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What changed in Symbotic Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Symbotic Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+290 added−268 removedSource: 10-K (2023-12-11) vs 10-K (2022-12-09)

Top changes in Symbotic Inc.'s 2023 10-K

290 paragraphs added · 268 removed · 208 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

48 edited+24 added−10 removed141 unchanged
Biggest changeWe also issued Walmart a new warrant to purchase 258,972 units of Warehouse, or 3.5% of the total outstanding units of Warehouse as calculated on a pro forma basis at the time of the issuance of the warrant, subject to customary adjustments, at an exercise price of $614.34 per unit, which is the estimated value of a unit of Warehouse on the date of the Merger Agreement based on the Exchange Ratio assuming one share of Class A Common Stock is $10.00. 12 Table of Contents Pursuant to the Investment and Subscription Agreement and as a result of the warrant exercise, Walmart has the right to designate a Walmart employee of a certain seniority level to attend all meetings of the Board in a nonvoting observer capacity, except in certain circumstances, including where such observer’s attendance may be inconsistent with the directors’ fiduciary duties to the Company or where such meetings may involve attorney-client privileged information, a conflict of interest between the Company and Walmart or information that the Company determines is competitively or commercially sensitive.
Biggest changePursuant to the Investment and Subscription Agreement and as a result of the warrant exercise, Walmart has the right to designate a Walmart employee of a certain seniority level to attend all meetings of the Board in a nonvoting observer capacity, except in certain circumstances, including where such observer’s attendance may be inconsistent with the directors’ fiduciary duties to the Company or where such meetings may involve attorney-client privileged information, a conflict of interest between the Company and Walmart or information that the Company determines is competitively or commercially sensitive.
Finally, our use of automation and software means our systems can approach true “lights-out” operation (100% up-time with zero human intervention). 6 Table of Contents • Original (Native) Package Handling : In our current applications, we handle cases by lifting them from the bottom using an automated fork system.
Finally, our 6 Table of Contents use of automation and software means our systems can approach true “lights-out” operation (100% up-time with zero human intervention). • Original (Native) Package Handling : In our current applications, we handle cases by lifting them from the bottom using an automated fork system.
Finally, we can easily reconfigure and expand our systems to accommodate SKU proliferation as our customers’ needs and strategies evolve. • Inventory Reduction & SKU Agility : The accuracy, throughput speed, and density of our platform allow our customers to achieve a higher level of availability and a wider range of SKU variety with less inventory. • Fulfillment Accuracy : Our digitization strategy, artificial intelligence enabled store/retrieve software and other automated systems contribute to the 99.9999% fulfillment accuracy of our platform. 9 Table of Contents • System Resilience : Our system-of-systems architecture philosophy eliminates single points of failure, enhancing system resiliency.
Finally, we can easily reconfigure and expand our systems to accommodate SKU proliferation as our customers’ needs and strategies evolve. • Inventory Reduction & SKU Agility : The accuracy, throughput speed, and density of our platform allow our customers to achieve a higher level of availability and a wider range of SKU variety with less inventory. 9 Table of Contents • Fulfillment Accuracy : Our digitization strategy, artificial intelligence enabled store/retrieve software and other automated systems contribute to the 99.9999% fulfillment accuracy of our platform. • System Resilience : Our system-of-systems architecture philosophy eliminates single points of failure, enhancing system resiliency.
The amendment and restatement added an additional $6.1 billion to our backlog. The implementation of the modules under the Walmart MAA began in 2021 and will continue based upon an agreed-upon timeline, subject to limited adjustment, with the implementation of all modules to begin by the end of 2028.
The amendment and restatement added approximately an additional $6.1 billion to our backlog. The implementation of the modules under the Walmart MAA began in 2021 and will continue based upon an agreed-upon timeline, subject to limited adjustment, with the implementation of all modules to begin by the end of 2028.
Symbotic was established to develop technologies to improve operating efficiencies in modern warehouses. Significant funds and resources have been devoted to date in developing the Symbotic platform and related applications, to create complete systems with the ability to fundamentally change how the supply chain functions. Symbotic’s intellectual property is protected by a portfolio of over 490 issued and/or pending patents.
Symbotic was established to develop technologies to improve operating efficiencies in modern warehouses. Significant funds and resources have been devoted to date in developing the Symbotic platform and related applications, to create complete systems with the ability to fundamentally change how the supply chain functions. Symbotic’s intellectual property is protected by a portfolio of over 575 issued and/or pending patents.
As a result, we have developed or created a significant amount of intellectual property protecting our core technology, including a patent portfolio with over 490 patent filings. First Mover Advantage with Differentiated Platform Architecture We believe we have developed highly unique platform architecture utilizing fully autonomous robots, at scale and in real world supply chain applications.
As a result, we have developed or created a significant amount of intellectual property protecting our core technology, including a patent portfolio with over 575 patent filings. First Mover Advantage with Differentiated Platform Architecture We believe we have developed highly unique platform architecture utilizing fully autonomous robots, at scale and in real world supply chain applications.
We are initially targeting the ten largest brick-and-mortar companies across five verticals: general merchandise, ambient grocery, ambient food distribution, consumer packaged food, and apparel. Based on identified North American warehouses of the ten largest companies in each of these five verticals, we believe that our strategically addressed market opportunity is approximately $126 billion.
We are initially targeting the ten largest brick-and-mortar companies across five verticals: general merchandise, ambient grocery, ambient food distribution, consumer packaged food, and apparel. Based on identified North American warehouses of the ten largest companies in each of these five verticals, we believe that our strategically addressed market opportunity is approximately $144 billion.
Our newest version of these robots uses vision technology in addition to our autonomous routing algorithms (described above) to achieve optimal speed, safety, and routing. • A.I.-Powered De-Palletizing Robotic Systems : Our proprietary de-palletizing robotic end of arm tools, coupled with our A.I. and state-of-the-art vision enhanced robotic arms de-palletize up to 1,800 cases and 200 SKU layers per hour.
Our newest version of these 14 Table of Contents robots uses vision technology in addition to our autonomous routing algorithms (described above) to achieve optimal speed, safety, and routing. • A.I.-Powered De-Palletizing Robotic Systems : Our proprietary de-palletizing robotic end of arm tools, coupled with our A.I. and state-of-the-art vision enhanced robotic arms de-palletize up to 1,800 cases and 200 SKU layers per hour.
Customers Customer Base We have a strong blue chip customer base that includes some of the world’s largest retailers and wholesale grocers, including Walmart, Albertsons, UNFI, Target and Giant Tiger, and our affiliate, C&S Wholesale Grocers.
Customers Customer Base We have a strong blue chip customer base that includes some of the world’s largest retailers and wholesale grocers, including Walmart, Albertsons, AFS, our affiliate, C&S Wholesale Grocers, Giant Tiger, GreenBox, Target, and UNFI.
Each level is approximately three feet tall, allowing 7 Table of Contents a typical thirty-two-foot-tall warehouse to have ten levels of storage for optimized space utilization. Each individual level has a transfer deck that spans the width of the structure and connects several dozen aisles that extend horizontally at a 90-degree angle from the transfer deck.
Each level is approximately three feet tall, allowing a typical thirty-two-foot-tall warehouse to have ten levels of storage for optimized space utilization. Each individual level has a transfer deck that spans the width of the structure and connects several dozen aisles that extend horizontally at a 90-degree angle from the transfer deck.
Pursuant to such agreement, in connection with the amendment and restatement of the Walmart MAA on May 20, 2022, Walmart exercised a warrant to purchase 267,281 units of Warehouse, or 3.7% of the total outstanding units of Warehouse as calculated following the exercise of the warrant and issuance of units thereunder, at an aggregate purchase price of $103,980,327.
Pursuant to such agreement, in connection with the amendment and restatement of the Walmart 12 Table of Contents MAA on May 20, 2022, Walmart exercised a warrant to purchase 267,281 units of Warehouse, or 3.7% of the total outstanding units of Warehouse as calculated following the exercise of the warrant and issuance of units thereunder, at an aggregate purchase price of $103,980,327.
An associate will either repair the case before re-induction into the system or reject the damaged goods. • Buffering Structure : The buffering structure of our platform, where goods are placed, stored, and retrieved, is composed of a number of levels stacked on top of each other.
An associate will either repair the case before re-induction into the system or reject the damaged goods. 7 Table of Contents • Buffering Structure : The buffering structure of our platform, where goods are placed, stored, and retrieved, is composed of a number of levels stacked on top of each other.
We have been investing in our people for over a decade and our team possesses decades of combined technical and engineering experience, with a majority of our full-time employees holding technical degrees and a substantial portion of our total employee base holding advanced degrees, including numerous PhDs in engineering.
We have been investing in our people for over a decade and our team possesses decades of combined technical and engineering experience, with a majority of our full-time employees holding technical degrees and a substantial portion of our total employee base holding advanced degrees, including numerous PhDs in engineering or related fields.
Cohen is an accomplished business builder, as evidenced by his helping lead sales growth at C&S Wholesale Grocers from $14 million in 1974 to $27 billion in 2018. Effectively running warehouse operations for the low margin grocery industry, Mr. Cohen has been building, running, and innovating warehouses for two generations.
Cohen is an accomplished business builder, as evidenced by his helping lead sales growth at C&S Wholesale Grocers from $14 million in 1974 to $27 billion in 2018. Effectively running warehouse operations for the low margin 8 Table of Contents grocery industry, Mr. Cohen has been building, running, and innovating warehouses for two generations.
When considering deeper penetration in our initial verticals, adding additional adjacent verticals, and entering the European market, our total addressable market increases to $373 billion. Industry Background First Principles of the Supply Chain The first principles of the supply chain are to align three mismatches that arise between producers and users of goods in a cost-effective manner.
When considering deeper penetration in our initial verticals, adding additional adjacent verticals, and entering the European market, we believe our total addressable market increases to $432 billion. Industry Background First Principles of the Supply Chain The first principles of the supply chain are to align three mismatches that arise between producers and users of goods in a cost-effective manner.
Our palletizing robotic application uses two robots simultaneously to palletize product rapidly and efficiently. Research and Development Our technology is underpinned by over $700 million invested in developing the Symbotic platform, and is protected in part by over 490 issued and/or pending patents.
Our palletizing robotic application uses two robots simultaneously to palletize product rapidly and efficiently. Research and Development Our technology is underpinned by over $800 million invested in developing the Symbotic platform, and is protected in part by over 575 issued and/or pending patents.
Specifically, we intend to continue innovating our robust A.I.-enabled robots alongside our proprietary software to continue to help our customers optimize operational efficiency. 14 Table of Contents • Expand system offerings : As our existing customers’ needs shift and expand, we will innovate, evolve and be flexible.
Specifically, we intend to continue innovating our robust A.I.-enabled robots alongside our proprietary software to continue to help our customers optimize operational efficiency. • Expand system offerings : As our existing customers’ needs shift and expand, we will innovate, evolve and be flexible.
To capture the size of this broader market opportunity, we estimate the size of these additional verticals in the United States at an additional $51 billion (using the same methodology we use for our primary and secondary verticals). 10 Table of Contents We also plan to expand to Canada and Europe, so we define our total addressable market as our total U.S. market opportunity of $289 billion plus our market opportunity in Canada and Europe, which we estimate to be an additional $83 billion.
To capture the size of this broader market opportunity, we estimate the size of these additional verticals in the United States at an additional $53 billion (using the same methodology we use for our primary and secondary verticals). 10 Table of Contents We also plan to expand to Canada and Europe, so we define our total addressable market as our total U.S. market opportunity of $321 billion plus our market opportunity in Canada and Europe, which we estimate to be an additional $111 billion.
The SEC maintains a website that contains reports, proxy statements and other information regarding issuers that file electronically with the SEC. These materials may be obtained electronically by accessing the SEC’s website at www.sec.gov.
The SEC maintains a website that contains reports, proxy statements and 17 Table of Contents other information regarding issuers that file electronically with the SEC. These materials may be obtained electronically by accessing the SEC’s website at www.sec.gov.
We estimate the size of our initial strategically addressed market to be $126 billion based on the number of warehouses in each of those verticals, our estimates of the percent of warehouses in each vertical that are addressable (over 1,500), and the expected average price of our system and associated recurring revenue.
We estimate the size of our initial strategically addressed market to be $144 billion based on the number of warehouses in each of those verticals, our estimates of the percent of warehouses in each vertical that are addressable, and the expected average price of our system and associated recurring revenue.
We consider our relationship with our employees to be in good standing and have yet to experience any work stoppages. None of our employees are subject to a collective bargaining agreement or represented by a labor union. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing, and integrating our existing and additional employees.
We consider our relationship with our employees to be in good standing and have not experienced any work stoppages. None of our employees are subject to a collective bargaining agreement or represented by a labor union. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing, and integrating our existing and new employees.
Unpatented research, development, know-how and engineering skills make an important contribution to our business and core technology, but we pursue patent protection when we believe it is possible and consistent with our overall strategy for safeguarding our intellectual property. As of September 24, 2022, we had 315 issued patents in 10 countries and an additional 179 patents pending worldwide.
Unpatented research, development, know-how and engineering skills make an important contribution to our business and core technology, but we pursue patent protection when we believe it is possible and consistent with our overall strategy for safeguarding our intellectual property. As of September 30, 2023, we had over 375 issued patents in 10 countries and over 190 additional patents pending worldwide.
This implies a total addressable market of $373 billion (over 6,500 distribution centers). To estimate our market opportunity in foreign countries, we currently exclude Asia, but for the remaining countries we assume the number of warehouses in each country relative to the number of warehouses in the U.S. is proportionate to their relative GDPs.
This implies a total addressable market of $432 billion. To estimate our market opportunity in foreign countries, we currently exclude Asia, but for the remaining countries we assume the number of warehouses in each country relative to the number of warehouses in the U.S. is proportionate to their relative GDPs.
We intend to accelerate our sales cycle as we begin to expand our marketing efforts and transition from a small number of very large transactions to more widespread adoption of our technology systems. Manufacturing and Suppliers We operate two manufacturing centers with co-located engineering support in Wilmington, Massachusetts, and Montreal, Quebec.
We intend to accelerate our sales cycle as we begin to expand our marketing efforts and transition from a small number of very large transactions to more widespread adoption of our technology systems. Manufacturing and Suppliers We operate a repair/service facility center with engineering support located in Wilmington, Massachusetts, with additional engineering support located in Montreal, Quebec.
