque Chowdhury as CEO of GreenBox. GreenBox began a third site during the quarter.
• Software revenue grew over 160% YOY to $6.7 million and operations services revenue grew by 47% YOY to $29.6 million.
• Backlog increased due to the addition of a development contract with Walmart offset by revenue recognized.

Revenue in the second quarter grew 40% year-over-year to $550 million. Software revenue saw a year-over-year increase of over 160% to $6.7 million, and operations services revenue grew 47% year-over-year to $29.6 million. The backlog stood at $22.7 billion, an increase from $22.4 billion in the previous quarter. System gross margin improved sequentially due to better project execution and contributions from the Walmart Advanced Systems and Robotics acquisition. Software maintenance and support gross margin exceeded 65%, and operations services swung to gross profit due to a more favorable mix.

• Third quarter 2025 revenue expected to be between $520 million and $540 million.
• Adjusted EBITDA expected between $26 million and $30 million, which is roughly 100 basis points down from Q2 due to timing of ASR business contributions.
• Tariffs are expected to be passed through, with exposure being a single-digit percent of a typical system; efforts underway to offset costs with the supply chain.

• Uncertainties regarding tariff pass-through and potential impact on pricing and costs.
• Contractual ambiguity in some older contracts regarding tariff reimbursement.
• Labor shortages and inflation concerns affecting customer decisions and investment timelines.

Q: Andy Kaplowitz of Citi inquired about system starts, ramp up, and margin impact of tariffs.

A: Rick Cohen noted system starts are lumpy and will improve with backlog, while Carol Hibbard discussed margin factors including project mix and ASR contribution.

Q: Nicole DeBlase of Deutsche Bank asked about Q3 revenue decline and OpEx step-ups.

A: Carol Hibbard explained Q3 revenue decline tied to prior year system start timing and OpEx step-ups related to acquisitions with expected step-down in SG&A.

Q: James Ricchiuti of Needham & Company asked about ASR revenue contribution and installation time for large customers.

A: Carol Hibbard stated ASR was mid-to-high single-digit percent of revenue, and installation to acceptance time improved by a couple months for some projects.

Q: Matt Somerville of D.A. Davidson asked about technology roadmap and GreenBox tenants.

A: Rick Cohen provided updates on perishable and smaller system developments, and Carol Hibbard clarified ASR revenue details and GreenBox progress.

Q: Joe Giordano of TD Cowen asked about tariffs and ASR technology leverage.

A: Carol Hibbard discussed tariff pass-through protection and Rick Cohen elaborated on ASR technology integration and customer interest.

Q: Mark Delaney of Goldman Sachs asked about new customers and free cash flow.

A: Rick Cohen noted increased incoming interest due to labor shortages and inflation, while Carol Hibbard explained free cash flow strength tied to cash flow timing and acquisition impact.

Q: Colin Rusch of Oppenheimer & Company asked about technology integration and GreenBox financing.

A: Rick Cohen discussed technology innovation acceleration, and Carol Hibbard stated limited customer interest in GreenBox financing.

Q: Guy Hardwick of Freedom Capital Markets asked about Q3 revenue guidance and GreenBox progress.

A: Carol Hibbard explained Q3 revenue guidance without specific system counts, and Rick Cohen provided GreenBox progress updates.

Q: Derek Soderberg of Cantor Fitzgerald asked about ASR revenue structure and data monetization.

A: Carol Hibbard detailed ASR revenue sources, and Rick Cohen discussed data insights used in system redesign.

Q: Ken Newman of KeyBanc Capital Markets asked about tariff pass-through and EBITDA margin expansion.

A: Carol Hibbard discussed tariff pass-through and SG&A leverage opportunities with integration synergies.

Q: Greg Palm of Craig Hallum Capital Group asked about gross margin one-time benefits and GreenBox revenue contribution.

A: Carol Hibbard explained gross margin one-time benefits from training revenue and GreenBox progress with identified locations.

Q: Robert Mason of Baird asked about backlog bridge and deployment schedule expansion.

A: Carol Hibbard bridged backlog changes and explained deployment schedule variations based on specific site needs