Symbotic (SYM) Stock: Earnings, Crash, and What Investors Need to Know
Symbotic reported earnings today and the stock immediately dumped 20% after market close. The report itself was excellent and the quarterly numbers came in at the high end of what the company itself guided for. Here are some key takeaways and my thoughts.
SYM 0.00%↑ brought in $369 million in revenue this quarter, after projecting for between $350 and $370 million. Revenue grew 80% year over year, up from $206 million in the same quarter a year ago. They completed 3 new systems and began 5 new deployments.
The automation technology leader built a full warehouse automation system in record time, completing it in 20 months. They remain focused on improving deployment speeds, reiterating their long term vision of a 12 month cycle or less.
We got some great information on Symbots and their advancements:
Symbot,
Is equipped with the newest NVDA 0.00%↑ chips. This opened up new market possibilities by granting the robots vision, they can now see boxes they could not in the past
Can handle a vastly increased universe of products. Their orginal bot called X could not process a tote or paper box, but Symbot can. Compared with competitors that just use trays, Symbotic has greater ability to handle packages of different sizes and shapes, according to management
Can pick and place packages 10 seconds faster than the original bot
Is able to handle more than 1 box at a time on outbound, before they could only do that with inbound
The company continues to innovate. One of their projects is called Breakpack, which has a target market of businesses like drug stores and smaller stores. Management believes there is a huge opportunity with this customer base. While the proof of concept was already contributing to revenue, it is now ready for general availability which may contribute to revenue by year end. They said the delay is due to the nature of the sales cycle.
Other Updates:
Greenbox, their joint venture with SoftBank, which enables them to greatly expand their addressable market by enabling them to work with smaller companies, is receiving a lot of interest and is expected to recognize its first revenue this year.
The customer base is becoming more diverse. The 37 deployments in progress are being built for 6 different customers, out of their 9 total customers. One critique of the company has long been their heavy reliance on a handful of customers, mainly Walmart
The value of their order backlog remains around $23 billion, which will ensure a steady stream of income for the foreseeable future
Recurring revenue streams grew 5% sequentially and 45% year over year, management said to expect accelerating recurring revenue growth in the 2nd quarter. This is one of the exciting prospects for the company as over time this recurring revenue will make up a bigger chunk of total revenues and bring high margins. Management stated that over time we can expect recurring gross margins to reach over 60%
Gross margin increased to 20% and is expected to continue to improve each year
In closing, management clearly demonstrated a long term focus on the call. For example, they stated how they don’t want to do anything that would save a few points on margin in the short term if it would cause a negative impact long term. Long term profitability will start to improve in the second half of year.
Additionally, investors should not expect new deployments to keep increasing at a steady rate every quarter as they have been, but instead to trend up over time as they start to focus more on delivering against the current backlog.
The trend of 1-2 new big customers each year will continue as they expand into and see an additional ramp from Greenbox in 2024 and 2025.
CEO Rick Cohen is a true visionary and in Jeff Bezos-esque fashion, constantly loves to talk about having “braggingly happy customers”. I’m not panicking about the short term market reaction and I like this stock for the long term.