Those pillars are: • A.I.-Powered Software : Our platform is enhanced by our A.I.-powered autonomous hardware and system software. • Atomizing : Atomizing goods is the process of dividing quantities of goods to the lowest common fulfillment unit (e.g., from pallets-to-cases and cases-to-items).
Eight pillars of that architecture combine synergistically to deliver the benefits of our systems. Those pillars are: • A.I.-Powered Software : Our platform is enhanced by our A.I.-powered autonomous hardware and system software. • Atomizing : Atomizing goods is the process of dividing quantities of goods to the lowest common fulfillment unit (e.g., from pallets-to-cases and cases-to-items).
These future anticipated products are not included in our current support and maintenance arrangements. • Geographic Expansion : Working with our existing customers and by adding new customers, we intend to expand our operations beyond the United States and Canada. We are currently evaluating opportunities in Europe, Latin America, and the Middle East.
These future anticipated products are not included in our current support and maintenance arrangements. • Geographic Expansion : Working with our existing customers and by adding new customers, we intend to expand our operations beyond the United States and Canada.
Competition Most of our target market currently relies on conventional manual and semi-mechanized systems that are labor intensive. There are several point solutions available in the market that automate certain components of the warehouse or distribution center, but few offer end-to-end systems. Those that do typically require a significant greenfield real estate investment.
Competition Most of our target market currently relies on conventional manual and semi-mechanized systems that are labor intensive. There are several point solutions available in the market that automate certain components of the warehouse or distribution center, but few offer end-to-end systems.
We have spent significant time working closely with our customers to develop, test, and refine our technology, and our success has translated into a $11.1 billion contracted backlog as of September 24, 2022 to deliver systems from 2022 through 2028, of which $6.1 billion was added to our contracted backlog on May 20, 2022 when we amended and restated the Walmart MAA as described below in “—Customers—Walmart.” 3 Table of Contents We believe the potential market opportunity for our systems is large and expanding.
We have spent significant time working closely with our customers to develop, test, and refine our technology, and our success has translated into approximately $23.3 billion of backlog as of September 30, 2023 to deliver systems from 2023 through 2029, of which approximately $6.1 billion was added to our backlog on May 20, 2022 when we amended and restated the Walmart MAA as described below in “—Customers—Walmart” and approximately $11.5 3 Table of Contents billion was added to our backlog on July 23, 2023 when we entered into a master services, license and equipment agreement with GreenBox as described below in “—Customers —GreenBox.” We believe the potential market opportunity for our systems is large and expanding.
The platform is composed of atomizing robotics, a buffering structure, autonomous mobile robots that handle product, robotic palletizing cells and software that coordinates and optimizes the movements of all these systems to maximize the throughput of goods while reducing cost of the system.
The platform is composed of atomizing robotics, a buffering structure, autonomous mobile robots that handle product, robotic palletizing cells and software that coordinates and optimizes the movements of all these systems to maximize the throughput of goods while reducing cost of the system. 5 Table of Contents Unique Platform Architecture Our innovative platform architecture differentiates our system from alternative warehouse systems.
Remaining Performance Obligations (“Backlog”) As of September 24, 2022, Symbotic had a $11.1 billion backlog of orders from its customers, of which approximately 8% is expected to be recognized as revenue in the following twelve months. The backlog is largely structured on a cost-plus fixed profit basis.
Remaining Performance Obligations (“Backlog”) As of September 30, 2023, Symbotic had approximately $23.3 billion of backlog of orders from its customers, of which approximately 8% is expected to be recognized as revenue in fiscal year 2024. The backlog is largely structured on a cost-plus fixed profit basis.
We then multiply the resulting number of warehouses by our estimate for the percent of those warehouses that are addressable and by our estimate for the average price of our system and associated recurring revenue outside the U.S.
We then multiply the resulting number of warehouses by our estimate for the percent of those warehouses that are addressable and by our estimate for the average price of our system and associated recurring revenue outside the U.S. The GreenBox joint venture was established to serve the needs for outsourced case handling.
Products Our system is typically sold in three parts: the initial system sale, software maintenance and support services, and operation services. The Symbotic system is a modular, highly configurable capital asset purchase that we sell to our customer in the year of deployment. Then over the remaining system life, which is typically 25-30 years, we charge a software maintenance fee.
The Symbotic system is a modular, highly configurable capital asset purchase that we sell to our customer in the year of deployment. Then over the remaining system life, which is typically 25-30 years, we charge a software maintenance fee. Finally, we provide training and system operation until the customer assumes operational duties.
These factors contribute to high maintenance costs and damage, resulting in limited total cost savings. 4 Table of Contents Retail and Supply Chain Trends Several trends within the retail industry and the supply chains that serve them have exacerbated the costs and inflexibility of today’s supply chains: • Labor Scarcity and Cost —As the labor force matures and becomes more highly educated, warehouse labor is becoming increasingly scarce and expensive.
Retail and Supply Chain Trends Several trends within the retail industry and the supply chains that serve them have exacerbated the costs and inflexibility of today’s supply chains: • Labor Scarcity and Cost —As the labor force matures and becomes more highly educated, warehouse labor is becoming increasingly scarce and expensive.
We do not consider these to be direct competitors at present because we are focused initially on fulfillment to physical stores; however, they will potentially become partners or competitors as we expand into e-commerce, or if they 11 Table of Contents expand to brick-and-mortar retail.
There are also systems such as Amazon Kiva, Exotec, Ocado, and AutoStore that focus exclusively on individual order fulfillment. We do not consider these to be direct competitors at present because we are focused initially on fulfillment to physical stores; however, they will potentially become partners or competitors as we expand into e-commerce, or if they expand to brick-and-mortar retail.
This helps us to develop algorithmic innovations that further improve system performance over time. • System Manager : The System Manager module of our software stack balances work across the inbound and outbound cells of our platform.
This helps us to develop algorithmic innovations that further improve system performance over time. • System Manager : The System Manager module of our software stack balances work across the inbound and outbound cells of our platform. It does this by managing inbound inventory and inventory levels in the buffering structure against fulfillment orders, optimized to fulfillment gate times.
Cohen has built a team of experienced board members and executives with a diverse range of technology expertise acquired at industry leading companies and institutions such as Flex, Fortna, IBM, Intuit, Manhattan Associates, MIT, Netezza, RealPage, SoftBank, Staples, Tesla and Walmart.
We believe our founder’s deep industry and operational expertise is a core competitive advantage for Symbotic. Mr. Cohen has built a team of experienced board members and executives with a diverse range of technology expertise acquired at industry leading companies and institutions such as Amazon.com, Fortna, Intuit, Manhattan Associates, MIT, Netezza, RealPage, SoftBank, Staples, The Boeing Company, Tesla and Walmart.
This novel application creates an environment in which both cases and toted items can be handled and shipped from a single platform. We believe this provides a significant step forward in our ability to provide an integrated omni-channel platform. System deployments Symbotic is an end-to-end automated system for product distribution at the heart of the supply chain.
We believe this provides a significant step forward in our ability to provide an integrated omni-channel platform. 13 Table of Contents System deployments Symbotic is an end-to-end automated system for product distribution at the heart of the supply chain.
Our issued patents are scheduled to expire between August 2024 and May 2041. Employees and Human Capital Resources Our employees are critical to our success. As of September 24, 2022, we had approximately 1,120 full-time employees, including approximately 945 based in the United States. Approximately 53% of our employees work in our offices in Wilmington, Massachusetts and Montreal, Quebec.
Our issued patents are scheduled to expire between August 2024 and February 2042. Employees and Human Capital Resources Our employees are critical to our success. As of September 30, 2023, we had approximately 1,300 full-time employees, including approximately 1,160 based in the United States.
Those companies that do offer end-to-end systems, most notably Witron, Honeywell, Dematic, Vanderlande, SSI Schaefer and Swisslog, have systems that are composed of a disparate set of mechanically complex point solutions, with numerous single points of failure. These systems are challenging to implement and expensive to adapt to changing customer needs and SKU variation.
These solutions also must be integrated with other disparate technologies, which often comes at significant cost and time and adds latency to operations. Those companies that do offer end-to-end systems, most notably Witron, Honeywell, Dematic, Vanderlande, SSI Schaefer and Swisslog, have systems that are composed of a disparate set of mechanically complex point solutions, with numerous single points of failure.
However, due to the nature of the COVID-19 pandemic, many in our workforce have been and continue to work remotely. The remainder of our employees install, commission, operate or maintain our systems at customers’ facilities. We also engage consultants and contractors to supplement our permanent workforce on an as needed basis.
Approximately 50% of our employees are based out of our offices in Wilmington, Massachusetts and Montreal, Quebec. The remainder of our employees install, commission, operate or maintain our systems at customers’ facilities. We also engage consultants and contractors to supplement our permanent workforce on an as needed basis.
We estimate that there is an additional $112 billion in market opportunity from our secondary verticals (non-food consumer packaged goods, home improvement, auto parts, third-party logistics, and refrigerated and frozen foods), implying a $238 billion total addressable market in the United States.
We estimate that there is an additional $124 billion in market opportunity from our secondary verticals (non-food consumer packaged goods, home improvement, auto parts, third-party logistics, and refrigerated and frozen foods). Over time we plan to expand beyond our primary and secondary target verticals, into additional verticals such as pharmaceuticals and electronics.
Even mechanized warehouses require significant human intervention, are very inflexible and face disruption from numerous single points of failure.
Even 4 Table of Contents mechanized warehouses require significant human intervention, are very inflexible and face disruption from numerous single points of failure. These factors contribute to high maintenance costs and damage, resulting in limited total cost savings.
Some point solutions such as specific goods-to-people robotics or pick and pack robotic arm solutions address only specific supply chain functions but do not maximize the efficiency of the supply chain as a whole. These solutions also must be integrated with other disparate technologies, which often comes at significant cost and time and adds latency to operations.
Those that do typically require a significant greenfield real estate investment. 11 Table of Contents Some point solutions such as specific goods-to-people robotics or pick and pack robotic arm solutions address only specific supply chain functions but do not maximize the efficiency of the supply chain as a whole.
This includes the use of non-disclosure and invention assignment agreements with our contractors and employees and the use of non-disclosure agreements with our customers, vendors, and business partners.
We seek to protect our intellectual property rights in our core technology through a combination of patents, trademarks, copyrights, and trade secrets. This includes the use of non-disclosure and invention assignment agreements with our contractors and employees and the use of non-disclosure agreements with our customers, vendors, and business partners.
Even these end-to-end mechanical systems require significant manual labor. They are frequently based on pallet and partial pallet storage techniques, requiring additional inventory and warehouse space. There are also systems such as Amazon Kiva, Exotec, Ocado, and AutoStore that focus exclusively on individual order fulfillment.
These systems are challenging to implement and expensive to adapt to changing customer needs and SKU variation. Even these end-to-end mechanical systems require significant manual labor. They are frequently based on pallet and partial pallet storage techniques, requiring additional inventory and warehouse space.
The principal purposes of our incentive plans are to attract, retain and motivate selected employees and consultants through cash and stock performance rewards and other benefits. 15 Table of Contents Government Regulations Compliance with various governmental regulations has an impact on our business, including our capital expenditures, earnings and competitive position, which can be material.
Government Regulations Compliance with various governmental regulations has an impact on our business, including our capital expenditures, earnings and competitive position, which can be material.
Intellectual Property Our ability to drive innovation in the robotics and A.I. automation markets depends in part upon our ability to protect our core technology and the intellectual property therein and thereto. We seek to protect our intellectual property rights in our core technology through a combination of patents, trademarks, copyrights, and trade secrets.
We also purchase lifts, fixed place robots, conveyors, and steel racking equipment from a wide range of vendors to complete our systems. 15 Table of Contents Intellectual Property Our ability to drive innovation in the robotics and A.I. automation markets depends in part upon our ability to protect our core technology and the intellectual property therein and thereto.
Omni-Channel Application We are currently prototyping, in one of our customer’s operating distribution centers, an application that integrates an additional function for the Symbotic platform, called Omni-Channel. This application atomizes cases to the item level and handles totes filled with multiple items just like we handle native cases.
Our typical deployment model is to build and install the system, operate the system for a limited time, and then transfer daily operation to the customer. Omni-Channel Application We are currently prototyping, in one of our customer’s operating distribution centers, an application that integrates an additional function for the Symbotic platform, called Omni-Channel.
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According to InsightQuote’s 2021 Warehousing & Fulfillment Costs & Pricing Survey, average salaries for warehouse management increased to nearly $56,000 in 2021, up 18% from approximately $47,500 in 2017, and average wages for warehouse staff in the U.S. increased to $14.00 per hour in 2021, up 22% from $11.44 per hour in 2017.
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Generally known as third party logistics, our focus is on the Warehouse-as-a-Service (WaaS) market. The WaaS market has witnessed significant growth in recent years, driven by the increasing demand for flexible and scalable warehousing solutions across various industries.
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Unique Platform Architecture 5 Table of Contents Our innovative platform architecture differentiates our system from alternative warehouse systems. Eight pillars of that architecture combine synergistically to deliver the benefits of our systems.
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As businesses focus on optimizing their supply chain operations, WaaS has emerged as a strategic alternative to captive warehouses, offering on-demand access to warehouse facilities, advanced inventory management systems, and technology-driven logistics solutions that benefit from automation and artificial intelligence.
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We believe our founder’s deep industry and operational expertise is a core competitive advantage for Symbotic. 8 Table of Contents Mr.
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Our analysis of the WaaS market highlights the potential for sustained growth, underpinned by the rise of globalization, outsourcing, e-commerce, and the evolving preferences of businesses seeking cost-effective and agile warehousing solutions.
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Over time we plan to expand beyond our primary and secondary target verticals, into additional verticals such as pharmaceuticals and electronics.
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We are currently evaluating opportunities in Europe, Latin America, and the Middle East. • WaaS : We have started to address the WaaS market and intend to address the WaaS market through our GreenBox joint venture, which we believe is positioned to leverage our expertise and the technology of the Symbotic system, to capture opportunities, meet evolving customer needs, and drive sustainable value for our shareholders.
