Symbotic Inc. Class A Common Stock 2026 Q3 Earnings Call

Please go ahead. Hello. Welcome to Symbotic's third quarter of fiscal year 2026 financial results webcast.

I'm 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. 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.symbotic.com.

On today's call, we are joined by Rick Cohen, Symbotic's Founder, Chairman, and Chief Executive Officer, and Izzy 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'll turn it over to Rick to begin.

Rick? Thank you, Charlie. Good afternoon, 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're clearly seeing this play out as our BreakPack product to handle individual items or each's, has now begun deployment at half of Walmart's regional distribution centers.

In addition, we recently began installation of our first SymMicro system for e-commerce fulfillment at the back of a Walmart store, a significant step forward towards unlocking this exciting new category of our business. We're 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 pallets and dynamically optimize freight delivery, 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 Glazer's Wine & Spirits for a second site after the success of their first facility. Southern Glazer's is a leading total beverage distributor serving 47 U.S. markets in Canada. As we drive additional value to 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 system 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 1,000 larger bots into our operational system this calendar year to handle a wider variety of SKUs. With this new bot, we've 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're 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've made two tuck-in technology acquisitions that expand our capabilities Fox 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 want to thank our team for all their hard work, along with our customers and our investors for their continued support. I'll now turn it over to Izzy, who will discuss our financial results and outlook.

Izzy? Thanks, Rick. Fiscal third quarter revenue reached $721 million, near the high end of our forecasted range, 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 efficiencies. 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 Glazer's 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 four 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 non-cash gain on the fair value of our strategic investment 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 the 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 Glazer's site.