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Since inception, our customers have ordered approximately $12.1 billion of systems from us, and as of September 24, 2022, we had orders of approximately $11.1 billion in backlog that we expect to deliver and install over approximately the next eight years. A substantial majority of the $11.1 billion in backlog relates to the Walmart MAA.
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We also issued Walmart a new warrant to purchase 258,972 units of Warehouse, or 3.5% of the total outstanding units of Warehouse as calculated on a pro forma basis at the time of the issuance of the warrant, subject to customary adjustments, at an exercise price of $614.34 per unit, which is the estimated value of a unit of Warehouse on the date of the Merger Agreement based on the Exchange Ratio assuming one share of Class A Common Stock is $10.00.
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Finally, we provide training and system operation until the customer assumes operational duties. Our typical deployment model is to install the system over a period of six to twelve months, operate the system for a limited time, and then transfer daily operation to the customer.
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GreenBox On July 21, 2023, in conjunction with entities related to the SoftBank Group, we established GreenBox Systems LLC, a strategic joint venture to build and automate supply chain networks globally by operating and financing Symbotic’s advanced A.I. and automation technology for the warehouse. Symbotic and the SoftBank Group own 35% and 65% of GreenBox respectively.
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It does this by managing inbound inventory and inventory levels in the buffering 13 Table of Contents structure against fulfillment orders, optimized to fulfillment gate times.
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On July 23, 2023, we entered into a commercial agreement with GreenBox that sets forth the terms, conditions, rights and obligations governing the design, installation, implementation and operation of Symbotic systems by Symbotic for GreenBox.
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Our Wilmington facility assembles our fully autonomous mobile robots while our facility in Montreal assembles de-palletizing and palletizing robotic cells. Both facilities use Oracle NetSuite for procurement, and to track & control production.
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On the terms and subject to the conditions set forth therein, the commercial agreement provides for a commitment from GreenBox to expend at least $7.5 billion in the aggregate to purchase Symbotic systems over a six-year period pursuant to an agreed-upon timeline with implementation of Symbotic systems expected to begin in fiscal year 2024.
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Each factory is roughly 40,000 square feet in size and is staffed with a mix of permanent and temporary employees to manage peak production and can operate on two shifts. To increase production, we intend to increase utilization of our installed manufacturing capacity, as well as continue partnering with subcontractors to take on an increasing amount of production.
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For each Symbotic system, GreenBox will pay to Symbotic: (i) the cost of implementation, including the cost of material and labor, plus a specified net profit amount; (ii) for software maintenance and support; and (iii) for spare parts and other miscellaneous expenses.
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We purchase a variety of components from a variety of vendors to assemble our autonomous robots. We also purchase lifts, fixed place robots, conveyors, and steel racking equipment from a wide range of vendors to complete our systems.
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The initial term of the commercial agreement with GreenBox expires on July 23, 2027, subject to a two-year extension by GreenBox if, at the end of the initial term, project SOWs (as defined in the commercial agreement) have not been executed with respect to Symbotic systems with an aggregate purchase price of GreenBox’s purchase commitment.
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At any time, either party may terminate the commercial agreement in the event of insolvency of the other party or a material breach of the other party that has not been cured. Products Our system is typically sold in three parts: the initial system sale, software maintenance and support services, and operation services.
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This application atomizes cases to the item level and handles totes filled with multiple items just like we handle native cases. This novel application creates an environment in which both cases and toted items can be handled and shipped from a single platform.
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Our Wilmington facility services previously built autonomous mobile robots for warranty and field repair returns. Our facility in Montreal conducts testing and engineering developmental work on de-palletizing and palletizing robotic cells. Each facility is staffed with a mix of permanent and temporary employees to manage peak workload and can operate two shifts when needed.
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We have transitioned to third party contract manufacturers to efficiently scale production capabilities, optimizing resources and foster agility in meeting growing market demand.
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The principal purposes of our incentive plans are to attract, retain and motivate selected employees and consultants through cash and stock performance rewards and other benefits. Diversity, Equity and Inclusion As a leader in warehouse automation, we are dedicated to building a vibrant and diverse robotics organization globally.
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By fostering a culture of Diversity, Equity and Inclusion, we strive for a workplace that celebrates the uniqueness of each employee and embraces diversity to enable innovation as we reimagine the supply chain industry. Talent Attraction Our ability to attract and retain key talent is crucial to the success of our business.
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We invest in talent acquisition initiatives to have the right people in key positions. Our workforce strategy includes recruiting top talent, building a talent pipeline through university partnerships, providing ongoing training and development opportunities, and fostering a workplace culture that promotes innovation and collaboration.
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In the coming years, we anticipate continued competition for skilled professionals in our industry, and our talent acquisition strategy will focus on building our reputation as a destination for top talent and recruiting individuals with expertise in robotics and industrial automation.
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Talent Management The engagement, retention and development of employees is critical to meet our priorities and deliver braggingly happy customers. All levels of our management are engaged in talent management practices.
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Our board of directors discusses key talent strategy in each regular board meeting, including periodic detailed discussions of our global leadership talent, with a focus on key positions at the executive leader level. We recognize that investing in strong talent management practices drives business performance, customer satisfaction, and employee engagement.
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Therefore, our talent interventions utilize various tools such as an annual performance management process, individual development interventions to facilitate a specific individual’s career growth, and development programs and learning plans to meet each employee where they are in their career.
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High-potential leaders are given exposure and visibility to members of our board of directors through formal project assignments and board 16 Table of Contents presentations. We provide opportunities for growth through formal and informal development programs that include training, coaching, networking, skills development, and on the job experience.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeDespite Symbotic’s affiliation with C&S Wholesale Grocers, there is no guarantee that it will continue to be a customer beyond the term of its current contracts with Symbotic. ◦ Symbotic depends upon key employees and other highly qualified personnel, and will need to hire and train additional personnel. ◦ Symbotic’s new warehouse automation systems, software, services and products may not be successful or meet existing or future requirements in supply agreements with existing or future customers, and may be affected from time to time by design and manufacturing defects that could adversely affect its business, financial condition and results of operations and result in harm to its reputation. ◦ Symbotic relies on suppliers to provide equipment, components and services.
Biggest changeDespite Symbotic’s affiliation with C&S Wholesale Grocers, there is no guarantee that it will continue to be a customer beyond the term of its current contracts with Symbotic. ◦ Symbotic may fail to realize anticipated benefits of the GreenBox joint venture, or it may disrupt Symbotic’s ongoing operations or result in operating difficulties, liabilities and expenses, harm its business, and negatively impact its results of operations. ◦ Symbotic will need to develop complex software and technology systems, both in-house and in coordination with vendors and suppliers, for it to successfully produce and integrate its warehouse automation systems with its customers’ existing warehouses, and there can be no assurance that such systems will be successfully developed. ◦ Symbotic depends upon key employees and other highly qualified personnel, and will need to hire and train additional personnel. ◦ Symbotic’s new warehouse automation systems, software, services and products may not be successful or meet existing or future requirements in supply agreements with existing or future customers, and may be affected from time to time by design and manufacturing defects that could adversely affect its business, financial condition and results of operations and result in harm to its reputation. ◦ Symbotic relies on suppliers to provide equipment, components and services.
Any significant security incident could have an adverse impact on sales, interrupt or delay our ability to operate or service our customers, harm our reputation and cause us to incur legal liability and increased costs to address such events and related security concerns.
Any significant security incident could have an adverse impact on sales, interrupt or delay our ability to operate or service our customers, harm our reputation and cause us to incur legal liability and increased costs to address such events and related security concerns.
Because Symbotic became a public reporting company by means of consummating the Business Combination rather than by means of a traditional underwritten initial public offering, there was no independent third-party underwriter selling the shares of the Symbotic’s Class A Common Stock, and, accordingly, the stockholders of Symbotic did not have the benefit of an independent review and investigation of the type normally performed by an unaffiliated, independent underwriter in a public securities offering.
Because Symbotic became a public reporting company by means of consummating the Business Combination rather than by means of a traditional underwritten initial public offering, there was no independent third-party underwriter selling the shares of Symbotic’s Class A Common Stock, and, accordingly, the stockholders of Symbotic did not have the benefit of an independent review and investigation of the type normally performed by an unaffiliated, independent underwriter in a public securities offering.
Foreign Corrupt Practices Act of 1977, as amended, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act and the USA PATRIOT Act, and are or will be subject to other anti-bribery and anti-money laundering laws in countries in which we conduct or will conduct activities.
We are subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act and the USA PATRIOT Act, and are or will be subject to other anti-bribery and anti-money laundering laws in countries in which we conduct or will conduct activities.
The measures we take to maintain and protect our IP from infringement, misappropriation or violation by others or the unauthorized disclosure of our trade secrets may not be effective for various reasons, including the following: • any patent applications we submit or currently have pending may not result in the issuance of patents; • the scope of our issued patents, including our patent claims, may not be broad enough to protect our proprietary rights; 27 Table of Contents • our issued patents may be challenged, invalidated or held unenforceable through administrative or legal proceedings in the U.S. or in foreign jurisdictions; • our employees or business partners may breach their confidentiality, non-disclosure and non-use obligations to us and we may not have adequate remedies for any such breach; • current and future competitors or third parties may reverse engineer, circumvent or design around our technology or IP or independently discover or develop technologies or software that are substantially equivalent or superior to ours; • we may not be successful in enforcing our IP portfolio against third parties who are infringing, violating or misappropriating such IP, for a number of reasons, including substantive and procedural legal impediments; • our trademarks may not be valid or enforceable, our efforts to protect our trademarks from unauthorized use may be deemed insufficient to satisfy legal requirements throughout the world to maintain our rights in our trademarks, and any goodwill that we have developed in those trademarks could be lost or impaired; • the costs associated with enforcing patents, confidentiality and invention assignment agreements or other IP and IP-related agreements may make enforcement commercially impracticable or divert our management’s attention and resources; and • our use of open source software could: (i) subject us to claims alleging that we are not compliant with such software licenses; (ii) require us to publicly release portions of our proprietary source code; and (iii) expose us to greater security risks than would the use of non-open source third-party commercial software.
The measures we take to maintain and protect our IP from infringement, misappropriation or violation by others or the unauthorized disclosure of our trade secrets may not be effective for various reasons, including the following: • any patent applications we submit or currently have pending may not result in the issuance of patents; • the scope of our issued patents, including our patent claims, may not be broad enough to protect our proprietary rights; • our issued patents may be challenged, invalidated or held unenforceable through administrative or legal proceedings in the U.S. or in foreign jurisdictions; • our employees or business partners may breach their confidentiality, non-disclosure and non-use obligations to us and we may not have adequate remedies for any such breach; • current and future competitors or third parties may reverse engineer, circumvent or design around our technology or IP or independently discover or develop technologies or software that are substantially equivalent or superior to ours; • we may not be successful in enforcing our IP portfolio against third parties who are infringing, violating or misappropriating such IP, for a number of reasons, including substantive and procedural legal impediments; • our trademarks may not be valid or enforceable, our efforts to protect our trademarks from unauthorized use may be deemed insufficient to satisfy legal requirements throughout the world to maintain our rights in our trademarks, and any goodwill that we have developed in those trademarks could be lost or impaired; 29 Table of Contents • the costs associated with enforcing patents, confidentiality and invention assignment agreements or other IP and IP-related agreements may make enforcement commercially impracticable or divert our management’s attention and resources; and • our use of open source software could: (i) subject us to claims alleging that we are not compliant with such software licenses; (ii) require us to publicly release portions of our proprietary source code; and (iii) expose us to greater security risks than would the use of non-open source third-party commercial software.
If Symbotic is unable to compete effectively with these potential competitors and developments, its sales and profitability could be adversely affected. ◦ If Symbotic is unable to develop new solutions, adapt to technological change, evolving industry standards and changing business needs or preferences, sell its software, services and products into new markets or further penetrate its existing markets, its revenue may not grow as expected. ◦ Laws and regulations governing the robotics and warehouse automation industries are still developing and may restrict Symbotic’s business or increase the costs of its solutions, making Symbotic’s solutions less competitive or adversely affecting its revenue growth. ◦ Supply chain interruptions may increase Symbotic’s costs or reduce its revenue. • Risks related to intellectual property, including that: ◦ Symbotic may need to bring or defend itself against patent, copyright, trademark, trade secret or other intellectual property infringement or misappropriation claims, which may adversely affect its business, financial condition and results of operations by limiting its ability to use technology or intellectual property and causing it to incur substantial costs. ◦ Symbotic’s business, financial condition and results of operations may be adversely affected and the value of its brand, products and other intangible assets may be diminished if it is unable to maintain and protect its IP from unauthorized use, infringement or misappropriation by third parties. • Risks related to cybersecurity, software deficiencies, service interruptions and data privacy, including that: 17 Table of Contents ◦ Symbotic has experienced cybersecurity incidents in the past and may experience further cybersecurity incidents or security breaches of its systems or IT (including third-party systems or IT that Symbotic relies on to operate its business) in the future, which may result in system disruptions, shutdowns or unauthorized access to or disclosure of confidential or personal information. ◦ Symbotic’s ability to efficiently manage and expand its business depends significantly on the reliability, capacity and protection of its systems and IT (including third-party systems or IT that Symbotic relies on to operate its business).
If Symbotic is unable to compete effectively with these potential competitors and developments, its sales and profitability could be adversely affected. 18 Table of Contents ◦ If Symbotic is unable to develop new solutions, adapt to technological change, evolving industry standards and changing business needs or preferences, sell its software, services and products into new markets or further penetrate its existing markets, its revenue may not grow as expected. ◦ Laws and regulations governing the robotics and warehouse automation industries are still developing and may restrict Symbotic’s business or increase the costs of its solutions, making Symbotic’s solutions less competitive or adversely affecting its revenue growth. ◦ Supply chain interruptions may increase Symbotic’s costs or reduce its revenue. • Risks related to intellectual property, including that: ◦ Symbotic may need to bring or defend itself against patent, copyright, trademark, trade secret or other intellectual property infringement or misappropriation claims, which may adversely affect its business, financial condition and results of operations by limiting its ability to use technology or intellectual property and causing it to incur substantial costs. ◦ Symbotic’s business, financial condition and results of operations may be adversely affected and the value of its brand, products and other intangible assets may be diminished if it is unable to maintain and protect its IP from unauthorized use, infringement or misappropriation by third parties. • Risks related to cybersecurity, software deficiencies, service interruptions and data privacy, including that: ◦ Symbotic has experienced cybersecurity incidents in the past and may experience further cybersecurity incidents or security breaches of its systems or IT (including third-party systems or IT that Symbotic relies on to operate its business) in the future, which may result in system disruptions, shutdowns or unauthorized access to or disclosure of confidential or personal information. ◦ Symbotic’s ability to efficiently manage and expand its business depends significantly on the reliability, capacity and protection of its systems and IT (including third-party systems or IT that Symbotic relies on to operate its business).
Following the Business Combination, we became subject to the SEC’s internal control over financial reporting requirements and will become subject to the auditor attestation requirements once we are no longer an “emerging growth company.” We will remain an emerging growth company until the earliest of: (i) the end of the fiscal year in which we had total annual gross revenue of $1.07 billion; (ii) the last day of our fiscal year following March 11, 2026 (the fifth anniversary of the date on which SVF 3 consummated the SVF 3 IPO); (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three-year period; or (iv) the end of the fiscal year in which the market value of our common stock held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter.
Following the Business Combination, we became subject to the SEC’s internal control over financial reporting requirements and will become subject to the auditor attestation requirements once we are no longer an “emerging growth company.” We will remain an emerging growth company until the earliest of: (i) the end of the fiscal year in which we had total annual gross revenue of $1.235 billion; (ii) the last day of our fiscal year following March 11, 2026 (the fifth anniversary of the date on which SVF 3 consummated the SVF 3 IPO); (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three-year period; or (iv) the end of the fiscal year in which the market value of our common stock held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter.
We amended and restated the Master Automation Agreement on May 20, 2022 (as it may be amended and/or restated from time to time, the “Walmart MAA”) to implement systems in all of Walmart’s 42 regional distribution centers, adding an additional $6.1 billion to our Backlog.
We amended and restated the Master Automation Agreement on May 20, 2022 (as it may be amended and/or restated from time to time, the “Walmart MAA”) to implement systems in all of Walmart’s 42 regional distribution centers, adding approximately an additional $6.1 billion to our backlog.
Our reliance on suppliers involves certain risks, including: • poor quality or an insecure supply chain, which could adversely affect the reliability and reputation of our hardware and software products, solutions and services; • changes in the cost of these purchases due to inflation, exchange rate fluctuations, taxes, tariffs, commodity market volatility or other factors that affect our suppliers; • embargoes, sanctions and other trade restrictions that may affect our ability to purchase from various suppliers; • risks related to intellectual property such as challenges to ownership of rights or alleged infringement by suppliers; and • shortages of components, commodities or other materials, including semiconductors and integrated circuits, which could adversely affect our manufacturing efficiencies and ability to make timely delivery of our products, solutions and services.
Our reliance on suppliers involves certain risks, including: • poor quality or an insecure supply chain, which could adversely affect the reliability and reputation of our hardware and software products, solutions and services; • changes in the cost of these purchases due to inflation, exchange rate fluctuations, taxes, tariffs, commodity market volatility or other factors that affect our suppliers; 23 Table of Contents • embargoes, sanctions and other trade restrictions that may affect our ability to purchase from various suppliers; • risks related to intellectual property such as challenges to ownership of rights or alleged infringement by suppliers; and • shortages of components, commodities or other materials, including semiconductors and integrated circuits, which could adversely affect our manufacturing efficiencies and ability to make timely delivery of our products, solutions and services.
Risk Factors In evaluating our Company and our business, you should carefully consider the risks and uncertainties described below, together with the other information in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes and in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may have a material adverse effect on our business, reputation, revenue, financial condition, results of operations and future prospects, in which case the market price of our Class A common stock 16 Table of Contents could decline, and you could lose part or all of your investment.
Risk Factors In evaluating our Company and our business, you should carefully consider the risks and uncertainties described below, together with the other information in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes and in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may have a material adverse effect on our business, reputation, revenue, financial condition, results of operations and future prospects, in which case the market price of our Class A common stock could decline, and you could lose part or all of your investment.
Among other things, the Charter and/or Bylaws includes the following provisions: • a prohibition on stockholder action by written consent, which means that our stockholders will only be able to take action at a meeting of stockholders and will not be able to take action by written consent for any matter; • a forum selection clause, which means certain litigation against us can only be brought in Delaware; 35 Table of Contents • the authorization of undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and • advance notice procedures, which apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
Among other things, the Charter and/or Bylaws includes the following provisions: • a prohibition on stockholder action by written consent, which means that our stockholders will only be able to take action at a meeting of stockholders and will not be able to take action by written consent for any matter; • a forum selection clause, which means certain litigation against us can only be brought in Delaware; • the authorization of undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and • advance notice procedures, which apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
In response to a determination that we have infringed upon, misappropriated or violated a third party’s IP (including through our indemnification obligations), we may be required to do one or more of the following: • cease development, sales or use of our products that incorporate or are covered by the asserted IP; • pay substantial damages, including through settlement payments or indemnification obligations (including legal fees); • obtain a license from the owner of the asserted IP, which license may not be available on reasonable terms or at all; or • redesign one or more aspects of our warehouse automation systems that is alleged to infringe, misappropriate or violate any third-party IP.
In response to a determination that we have infringed upon, misappropriated or violated a third party’s IP (including through our indemnification obligations), we may be required to do one or more of the following: • cease development, sales or use of our products that incorporate or are covered by the asserted IP; • pay substantial damages, including through settlement payments or indemnification obligations (including legal fees); 28 Table of Contents • obtain a license from the owner of the asserted IP, which license may not be available on reasonable terms or at all; or • redesign one or more aspects of our warehouse automation systems that is alleged to infringe, misappropriate or violate any third-party IP.
Disruptions in the supply chain may result from the COVID-19 pandemic or other public health crises, weather-related events, natural disasters, trade restrictions, tariffs, border controls, acts of war, terrorist attacks, third-party strikes, work stoppages or slowdowns, shipping capacity constraints, supply or shipping interruptions or other factors beyond our control.
Disruptions in the supply chain may result from public health crises, such as the COVID-19 pandemic, or from weather-related events, natural disasters, trade restrictions, tariffs, border controls, acts of war, terrorist attacks, third-party strikes, work stoppages or slowdowns, shipping capacity constraints, supply or shipping interruptions or other factors beyond our control.
Moreover, the Tax Receivable Agreement provides that, in the event that (i) we exercise our early termination rights under the Tax Receivable Agreement, (ii) we experience certain changes of control (as described in the Tax Receivable Agreement) or (iii) we breach any of our material obligations under the Tax Receivable Agreement, our obligations under the Tax Receivable Agreement may accelerate and we could be required to make a lump-sum cash payment to each TRA Holder equal to the present value of all future payments that would have otherwise been made under the Tax Receivable Agreement, which lump-sum payment would be based on certain assumptions, including those relating to our future taxable income.
Moreover, the Tax Receivable Agreement provides that, in the event that (i) we exercise our early termination rights under the Tax Receivable Agreement, (ii) we experience certain changes of control (as described in the Tax Receivable Agreement) or (iii) we breach any of our material obligations under the Tax Receivable Agreement, our obligations under the 44 Table of Contents Tax Receivable Agreement may accelerate and we could be required to make a lump-sum cash payment to each TRA Holder equal to the present value of all future payments that would have otherwise been made under the Tax Receivable Agreement, which lump-sum payment would be based on certain assumptions, including those relating to our future taxable income.
To the extent the funds of New Symbotic Holdings are legally available for distribution, and subject to any restrictions contained in any credit agreement to which New Symbotic Holdings or its subsidiaries are bound, New Symbotic Holdings is required under the New Symbotic Holdings LLC Agreement to (i) make generally pro rata distributions to its equityholders, including us, in an amount generally intended to 41 Table of Contents allow its equityholders to satisfy their respective income tax liabilities with respect to their allocable share of the income of New Symbotic Holdings, based on certain assumptions and conventions, and (ii) reimburse us for our corporate and other overhead expenses.
To the extent the funds of New Symbotic Holdings are legally available for distribution, and subject to any restrictions contained in any credit agreement to which New Symbotic Holdings or its subsidiaries are bound, New Symbotic Holdings is required under the New Symbotic Holdings LLC Agreement to (i) make generally pro rata distributions to its equityholders, including us, in an amount generally intended to allow its equityholders to satisfy their respective income tax liabilities with respect to their allocable share of the income of New Symbotic Holdings, based on certain assumptions and conventions, and (ii) reimburse us for our corporate and other overhead expenses.
You may not be able to resell your shares at an attractive price due to a number of factors such as those listed in “Risks Related to Symbotic—Risks Related to Our Business, Operations and Industry” and the following: 32 Table of Contents • the impact of the COVID-19 pandemic on our financial condition and the results of operations; • our operating and financial performance and prospects; • our quarterly or annual earnings or those of other companies in our industry compared to market expectations; • conditions that impact demand for our products; • future announcements concerning our business, our clients’ businesses or our competitors’ businesses; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • the market’s reaction to our reduced disclosure and other requirements as a result of being an “emerging growth company” under the “JOBS Act”; • the size of our public float; • coverage by or changes in financial estimates by securities analysts or failure to meet their expectations; • market and industry perception of our success, or lack thereof, in pursuing our growth strategy; • strategic actions by us or our competitors, such as acquisitions or restructurings; • changes in laws or regulations which adversely affect our industry or us; • changes in accounting standards, policies, guidance, interpretations or principles; • changes in senior management or key personnel; • issuances, exchanges or sales, or expected issuances, exchanges or sales of our capital stock; • changes in our dividend policy; • adverse resolution of new or pending litigation against us; and • changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events.
You may not be able to resell your shares at an attractive price due to a number of factors such as those listed in “Risks Related to Symbotic—Risks Related to Our Business, Operations and Industry” and the following: • our operating and financial performance and prospects; • our quarterly or annual earnings or those of other companies in our industry compared to market expectations; • conditions that impact demand for our products; • future announcements concerning our business, our clients’ businesses or our competitors’ businesses; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • the market’s reaction to our reduced disclosure and other requirements as a result of being an “emerging growth company” under the “JOBS Act”; • the size of our public float; • coverage by or changes in financial estimates by securities analysts or failure to meet their expectations; 34 Table of Contents • market and industry perception of our success, or lack thereof, in pursuing our growth strategy; • strategic actions by us or our competitors, such as acquisitions or restructurings; • changes in laws or regulations which adversely affect our industry or us; • changes in accounting standards, policies, guidance, interpretations or principles; • changes in senior management or key personnel; • issuances, exchanges or sales, or expected issuances, exchanges or sales of our capital stock; • changes in our dividend policy; • adverse resolution of new or pending litigation against us; and • changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events.
Accordingly, we compete with a number of companies that offer solutions to the retail distribution market, including companies that (i) offer point solutions such as Grey Orange, Locus Robotics, Vecna, OPEX, Fetch and Berkshire Grey; (ii) offer end-to-end solutions, most notably Witron, Honeywell, Dematic, Vanderlande, SSI Schaefer and Swisslog, which are composed of a disparate set of point solutions; and (iii) may offer solutions such as Exotec, Ocado and AutoStore that focus exclusively on e-commerce.
Accordingly, we compete with a number of companies that offer solutions to the retail distribution market, including companies that (i) offer point solutions such as Grey Orange, Locus Robotics, Vecna, OPEX, Fetch and Berkshire Grey; (ii) offer end-to-end solutions, most notably Witron, Honeywell, Dematic, Vanderlande, SSI Schaefer and Swisslog, which are composed of a disparate set of point solutions; and (iii) may offer solutions such as Exotec, Ocado and AutoStore that focus exclusively on 24 Table of Contents e-commerce.
Under such scenario we would be required to pay the TRA Holders 85% of such amount, or $1,452.4 million, over a 41-year period. These amounts are estimates and have been prepared for informational purposes only.
Under such scenario we would be required to pay the TRA Holders 85% of such amount, or $4,495.1 million, over a 41-year period. These amounts are estimates and have been prepared for informational purposes only.
We are in the process of procuring such services separately from C&S Wholesale Grocers or entering into agreements that govern the use of shared services with C&S Wholesale Grocers. Among other potential risks, this process may result in increased costs, including insurance costs, for Symbotic.
We are in the process of procuring such services separately from C&S Wholesale Grocers or entering into agreements that govern the use of shared services with C&S Wholesale Grocers. Among other potential risks, this process may result in increased costs for Symbotic.
The Share Reserve will be subject to an annual increase on the first trading day of each calendar year, beginning January 1, 2023 and ending on and including January 1, 2032, by a number of shares equal to the lesser of (i) 5% of the aggregate number of shares of Class A Common Stock outstanding on the last day of the prior calendar year and (ii) such smaller number of shares (which may be zero) as is determined by the compensation committee prior to such calendar year.
The Share Reserve will be subject to an annual increase on the first trading day of each calendar year, beginning January 1, 36 Table of Contents 2023 and ending on and including January 1, 2032, by a number of shares equal to the lesser of (i) 5% of the aggregate number of shares of Class A Common Stock outstanding on the last day of the prior calendar year and (ii) such smaller number of shares (which may be zero) as is determined by the compensation committee prior to such calendar year.
There are no guarantees we will be able to do so in an efficient or timely manner, or at all. Our warehouse automation systems, software, services and products may be affected from time to time by design and manufacturing defects that could adversely affect our business, financial condition and results of operations and result in harm to our reputation.
There are no guarantees we will be able to do so in an efficient or timely manner, or at all. 25 Table of Contents Our warehouse automation systems, software, services and products may be affected from time to time by design and manufacturing defects that could adversely affect our business, financial condition and results of operations and result in harm to our reputation.
Although we monitor our use of open source software to avoid subjecting our platform to unintended conditions, the terms of many open source licenses have not been interpreted by U.S. or foreign courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to provide or distribute 28 Table of Contents our platform.
Although we monitor our use of open source software to avoid subjecting our platform to unintended conditions, the terms of many open source licenses have not been interpreted by U.S. or foreign courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to provide or distribute our platform.
As a result, our business plan could be significantly impacted and we may incur significant liabilities under warranty claims, which could adversely affect our business, prospects and results of operations. We depend upon key employees and other highly qualified personnel, including hardware and software engineers, and will need to hire and train additional personnel.
As a result, our business plan could be significantly 22 Table of Contents impacted and we may incur significant liabilities under warranty claims, which could adversely affect our business, prospects and results of operations. We depend upon key employees and other highly qualified personnel, including hardware and software engineers, and will need to hire and train additional personnel.
Although we take steps to protect the security of our customers’ personal information and other personal information within our control, we may face actual or perceived breaches of security, security incidents or other misuses of this information, and many jurisdictions have enacted laws requiring companies to notify individuals, regulatory authorities and others of security breaches involving certain types of data.
Although we take steps to protect the security of our customers’ personal information and other personal information within our control, we may face actual or perceived breaches of security, security 32 Table of Contents incidents or other misuses of this information, and many jurisdictions have enacted laws requiring companies to notify individuals, regulatory authorities and others of security breaches involving certain types of data.
Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities, which will result in less time being devoted to the management and growth of 38 Table of Contents Symbotic.
Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities, which will result in less time being devoted to the management and growth of Symbotic.
Actions we take to mitigate volatility in manufacturing and operating costs may not be successful and, as a result, our financial condition, cash flows and results of operations could be adversely affected. In our customer agreements, we agreed to undertake certain liability allocations as part of the negotiation process.
Actions we take to mitigate 26 Table of Contents volatility in manufacturing and operating costs may not be successful and, as a result, our financial condition, cash flows and results of operations could be adversely affected. In our customer agreements, we agreed to undertake certain liability allocations as part of the negotiation process.
We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. In addition, our current controls and any new controls that we develop may become inadequate because of poor design, 37 Table of Contents inadequate enforcement and/or changes in our business, including increased complexity resulting from expansion.
We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. In addition, our current controls and any new controls that we develop may become inadequate because of poor design, inadequate enforcement and/or changes in our business, including increased complexity resulting from expansion.
Even in the absence of any security 30 Table of Contents breach, customer concerns about security, privacy or data protection may deter them from using our software, services and products, which could negatively impact our reputation and otherwise adversely affect our business, financial condition and results of operations.
Even in the absence of any security breach, customer concerns about security, privacy or data protection may deter them from using our software, services and products, which could negatively impact our reputation and otherwise adversely affect our business, financial condition and results of operations.
To the extent that we are unable to make payments under the Tax Receivable Agreement for any reason, such payments will accrue interest until paid. Pursuant to the Tax Receivable Agreement, we will be required to make payments to equityholders of New Symbotic Holdings for certain tax benefits we may claim, and those payments may be substantial.
To the extent that we are unable to make payments under the Tax Receivable Agreement for any reason, such payments will accrue interest until paid. Pursuant to the Tax Receivable Agreement, we will be required to make payments to equity holders of New Symbotic Holdings for certain tax benefits we may claim, and those payments may be substantial.
The actual amount of reduction in tax payments and related liabilities that we 42 Table of Contents will recognize will differ based on, among other things, the timing of the exchanges, the price of our shares of Class A Common Stock at the time of the exchange, and the tax rates then in effect.
The actual amount of reduction in tax payments and related liabilities that we will recognize will differ based on, among other things, the timing of the exchanges, the price of our shares of Class A Common Stock at the time of the exchange, and the tax rates then in effect.
All Symbotic systems purchased under our existing contracts with C&S Wholesale Grocers have been delivered, though we have ongoing software license and maintenance obligations under our contracts with C&S through March 2026. Despite our affiliation with C&S Wholesale Grocers, there is no guarantee that it will continue to be a customer beyond the term of its current contracts with us.
All Symbotic systems purchased under our existing contracts with C&S Wholesale Grocers have been delivered, though we have ongoing software license and maintenance obligations under our contracts with C&S through September 2029. Despite our affiliation with C&S Wholesale Grocers, there is no guarantee that it will continue to be a customer beyond the term of its current contracts with us.
In addition, new warehouse automation systems, software, services and products may require increased operational expenses or customer acquisition costs and present new and difficult technological and intellectual 21 Table of Contents property challenges that may subject us to claims or complaints if our customers experience installation issues, service disruptions or failures or other quality issues.
In addition, new warehouse automation systems, software, services and products may require increased operational expenses or customer acquisition costs and present new and difficult technological and intellectual property challenges that may subject us to claims or complaints if our customers experience installation issues, service disruptions or failures or other quality issues.
As a result, we must continually invest resources in product development and successfully incorporate and develop new technology. If we are unable to do so or otherwise provide warehouse automation systems, software, services and products that customers want, then our customers may become dissatisfied and use competitors’ 24 Table of Contents services.
As a result, we must continually invest resources in product development and successfully incorporate and develop new technology. If we are unable to do so or otherwise provide warehouse automation systems, software, services and products that customers want, then our customers may become dissatisfied and use competitors’ services.
Despite our affiliation with C&S Wholesale Grocers, there is no guarantee that it will continue to be a customer beyond the term of its current contracts with us. Our Chairman and Chief Executive Officer, Richard B. Cohen, also serves as the Executive Chairman of C&S Wholesale Grocers. Additionally, Mr.
C&S Wholesale Grocers, an important customer, is an affiliate of Symbotic. Despite our affiliation with C&S Wholesale Grocers, there is no guarantee that it will continue to be a customer beyond the term of its current contracts with us. Our Chairman and Chief Executive Officer, Richard B. Cohen, also serves as the Executive Chairman of C&S Wholesale Grocers. Additionally, Mr.
Our business, financial condition, results of operations or cash flows could be significantly hindered by the occurrence of a natural disaster, terrorist attack or other catastrophic event. We also face risks related to health pandemics or epidemics, including the ongoing COVID-19 pandemic, which could adversely affect our business, financial condition and results of operations.
Our business, financial condition, results of operations or cash flows could be significantly hindered by the occurrence of a natural disaster, terrorist attack or other catastrophic event. We also face risks related to health pandemics or epidemics, such as the COVID-19 pandemic, which could adversely affect our business, financial condition and results of operations.
We can be held liable for the corrupt or other illegal activities of our employees, agents, contractors 40 Table of Contents and other collaborators, even if we do not explicitly authorize or have actual knowledge of such activities.
We can be held liable for the corrupt or other illegal activities of our employees, agents, contractors and other collaborators, even if we do not explicitly authorize or have actual knowledge of such activities.
Any actual or alleged failure by us to comply with our privacy policy or any federal, state or international privacy, data protection or security laws or regulations or other obligations could result in claims and litigation against us, regulatory investigations and other proceedings, legal liability, fines, damages and other costs.
Any actual or alleged failure by us to comply with our privacy policy or any federal, state or international privacy, data protection or security laws or regulations or other obligations could result in claims and litigation against us, regulatory investigations and other 33 Table of Contents proceedings, legal liability, fines, damages and other costs.
Pursuant to such agreement, we have agreed to certain restrictions on our ability to sell or license our products and services to a specified company or its subsidiaries, affiliates or dedicated service providers. Walmart also has certain board observation rights following the Business Combination.
Pursuant to such 20 Table of Contents agreement, we have agreed to certain restrictions on our ability to sell or license our products and services to a specified company or its subsidiaries, affiliates or dedicated service providers. Walmart also has certain board observation rights following the Business Combination.
Cohen, together with certain family members and certain affiliated entities and trusts of Mr. Cohen and his family members, in the aggregate, hold Class V-3 common stock and 91.5% of the voting power of our outstanding common stock and are able to control all matters submitted to our stockholders for approval.
Cohen, together with certain family members and certain affiliated entities and trusts of Mr. Cohen and his family members, in the aggregate, hold Class V-3 common stock and 89.8% of the voting power of our outstanding common stock and are able to control all matters submitted to our stockholders for approval.
For all 25 Table of Contents these reasons, our pursuit of mergers, acquisitions or dispositions of businesses or assets or other strategic transactions could cause our actual results to differ materially from those anticipated.
For all these reasons, our pursuit of mergers, acquisitions or dispositions of businesses or assets or other strategic transactions could cause our actual results to differ materially from those anticipated.
In addition, our Chief Strategy Officer, William Boyd, also serves as Executive Vice President and Chief Legal Officer of C&S Wholesale Grocers and our Chief Human Resource Officer, Miriam Ort, also serves as Chief Human Resources Officer of C&S 39 Table of Contents Wholesale Grocers.
In addition, our Chief Strategy Officer, William Boyd, also serves as Executive Vice President and Chief Legal Officer of C&S Wholesale Grocers and our Chief Human Resource Officer, Miriam Ort, also serves as Chief Human Resources Officer of C&S Wholesale Grocers.
Assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize all tax benefits that are subject to the Tax Receivable Agreement, we expect that the reduction in tax payments for us associated with our purchase of New Symbotic Holdings Common Units since the Closing would aggregate to approximately $131.9 million over a 41-year period.
Assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize all tax benefits that are subject to the Tax Receivable Agreement, we expect that the reduction in tax payments for us associated with our purchase of New Symbotic Holdings Common Units since the Closing would aggregate to approximately $412.2 million over 43 Table of Contents a 41-year period.
Under such scenario we would be required to pay the TRA Holders 85% of such amount, or $112.1 million, over a 41-year period from the Closing Date.
Under such scenario we would be required to pay the TRA Holders 85% of such amount, or $350.3 million, over a 41-year period from the Closing Date.
Affected indices include the Russell 2000 and the S&P 500, S&P MidCap 400 and S&P SmallCap 600, which together make up the S&P Composite 1500.
Affected indices include the Russell 2000 and the S&P 500, S&P MidCap 400 and S&P 40 Table of Contents SmallCap 600, which together make up the S&P Composite 1500.
We are currently in the process of entering into independent arrangements and/or agreements with C&S Wholesale Grocers with respect to these services, including with respect to the allocation of liabilities and obligations attributable to us and to C&S Wholesale Grocers under any continued shared services.
We are currently in the process of entering into independent arrangements and/or agreements with C&S Wholesale Grocers with respect to these services, including with respect to the allocation of liabilities and obligations attributable to us and to C&S Wholesale Grocers under any continued shared services. This process may result in increased costs, including insurance costs, for us.
In addition to our dependence on Walmart, we are also dependent upon sales to C&S Wholesale Grocers, Inc. (“C&S Wholesale Grocers”), with which we are affiliated, Albertsons, Giant Tiger and Target. Net sales to these customers accounted for approximately 6% of our total revenue in the fiscal year ended September 24, 2022.
In addition to our dependence on Walmart, we are also dependent upon sales to Albertsons, AFS, C&S Wholesale Grocers, Inc. (“C&S Wholesale Grocers”), with which we are affiliated, Giant Tiger, GreenBox, Target, and UNFI. Net sales to these customers accounted for approximately 12% of our total revenue in the fiscal year ended September 30, 2023.
Further, assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize all tax benefits that are subject to the Tax Receivable Agreement, we estimate that the reduction in tax payments for us associated with our purchase of New Symbotic Holdings Units would aggregate to approximately $1,708.7 million over 41 years based on a closing share price of $10.54 per share of Class A common stock and assuming all future Exchanges of New Symbotic Holdings Common Units had occurred on September 24, 2022.
Further, assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize all tax benefits that are subject to the Tax Receivable Agreement, we estimate that the reduction in tax payments for us associated with our purchase of New Symbotic Holdings Units would aggregate to approximately $5,228.4 million over 41 years based on a closing share price of $33.43 per share of Class A common stock and assuming all future Exchanges of New Symbotic Holdings Common Units had occurred on September 30, 2023.
If we are held to have breached or failed to fully comply with all the terms and conditions of an open source software license, we could face infringement or other liability which may result in an injunction against providing our offering, or be required to seek costly licenses from third parties to continue providing our offerings on terms that are not economically feasible, to re-engineer our platform, to discontinue or delay the provision of our offerings if re-engineering could not be accomplished on a timely basis or to make generally available, in source code form, our proprietary code, any of which could adversely affect our business, financial condition and results of operations.
If we are held to have breached or failed to fully comply with all the terms and conditions of an open source software license, we could face infringement or other liability which may result in an injunction against providing our offering, or be required to seek costly licenses from third parties to continue providing our offerings on terms that are not economically feasible, to re-engineer our platform, to discontinue or delay the provision of our offerings if re-engineering could not be accomplished on a timely basis or to make generally available, in source code form, our proprietary code, any of which could adversely affect our business, financial condition and results of operations. 30 Table of Contents Our patent applications may not issue or, if issued, may not provide sufficient protection, which may adversely affect our ability to prevent others from commercially exploiting products similar to ours.
We have experienced rapid growth, and we are attempting to continue to grow our business substantially. To this end, we have made, and expect to continue to make, significant investments in our business, including investments in our infrastructure, technology, marketing and sales efforts. These investments include dedicated facilities expansion and increased staffing.
To this end, we have made, and expect to continue to make, significant investments in our business, including investments in our infrastructure, technology, marketing and sales efforts. These investments include dedicated facilities expansion and increased staffing.
Although our agreements with our customers often contain provisions that seek to limit our exposure to such claims, it is possible that these provisions may not be effective or enforceable under the laws of some jurisdictions.
Although our agreements with our customers often contain provisions that seek to limit our exposure to such claims, it is possible that these provisions may not be effective or enforceable under the laws of some jurisdictions. While we seek to insure against these types of claims, our insurance policies may not adequately limit our exposure to such claims.
We believe we will continue to incur operating losses in the near term as we continue to invest significantly in our business to position us for future growth, including expending substantial financial and other resources on: • product development, including investments in our product development team and the development of new products and new functionality for our warehouse automation systems, as well as investments in further optimizing our existing warehouse automation systems and robotics technology, software, products and infrastructure; • our technology infrastructure, including systems architecture, scalability, availability, performance and security; • acquisitions and strategic transactions; • our international operations and anticipated international expansion; and • general administration, including increased legal, compliance and accounting expenses associated with being a public company. 18 Table of Contents These efforts may be costlier than we expect, and our revenue may not grow at a rate to offset these expenses.
We could continue to incur operating losses in the near term as we continue to invest significantly in our business to position us for future growth, including expending substantial financial and other resources on: • product development, including investments in our product development team and the development of new products and new functionality for our warehouse automation systems, as well as investments in further optimizing our existing warehouse automation systems and robotics technology, software, products and infrastructure; • our technology infrastructure, including systems architecture, scalability, availability, performance and security; • acquisitions and strategic transactions; • our international operations and anticipated international expansion; and • general administration, including increased legal, compliance and accounting expenses associated with being a public company.
Upon the expiration or waiver of the lock-ups described above, shares held by certain of our stockholders will be eligible for resale, subject to, in the case of certain stockholders, volume, manner of sale and other limitations under Rule 144, if then available.
Shares held by certain of our stockholders will be eligible for resale, subject to, in the case of certain stockholders, volume, manner of sale and other limitations under Rule 144, if then available.
In addition, pursuant to the A&R Registration Rights Agreement, certain stockholders will have the right, subject to certain conditions, to require us to register the sale of their shares of our common stock under the Securities Act.
In addition, pursuant to the A&R Registration Rights Agreement (as incorporated herein by reference, the “A&R Registration Rights Agreement”), certain stockholders have the right, subject to certain conditions, to require us to register the sale of their shares of our common stock under the Securities Act.
Additionally, due to the ongoing COVID-19 pandemic, certain functional areas of our workforce remain in a remote work environment and such an environment may be outside of our corporate network security protection boundaries, which imposes additional risks to our business, including increased risk of industrial espionage, phishing and other cybersecurity attacks, and unauthorized dissemination of sensitive, proprietary or confidential information.
Additionally, certain functional areas of our workforce work remotely and such a remote work environment may be outside of our corporate network security protection 31 Table of Contents boundaries, which imposes additional risks to our business, including increased risk of industrial espionage, phishing and other cybersecurity attacks, and unauthorized dissemination of sensitive, proprietary or confidential information.
To the extent that one or more customers in this group decide not to implement our warehouse automation systems in their distribution centers or decide to retain manual solutions or adopt single point automated solutions for their distribution centers, our business, financial condition or results of operations may be materially and adversely affected. 19 Table of Contents C&S Wholesale Grocers, an important customer, is an affiliate of Symbotic.
To the extent that one or more customers in this group decide not to implement our warehouse automation systems in their distribution centers or decide to retain manual solutions or adopt single point automated solutions for their distribution centers, our business, financial condition or results of operations may be materially and adversely affected.
In addition, we have an accumulated deficit of $1,286.6 million as of September 24, 2022 and $1,154.9 million as of September 25, 2021 and have incurred recurring net losses since inception, including net losses of $139.1 million and $122.3 million, respectively, for the years ended September 24, 2022 and September 25, 2021.
In addition, we have an accumulated deficit of $1,310.4 million as of September 30, 2023 and $1,286.6 million as of September 24, 2022 and have incurred recurring net losses since inception, including net losses of $207.9 million and $139.1 million, respectively, for the years ended September 30, 2023 and September 24, 2022.
We may receive inquiries from IP owners inquiring whether we have infringed upon or misappropriated or violated 26 Table of Contents their proprietary rights or IP, or otherwise not complied with the terms and conditions such rights may be subject to (including open source software licenses).
We may receive inquiries from IP owners inquiring whether we have infringed upon or misappropriated or violated their proprietary rights or IP, or otherwise not complied with the terms and conditions such rights may be subject to (including open source software licenses). Companies owning IP, including those relating to warehouse automation, may allege infringement, misappropriation or violation of such rights.
By exercising their registration rights and selling a large number of shares, these stockholders could cause the prevailing market price of our Class A Common Stock to decline. Following completion of the Business Combination, the shares covered by registration rights represent approximately 97.5% of our outstanding common stock.
By exercising their registration rights and selling a large number of shares, these stockholders could cause the prevailing market price of our Class A Common Stock to decline. As of August 1, 2023, the shares covered by registration rights represent approximately 83% of our outstanding common stock.
Risks Related to Our Business, Operations and Industry Unless the context otherwise requires, all references in this “Risk Factors—Risks Related to Our Business and Industry” section to “ we,” “ us” and “ our” refer to Symbotic as it currently exists following the consummation of the Business Combination and to Warehouse as it existed prior to the consummation of the Business Combination.
Risks Related to Our Business, Operations and Industry Unless the context otherwise requires, all references in this “Risk Factors—Risks Related to Our Business and Industry” section to “ we,” “ us” and “ our” refer to Symbotic as it currently exists following the consummation of the Business Combination and to Warehouse as it existed prior to the consummation of the Business Combination. 19 Table of Contents We are an early-stage company with a limited operating history and a history of losses.
If warehouse automation technology does not continue to gain broader market acceptance as an alternative to conventional manual operations, or if the marketplace adopts warehouse automation technologies that differ from our technologies, we may not be able to increase or sustain the level of sales of our systems or retain existing customers or attract new customers, and our operating results would be adversely affected as a result.
If warehouse automation technology does not continue to gain broader market acceptance as an alternative to conventional manual operations, or if the marketplace adopts warehouse automation technologies that differ from our technologies, we may not be able to increase or sustain the level of sales of our systems or retain existing customers or attract new customers, and our operating results would be adversely affected as a result. 27 Table of Contents Laws and regulations governing the robotics and warehouse automation industries are still developing and may restrict our business or increase the costs of our systems, making our systems less competitive or adversely affecting our revenue growth.
We are an early-stage company with a limited operating history and a history of losses. We have not been profitable historically and may not achieve or maintain profitability in the near term or at all, and it is difficult to evaluate our future prospects and the risks and challenges we may encounter.
We have not been profitable historically and may not achieve or maintain profitability in the near term or at all, and it is difficult to evaluate our future prospects and the risks and challenges we may encounter.
We are subject to U.S. and foreign anti-corruption and anti-money laundering laws and regulations and could face criminal liability and other serious consequences for violations, which could adversely affect our business, financial condition and results of operations. We are subject to the U.S.
To the extent that such events disrupt our business or the business of our current or prospective customers, or adversely impact our reputation, such events could adversely affect our business, financial condition, results of operations and cash flows. 41 Table of Contents We are subject to U.S. and foreign anti-corruption and anti-money laundering laws and regulations and could face criminal liability and other serious consequences for violations, which could adversely affect our business, financial condition and results of operations.
Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. A failure of our controls and procedures to detect error or fraud could seriously harm our business and results of operations.
Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Those laws, regulations and rules and their interpretation and application may also change from time to time and those changes could 36 Table of Contents materially and adversely affect our business, investments and results of operations.
Those laws, regulations and rules and their interpretation and application may also change from time to time and those changes could materially and adversely affect our business, investments and results of operations. In addition, a failure to comply with applicable laws, regulations and rules, as interpreted and applied, could materially and adversely affect our business and results of operations.
Walmart, our largest customer, accounted for approximately 94% of our total revenue in the fiscal year ended September 24, 2022 and for a substantial majority of our $11.1 billion Backlog (as defined herein) as of September 24, 2022.
Walmart, our largest customer, accounted for approximately 88% of our total revenue in the fiscal year ended September 30, 2023 and for a significant portion of our $23.3 billion backlog (as defined herein) as of September 30, 2023.
Our operating results and financial condition may fluctuate from period to period, which could make our future operating results difficult to predict or cause our operating results to fall below analysts’ and investors’ expectations.
Additionally, the terms of such potential transactions may expose us to ongoing obligations and liabilities. 21 Table of Contents Our operating results and financial condition may fluctuate from period to period, which could make our future operating results difficult to predict or cause our operating results to fall below analysts’ and investors’ expectations.
Our inability or decision not to pay dividends, particularly when others in our industry have elected to do so, could also adversely affect the market price of our common stock. 33 Table of Contents If securities analysts do not publish research or reports about us, or if they issue unfavorable commentary about us or our industry or downgrade our common stock, the price of our common stock could decline.
Our inability or decision not to pay dividends, particularly when others in our industry have elected to do so, could also adversely affect the market price of our common stock.
This process may result in increased costs, including 22 Table of Contents insurance costs, for us. In addition, if these arrangements terminate or expire and we do not enter into replacement agreements, we could suffer operational difficulties and/or significant losses.
In addition, if these arrangements terminate or expire and we do not enter into replacement agreements, we could suffer operational difficulties and/or significant losses.
Any provision of the Charter, the Bylaws or Delaware law that has the effect of delaying, preventing or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.
Any provision of the Charter, the Bylaws or Delaware law that has the effect of delaying, preventing or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock. 37 Table of Contents The Charter provides that the courts located in the State of Delaware will be the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
Similarly, if any of our potential competitors implement new technologies before we are able to implement ours, those competitors may be able to provide more effective products, possibly at lower prices.
Similarly, if any of our potential competitors implement new technologies before we are able to implement ours, those competitors may be able to provide more effective products, possibly at lower prices. Any delay or failure in the introduction of new or enhanced solutions could harm our business, financial condition, cash flows and results of operations.
Information that may have been subject to unauthorized access includes names, addresses and Social Security Numbers of employees. We may experience additional cybersecurity incidents and security breaches in the future.
In the past, an unauthorized actor gained access to our IT system, which resulted in certain information being accessed and exfiltrated, including human resources and employee data. Information that may have been subject to unauthorized access includes names, addresses and Social Security Numbers of employees. We may experience additional cybersecurity incidents and security breaches in the future.
We will incur increased costs as a result of operating as a public company, and our management will devote substantial time to new compliance initiatives. As we became a public company following the Business Combination, we will incur significant legal, compliance, accounting and other expenses that we did not incur as a private company.
We became a public company following the Business Combination, and consequently we have incurred and we will continue to incur significant legal, compliance, accounting and other expenses that we did not incur as a private company.
While we seek to insure against these types of claims, our insurance policies may not adequately limit our 31 Table of Contents exposure to such claims. These claims, even if unsuccessful, could be costly and time consuming to defend and could harm our business, financial condition, results of operations, and cash flows.
These claims, even if unsuccessful, could be costly and time consuming to defend and could harm our business, financial condition, results of operations, and cash flows.
Our issuance of additional shares of common stock or convertible securities could make it difficult for another company to acquire us, may dilute your ownership of us and could adversely affect our stock price.
Moreover, if one or more of the analysts who cover us downgrades our common stock, or if our reporting results do not meet their expectations, the market price of our common stock could decline. 35 Table of Contents Our issuance of additional shares of common stock or convertible securities could make it difficult for another company to acquire us, may dilute your ownership of us and could adversely affect our stock price.
Other Risks Prior to the Business Combination, we had not been required to document and test our internal controls over financial reporting, management had not been required to certify the effectiveness of our internal controls, and our auditors had not been required to opine on the effectiveness of our internal controls over financial reporting.
The failure to receive research coverage or support in the market for the Company’s Class A Common Stock could have an adverse effect on the Company’s ability to develop a liquid market for the Company’s Class A Common Stock. 38 Table of Contents Other Risks Prior to the Business Combination, we had not been required to document and test our internal controls over financial reporting, management had not been required to certify the effectiveness of our internal controls, and our auditors had not been required to opine on the effectiveness of our internal controls over financial reporting.
In addition, the structuring of future transactions may take into consideration these tax or other considerations even where no similar benefit would accrue to the holders of shares of Class A Common Stock of Symbotic.
In addition, the structuring of future transactions may take into consideration these tax or other considerations even where no similar benefit would accrue to the holders of shares of Class A Common Stock of Symbotic. 42 Table of Contents Our only principal asset is our interest in New Symbotic Holdings, and accordingly, we will depend on distributions from New Symbotic Holdings to pay taxes, make payments under the Tax Receivable Agreement and cover our corporate and other overhead expenses.
Due to the foregoing factors, and the other risks discussed in this Annual Report on Form 10-K, you should not rely on quarter-over-quarter and year-over-year comparisons of our operating results as an indicator of our future performance. 20 Table of Contents Complex software and technology systems will need to be developed, both in-house and in coordination with vendors and suppliers, for us to successfully produce and integrate our warehouse automation systems with our customers’ existing warehouses, and there can be no assurance that such systems will be successfully developed.
Due to the foregoing factors, and the other risks discussed in this Annual Report on Form 10-K, you should not rely on quarter-over-quarter and year-over-year comparisons of our operating results as an indicator of our future performance.
Our IT and OT systems could be compromised by malware (including ransomware), cyber-attacks and other events, 29 Table of Contents or as a result of error or system failure.
Our IT and OT systems could be compromised by malware (including ransomware), cyber-attacks and other events, or as a result of error or system failure. Hardware and software that we procure or rely upon from third parties may also contain defects or vulnerabilities in manufacture or design that could expose our systems to a risk of compromise.
Any delay or failure in the introduction of new or enhanced solutions could harm our business, financial condition, cash flows and results of operations. 23 Table of Contents Failure to manage our growth effectively could make it difficult to execute our business strategy and could adversely affect our business, financial condition and results of operations.
Failure to manage our growth effectively could make it difficult to execute our business strategy and could adversely affect our business, financial condition and results of operations. We have experienced rapid growth, and we are attempting to continue to grow our business substantially.
As of December 5, 2022, there are (i) 58,497,230 shares of Class A Common Stock issued and outstanding, (ii) 78,476,494 shares of Class V-1 Common Stock issued and outstanding, and (iii) 416,933,025 shares of Class V-3 Common Stock issued and outstanding.
As of December 5, 2023, there were (i) 83,718,573 shares of Class A Common Stock issued and outstanding, (ii) 65,991,247 shares of Class V-1 Common Stock issued and outstanding, and (iii) 407,528,941 shares of Class V-3 Common Stock issued and outstanding.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLocation ~Size (sq. ft.) Lease Expiration Purpose Wilmington, MA (Main) 66,000 May 2025 Headquarters, R&D & Admin Wilmington, MA 125,000 December 2025 Innovation Center, Manufacturing & Testing Montreal, QC 48,000 June 2026 Canadian HQ & R&D Montreal, QC 41,000 June 2026 Manufacturing & Testing Douglas, GA 26,000 December 2022 Inventory Management
Biggest changeLocation ~Size (sq. ft.) Lease Expiration Purpose Wilmington, MA (Main) 66,000 May 2025 Headquarters, R&D & Admin Wilmington, MA 125,000 December 2030 Innovation Center & Testing Montreal, QC 48,000 June 2026 Canadian HQ & R&D Montreal, QC 41,000 June 2026 Testing 45 Table of Contents

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe intend to recognize provisions for claims or pending litigation when we determine that an unfavorable outcome is probable, and the amount of loss can be reasonably estimated. Due to the inherent uncertain nature of litigation, the ultimate outcome or actual cost of settlement may materially vary from estimates.
Biggest changeWe do not currently expect the results of any of these matters to have a material effect on our business, results of operations, financial condition or cash flows. We intend to recognize provisions for claims or pending litigation when we determine that an unfavorable outcome is probable, and the amount of loss can be reasonably estimated.
See “Risk Factors—Other Risks—Any future litigation against us could be costly and time-consuming to defend.” Item 4. Mine Safety Disclosures Not applicable. PART II
Due to the inherent uncertain nature of litigation, the ultimate outcome or actual cost of settlement may materially vary from estimates. See “Risk Factors—Other Risks—Any future litigation against us could be costly and time-consuming to defend.” Item 4. Mine Safety Disclosures Not applicable. PART II
Item 3. Legal Proceedings We may be subject from time to time to various claims, lawsuits and other legal and administrative proceedings arising in the ordinary course of business.
Item 3. Legal Proceedings We may be subject from time to time to various claims, lawsuits and other legal and administrative proceedings arising in the ordinary course of business. Some of these claims, lawsuits and other proceedings may involve highly complex issues that are subject to substantial uncertainties, and could result in damages, fines, penalties, non-monetary sanctions or relief.
Removed
Some of these claims, lawsuits and other proceedings may involve highly complex issues that are subject to substantial uncertainties, and could result in damages, fines, penalties, non-monetary sanctions or relief. 44 Table of Contents We do not currently expect the results of any of these matters to have a material effect on our business, results of operations, financial condition or cash flows.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePerformance Graph We are a “smaller reporting company,” as defined by Item 10(f)(1) of Regulation S-K, and therefore are not required to provide the information required by paragraph (e) of Item 201 of Regulation S-K. Recent Sales of Unregistered Securities None, other than as set forth in our Current Report on Form 10-K filed on June 13, 2022.
Biggest changePerformance Graph We were a “smaller reporting company,” as defined by Item 10(f)(1) of Regulation S-K, for the fiscal year ended September 30, 2023, and therefore are not required to provide the information required by paragraph (e) of Item 201 of Regulation S-K.
Issuer Purchases of Equity Securities There were no purchases of equity securities by the issuer or affiliated purchasers, as defined in Rule 10b-18(a)(3) the Securities Exchange Act of 1934, during the quarter ended September 24, 2022.
Issuer Purchases of Equity Securities There were no purchases of equity securities by the issuer or affiliated purchasers, as defined in Rule 10b-18(a)(3) the Securities Exchange Act of 1934, during the quarter ended September 30, 2023.
Holders of our Common Stock As of December 5, 2022, there were approximately 56 holders of record of our Class A Common Stock, approximately 48 holders of our Class V-1 Common Stock and approximately 10 holders of record of our Class V-3 Common Stock.
Holders of our Common Stock As of December 5, 2023, there were approximately 23 holders of record of our Class A Common Stock, approximately 40 holders of our Class V-1 Common Stock and approximately 11 holders of record of our Class V-3 Common Stock.
Securities Authorized for Issuance Under Equity Compensation Plans The information required by Item 5 of Form 10-K regarding equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report. Item 6. [Reserved] Not applicable.
Recent Sales of Unregistered Securities None, other than as set forth in our Current Report on Form 8-K filed on July 24, 2023. Securities Authorized for Issuance Under Equity Compensation Plans The information required by Item 5 of Form 10-K regarding equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table shows net cash and cash equivalents provided by (used in) operating activities, net cash and cash equivalents used in investing activities, and net cash and cash equivalents provided by financing activities during the periods presented: Year Ended September 24, 2022 September 25, 2021 September 26, 2020 Net cash provided by (used in): Operating activities $ (148,247) $ 109,567 $ (124,307) Investing activities (17,950) (12,168) (5,059) Financing activities 362,448 — 100,000 Operating Activities Our net cash and cash equivalents provided by (used in) operating activities consists of net loss adjusted for certain non-cash items, including depreciation and amortization, foreign currency losses, losses on abandonment of assets, and deferred taxes, net, as well as changes in operating assets and liabilities.
Biggest changeThe following table reconciles GAAP gross profit to Adjusted gross profit and gross profit margin to Adjusted gross profit margin during the periods presented (dollars in thousands): Year Ended September 30, 2023 September 24, 2022 September 25, 2021 Gross profit $ 189,739 $ 99,647 $ 10,447 Depreciation 639 353 340 Stock-based compensation 6,212 — — Restructuring charges 19,766 — — Adjusted gross profit $ 216,356 $ 100,000 $ 10,787 Gross profit margin 16.1 % 16.8 % 4.1 % Adjusted gross profit margin 18.4 % 16.9 % 4.3 % Liquidity and Capital Resources As of September 30, 2023, our principal sources of liquidity were net proceeds received related to the Business Combination and cash received from customers upon the inception of contracts to install customer Systems. 54 Table of Contents The following table shows net cash and cash equivalents provided by (used in) operating activities, net cash and cash equivalents used in investing activities, and net cash and cash equivalents provided by financing activities during the periods presented: Year Ended September 30, 2023 September 24, 2022 (in thousands) Net cash provided by (used in): Operating activities $ 230,794 $ (148,247) Investing activities $ (299,464) $ (17,950) Financing activities $ (24,101) $ 362,448 Operating Activities Our net cash and cash equivalents provided by (used in) operating activities consists of net loss adjusted for certain non-cash items, including depreciation and amortization, foreign currency losses, losses on abandonment or sales of assets, and stock-based compensation, as well as changes in operating assets and liabilities.
The non-GAAP adjustments, and our basis for excluding them from our non-GAAP financial measure, are outlined below: • Unit and Stock-based compensation – Although unit and stock-based compensation is an important aspect of the compensation paid to our employees, the grant date fair value varies based on the derived stock price at the time of grant, varying valuation methodologies, subjective assumptions, and the variety of award types.
The non-GAAP adjustments, and our basis for excluding them from our non-GAAP financial measure, are outlined below: • Stock-based compensation – Although stock-based compensation is an important aspect of the compensation paid to our employees, the grant date fair value varies based on the derived stock price at the time of grant, varying valuation methodologies, subjective assumptions, and the variety of award types.
The third-party valuations of the Company’s common units were prepared in accordance with the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company 58 Table of Contents Equity Securities Issued as Compensation (the “Practice Guide”), which prescribes several valuation approaches for determining the value of an enterprise, such as the cost, market, and income approaches, and various methodologies for allocating the value of an enterprise to its capital structure and specifically the common stock.
The third-party valuations of the Company’s common units were prepared in accordance with the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation (the “Practice Guide”), which prescribes several valuation approaches for determining the value of an enterprise, such as the cost, market, and income approaches, and various methodologies for allocating the value of an enterprise to its capital structure and specifically the common stock.
Prior to the close of the Business Combination, our financial reporting predecessor, Legacy Warehouse was treated as a pass-through entity for tax purposes and no provision, except for certain foreign subsidiaries which are taxed in their respective foreign jurisdictions, was made in the consolidated financial statements for income taxes.
Prior to the close of the Business Combination, our financial reporting predecessor, Legacy Warehouse was treated as a pass-through entity for tax purposes and no provision, except for certain foreign subsidiaries which are taxed in their respective foreign jurisdictions, was made in 48 Table of Contents the consolidated financial statements for income taxes.
As part of this process, we review information including, but not limited to, any outstanding key contract matters, progress towards 57 Table of Contents completion and the related program schedule, identified risks and opportunities and the related changes in estimates of revenue and costs.
As part of this process, we review information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities and the related changes in estimates of revenue and costs.
The modular hardware and embedded software are each not capable of being distinct because our customers cannot benefit from the hardware or software on their own. Accordingly, they are treated as a single performance obligation.
The modular hardware and embedded software are each not capable of being distinct because our customers cannot benefit from 47 Table of Contents the hardware or software on their own. Accordingly, they are treated as a single performance obligation.
As we further discuss in Note 2, Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K, for contracts with customers entered into during fiscal year 2022 and 2021, revenue from the sales of our Systems is recognized over time as the asset created by our performance does not have alternative use to us and an enforceable right to payment for performance completed to date is present.
As we further discuss in Note 2, Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K, for the majority of contracts with customers entered into, revenue from the sales of our Systems is recognized over time as the asset created by our performance does not have alternative use to us and an enforceable right to payment for performance completed to date is present.
The Class A Units were converted into Common Stock using an exchange ratio of 61.28 per share, the Class B Units were converted into Common Stock using an exchange ratio of 47,508,300.00 per share, the Class B-1 Units were converted into Common Stock using an exchange ratio of 24,041,300.00 per share, and the Class C Units were converted into Common Stock using an exchange ratio of 58.15 per share.
The Class A Units were converted into Common Stock using an exchange ratio of 61.28 per share, the Class B Units were converted into Common Stock using an exchange ratio of 47,508,300.00 per share, the Class B-1 Units were converted into Common Stock using an exchange ratio of 24,041,300.00 per share, and the Class C Units were converted into Common Stock using an exchange ratio of 58.15 57 Table of Contents per share.
This makes the comparison of our current financial results to previous and future periods difficult to interpret; therefore, we believe it is useful to exclude unit and stock-based compensation from our non-GAAP financial measures in order to highlight the performance of our business and to be consistent with the way many investors evaluate our performance and compare our operating results to peer companies. 54 Table of Contents • Business Combination transaction expenses – Business Combination transaction expenses represents the expenses incurred solely related to the Business Combination, which we completed on June 7, 2022.
This makes the comparison of our current financial results to previous and future periods difficult to interpret; therefore, we believe it is useful to exclude stock-based compensation from our non-GAAP financial measures in order to highlight the performance of our business and to be consistent with the way many investors evaluate our performance and compare our operating results to peer companies. • Business Combination transaction expenses – Business Combination transaction expenses represent the expenses incurred solely related to the Business Combination, which we completed on June 7, 2022.
Under both scenarios, the enterprise value was determined using a combination of the income approach, specifically a discounted cash flow analysis, and the market approach, specifically the similar transactions method and public company market multiple method.
Under both scenarios, the enterprise value was 58 Table of Contents determined using a combination of the income approach, specifically a discounted cash flow analysis, and the market approach, specifically the similar transactions method and public company market multiple method.
The non-GAAP financial measure does not replace the presentation of our GAAP financial measures and should only be used as a supplement to, not as a substitute for, our financial results presented in accordance with GAAP.
The non-GAAP financial measures do not replace the presentation of our GAAP financial measures and should only be used as a supplement to, not as a substitute for, our financial results presented in accordance with GAAP.
We also believe that this non-GAAP financial measure enables investors to evaluate our operating results and future prospects in the same manner as we do. This non-GAAP financial measure may exclude expenses and gains that may be unusual in nature, infrequent, or not reflective of our ongoing operating results.
We also believe that these non-GAAP financial measures enable investors to evaluate our operating results and future prospects in the same manner as we do. These non-GAAP financial measures may exclude expenses and gains that may be unusual in nature, infrequent, or not reflective of our ongoing operating results.
Based on our present business plan, we expect our current cash and cash equivalents and our forecasted cash flows from operations to be sufficient to meet our foreseeable cash needs for at least the next 12 months.
Based on our present business plan, we expect our current cash and cash equivalents, unrestricted marketable securities, working capital, and our forecasted cash flows from operations to be sufficient to meet our foreseeable cash needs for at least the next 12 months.
Investing Activities Our investing activities have consisted primarily of property and equipment purchases. Net cash and cash equivalents used in investing activities during the year ended September 24, 2022 consisted of $18.0 million of purchased property and equipment.
Net cash and cash equivalents used in investing activities during the year ended September 24, 2022 consisted of $18.0 million of purchased property and equipment.
We recognize compensation expense over the requisite service period for awards expected to vest. We account for forfeitures as they occur, rather than applying an estimated forfeiture rate. The graded-vesting method of expense recognition is applied to all awards with service-only conditions. Certain RSUs involve stock to be issued upon the achievement of certain performance conditions.
We account for forfeitures as they occur, rather than applying an estimated forfeiture rate. The graded-vesting method of expense recognition is applied to all awards with service-only conditions. Certain RSUs involve stock to be issued upon the achievement of certain performance conditions.
We believe that this non-GAAP financial measure reflects our ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business, as it facilitates comparing financial results across accounting periods and to those of peer companies.
We believe that these non-GAAP financial measures reflect our ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business, as it facilitates comparing financial results across accounting periods and to those of peer companies.
We use this non-GAAP financial measure, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes, to measure executive compensation, and to evaluate our financial performance. This non-GAAP financial measure is Adjusted EBITDA, as discussed below.
We use these non-GAAP financial measures, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes, to measure executive compensation, and to evaluate our financial performance. These non-GAAP financial measures are Adjusted EBITDA, Adjusted gross profit, and Adjusted gross profit margin, as discussed below.
We do this by developing, commercializing, and deploying innovative, end-to-end technology solutions that dramatically improve supply chain operations. We currently automate the processing of pallets and cases in large warehouses or distribution centers for some of the largest retail companies in the world.
Company Overview At Symbotic, our vision is to make the supply chain work better for everyone. We do this by developing, commercializing, and deploying innovative, end-to-end technology solutions that dramatically improve supply chain operations. We currently automate the processing of pallets and cases in large warehouses or distribution centers for some of the largest retail companies in the world.
Results of Operations for the Years Ended September 24, 2022, September 25, 2021, and September 26, 2020 The following tables set forth certain consolidated financial data in dollar amounts and as a percentage of total revenue.
Results of Operations for the Years Ended September 30, 2023 and September 24, 2022 The following tables set forth certain consolidated financial data in U.S. dollar amounts and as a percentage of total revenue.
We define Adjusted EBITDA as GAAP net loss excluding the following items: interest income; income taxes; depreciation and amortization of tangible and intangible assets; unit and stock-based compensation; Business Combination transaction expenses; and other non-recurring items that may arise from time to time.
We define Adjusted EBITDA as GAAP net loss excluding the following items: interest income; income taxes; depreciation and amortization of tangible and intangible assets; stock-based compensation; Business Combination transaction expenses; Joint venture formation fees; CEO transition charges; Restructuring; and other infrequent items that may arise from time to time.
This may result in an operating cash flow source or use for the period, depending on the timing of payments received as compared to the fulfillment of the system installation performance obligation. Net cash used in operating activities was $148.2 million during the year ended September 24, 2022.
This may result in an operating cash flow source or use for the period, depending on the timing of payments received as compared to the fulfillment of the system installation performance obligation. Net cash provided by operating activities was $230.8 million for the year ended September 30, 2023.
Net cash used in operating activities was due to our net loss of $139.1 million adjusted for non-cash items of $37.0 million, primarily consisting of $26.9 million stock-based compensation expense, $6.0 million depreciation and amortization and $4.1 million of losses on abandonment of assets, offset by use of cash for operating assets and liabilities of $46.1 million due to the timing of cash payments to vendors and cash receipts from customers. 55 Table of Contents Net cash provided by operating activities was $109.6 million during the year ended September 25, 2021.
Net cash used in operating activities was due to our net loss of $139.1 million adjusted for non-cash items of $38.0 million, primarily consisting of $26.9 million stock-based compensation expense, $6.0 million depreciation and amortization and $4.1 million of losses on disposal of assets, offset by use of cash for operating assets and liabilities of $47.1 million due to the timing of cash payments to vendors and cash receipts from customers.
These estimates may change as new events occur or additional information is obtained, and we may periodically be faced with uncertainties, the outcomes of which are not within our control and may not be known for a prolonged period of time. Because the use of estimates is inherent in the financial reporting process, actual results could differ from those estimates.
These estimates may change as new events occur or additional information is obtained, and we may periodically be faced with uncertainties, the outcomes of which are not within our control and may not be known for a prolonged period of time.
This is presented within the consolidated statements of changes in redeemable preferred and common units and equity (deficit). We typically issue restricted stock units (“RSUs”) as stock-based compensation. For RSUs, the fair value is the closing market price of the stock on the date immediately preceding the grant.
This is presented within the consolidated statements of changes in redeemable preferred and common units and equity (deficit). We typically issue restricted stock units (“RSUs”) as stock-based compensation. For RSUs, the fair value is the closing stock price on the grant date. We recognize compensation expense over the requisite service period for awards expected to vest.
We exclude Business Combination transaction expenses from our non-GAAP financial measures to provide a useful comparison of our operating results to prior periods and to our peer companies because such amounts vary significantly based on the magnitude of the Business Combination transaction and do not reflect our core operations.
We exclude Business Combination transaction expenses from our non-GAAP financial measures to provide a useful comparison of our operating results to prior periods and to peer companies because such amounts vary significantly based on the magnitude of the Business Combination transaction and do not reflect our core operations. • Joint venture formation fees – Joint venture formation fees represent the charges incurred associated with the formation of GreenBox, which was established on July 21, 2023.
See “Risk Factors” elsewhere in this Annual Report on Form 10-K for a discussion of certain risks associated with our business. The following discussion contains forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts.
See “Risk Factors” elsewhere in this Annual Report on Form 10-K for a discussion of certain risks associated with our business. The following discussion contains forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events.
The decrease in software maintenance and support gross profit is attributable to an increased cost for the year ended September 24, 2022, associated with an increase in headcount within our technical support team in order to appropriately support our growing business.
The decrease in software maintenance and support gross profit is due to an increased cost for the year ended September 30, 2023 associated with an increase in headcount within our technical support team to appropriately support the expected rapid growth of our business.
The warrants issued by us are accounted for as equity instruments due to our ability to settle the 59 Table of Contents warrants through the issuance of units and the absence of terms which would require liability classification, including the rights of the grantee to require cash settlement.
The warrants issued by us are accounted for as equity instruments due to our ability to settle the warrants through the issuance of units and the absence of terms which would require liability classification, including the rights of the grantee to require cash settlement. We classify these equity instruments within additional paid-in capital on the consolidated balance sheets.
In order to calculate warrant charges, we used the Black-Scholes pricing model, which required key inputs including volatility and risk-free interest rate and certain unobservable inputs for which there is little or no market data, requiring us to develop our own assumptions. We estimated the fair value of unvested warrants, considered to be probable of vesting, at the time.
In order to calculate warrant charges, we utilized both the Monte Carlo simulation model and the Black-Scholes pricing model, which required key inputs including volatility and risk-free interest rate and certain unobservable inputs for which there is little or no market data, requiring us to develop our own assumptions.
Research and Development Expenses Year Ended Change September 24, 2022 September 25, 2021 Amount % (dollars in thousands) Research and development $ 124,141 $ 73,386 $ 50,755 69 % Percentage of total revenue 21 % 29 % The increase in research and development expenses for the year ended September 24, 2022 compared to the year ended September 25, 2021 was due to the following: Change (in thousands) Employee-related costs $ 35,060 Prototype-related costs, allocated overhead expenses, and other 15,695 $ 50,755 Employee-related costs increased as a result of our headcount growth to our engineering team through full-time and contracted employees as we continue to grow our software and hardware engineering organizations to support the development of key projects such as next generation autonomous EV robots as well as continue to expand our A.I. and analytics capabilities.
Research and Development Expenses Year Ended Change September 30, 2023 September 24, 2022 Amount % (dollars in thousands) Research and development $ 195,042 $ 124,141 $ 70,901 57 % Percentage of total revenue 17 % 21 % The increase in research and development expenses for the year ended September 30, 2023 compared to the year ended September 24, 2022 was due to the following: Change (in thousands) Employee-related costs $ 79,734 Prototype-related costs, allocated overhead expenses, and other (8,833) $ 70,901 Employee-related costs increased as a result of our headcount growth to our engineering team through full-time and contracted employees as we continue to grow our software and hardware engineering organizations to support the development of key projects such as next generation autonomous electric vehicle robots, and also to support the continued expansion of our A.I. and analytics capabilities.
Our cash requirements for the year ended September 24, 2022 were primarily related to capital expenditures and inventory purchases in order to deliver to our customers our warehouse automation systems in an orderly manner in line with our installation timeline as well as expenses related to our Business Combination.
Our cash requirements for the year ended September 30, 2023 were primarily related to capital expenditures, inventory purchases in order to deliver to our customers our warehouse automation systems in an orderly manner in line with our installation timeline, and purchases of marketable securities in order to diversify the composition of our cash balance.
For customer contracts that contain more than one performance obligation, we allocate the total transaction consideration to each performance obligation based on the relative stand-alone selling price of each performance obligation within the contract.
Although most of our sales agreements contain standard terms and conditions, certain agreements contain multiple performance obligations or non-standard terms and conditions. For customer contracts that contain more than one performance obligation, we allocate the total transaction consideration to each performance obligation based on the relative stand-alone selling price of each performance obligation within the contract.
The following table summarizes our current and long-term material cash requirements as of September 24, 2022: Payments due in: Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years (in thousands) Operating lease obligations $ 7,230 $ 2,301 $ 4,372 $ 557 $ — Vendor commitments 756,953 725,866 31,087 — — Total $ 764,183 $ 728,167 $ 35,459 $ 557 $ — Critical Accounting Policies and Estimates Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America.
The following table summarizes our current and long-term material cash requirements as of September 30, 2023 for our vendor commitments: Payments due in: Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years (in thousands) Vendor commitments $ 1,159,595 $ 1,137,100 $ 22,261 $ 234 $ — Critical Accounting Policies and Estimates Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America.
Our foreseeable cash needs, in addition to our recurring operating expenses, include our expected capital expenditures to support expansion of our infrastructure and workforce, leases for office space, and minimum contractual obligations. 56 Table of Contents Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced product and service offerings, and the cost of any future acquisitions of technology or businesses.
Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced product and service offerings, and the cost of any future acquisitions of technology or businesses.
Net cash used in operating activities was $124.3 million during the year ended September 26, 2020.
Net cash used in operating activities was $148.2 million during the year ended September 24, 2022.
Systems include the delivery of hardware and an embedded software component, sold as either a perpetual or term-based on- 46 Table of Contents premise license, that automate our customers’ depalletizing, storage, selection, and palletization warehousing processes.
We have identified the following distinct performance obligations in our contracts with customers: Systems : We design, assemble, and install modular hardware systems and perform configuration of embedded software. Systems include the delivery of hardware and an embedded software component, sold as either a perpetual or term-based on-premise license, that automate our customers’ depalletizing, storage, selection, and palletization warehousing processes.
We enter into contracts with customers that can include various combinations of services to design and install the Systems. These services are generally distinct and accounted for as separate performance obligations. As a result, each customer contract may contain multiple performance obligations.
The Systems have both a hardware component and an embedded software component that enables the systems to be programmed to operate within specific customer environments. We enter into contracts with customers that can include various combinations of services to design and install the Systems. These services are generally distinct and accounted for as separate performance obligations.
A description of our revenue recognition policies is included in the Note 2, Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K. Although most of our sales agreements contain standard terms and conditions, certain agreements contain multiple performance obligations or non-standard terms and conditions.
Revenue Recognition We generate revenue from the sale of products and services. A description of our revenue recognition policies is included in the Note 2, Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
We classify these equity instruments within additional paid-in capital on the consolidated balance sheets. Warrants to purchase units accounted for as equity instruments represent the warrants issued to Walmart as discussed in Note 17, Stock -Based Compensation and Warrant Units .
Warrants to purchase units accounted for as equity instruments represent the warrants issued to Walmart and Sunlight as discussed in Note 19, Stock -Based Compensation and Warrant Units .
Recently Adopted Accounting Pronouncements See Note 2 to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a description of recently adopted accounting standards.
Off-Balance Sheet Arrangements: As of September 30, 2023, we had no off-balance sheet arrangements as defined in Instruction 8 to Item 303(b) of Regulation S-K. Recently Adopted Accounting Pronouncements See Note 2 to the accompanying consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a description of recently adopted accounting standards.
We incurred incremental costs related to building both shorter-term as well as permanent processes and infrastructure to ramp partnerships and operations. Allocated overhead and other expenses increased due to an increase in hardware and software IT related costs attributable to the increase in employee headcount year over year as well as an increase attributable to growing our cybersecurity infrastructure.
Allocated overhead and other expenses increased due to an increase in hardware and software information technology related costs attributable to the increase in employee headcount year over year as well as an increase attributable to growth of our cybersecurity infrastructure.
We believe that the assumptions and estimates associated with the following critical accounting policies involve significant judgment and thus have the most significant potential impact on our Consolidated Financial Statements. Revenue Recognition We generate revenue from the sale of products and services.
Because the use of estimates is inherent in the financial reporting process, actual results could differ from those estimates. 56 Table of Contents We believe that the assumptions and estimates associated with the following critical accounting policies involve significant judgment and thus have the most significant potential impact on our Consolidated Financial Statements.
Year Ended September 24, 2022 Compared to the Year Ended September 25, 2021 Revenue Year Ended Change September 24, 2022 September 25, 2021 Amount % (dollars in thousands) Systems $ 567,993 $ 227,563 $ 340,430 150 % Software maintenance and support 3,735 4,009 (274) (7) Operation services 21,584 20,341 1,243 6 Total revenue $ 593,312 $ 251,913 $ 341,399 136 % Systems revenue increased during the year ended September 24, 2022 as compared to the year ended September 25, 2021 due to there being seventeen system deployments currently in progress as of September 24, 2022 as compared to five deployments in progress as of September 25, 2021 as we continue to grow our business.
Year Ended September 30, 2023 Compared to the Year Ended September 24, 2022 Revenue Year Ended Change September 30, 2023 September 24, 2022 Amount % (dollars in thousands) Systems $ 1,138,059 $ 567,993 $ 570,066 100 % Software maintenance and support 6,601 3,735 2,866 77 Operation services 32,231 21,584 10,647 49 Total revenue $ 1,176,891 $ 593,312 $ 583,579 98 % Systems revenue increased during the year ended September 30, 2023 as compared to the year ended September 24, 2022 due to there being thirty-five system deployments currently in progress as of September 30, 2023 as compared to seventeen deployments in progress as of September 24, 2022 as we continue to grow our business.
Net cash provided by operating activities was due to our net loss of $122.3 million adjusted for non-cash items of $4.6 million, primarily consisting of $4.5 million depreciation and amortization and $0.1 million of unit-based compensation, offset by cash provided by operating assets and liabilities of $227.2 million due to the timing of cash payments to vendors and cash receipts from customers.
Net cash provided by operating activities was due to our net loss of $(207.9) million adjusted for non-cash items of $186.1 million, primarily consisting of $154.2 million stock-based compensation expense, $11.3 million depreciation and amortization, $22.3 million provision for excess and obsolete inventory, offset by $(4.6) million deferred tax assets, net.
Any income tax items for the periods prior to the close of the Business Combination are related to the applicable subsidiary companies that are subject to foreign income tax. In fiscal years 2021 and 2020, Legacy Warehouse was treated as a pass-through entity for tax purposes and had certain foreign subsidiaries.
Any income tax items for the periods prior to the close of the Business Combination are related to the applicable subsidiary companies that are subject to foreign income tax.
Unless the context otherwise requires, references in 45 Table of Contents this Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “Symbotic,” “we,” “us,” “our” and the “Company” are intended to mean the business and operations of Symbotic. Company Overview At Symbotic, our vision is to make the supply chain work better for everyone.
From time to time, we also may provide forward-looking statements in other materials we release to the public. Unless the context otherwise requires, references in this Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “Symbotic,” “we,” “us,” “our” and the “Company” are intended to mean the business and operations of Symbotic.
Selling, General, and Administrative Expenses Year Ended Change September 24, 2022 September 25, 2021 Amount % (dollars in thousands) Selling, general, and administrative $ 115,881 $ 59,442 $ 56,439 95 % Percentage of total revenue 20 % 24 % The increase in selling, general, and administrative expenses for the year ended September 24, 2022 compared to the year ended September 25, 2021 was due to the following: Change (in thousands) Employee-related costs $ 47,827 Allocated overhead expenses and other 8,612 $ 56,439 Employee-related costs increased as a result of our headcount growth within our selling, general, and administrative functions, as well as an increase in expense in fiscal year 2022 related to travel expenses as our employees resumed normal business travel in fiscal year 2022.
This resulted in less prototype-related costs during fiscal year 2023. 51 Table of Contents Selling, General, and Administrative Expenses Year Ended Change September 30, 2023 September 24, 2022 Amount % (dollars in thousands) Selling, general, and administrative $ 217,927 $ 115,881 $ 102,046 88 % Percentage of total revenue 19 % 20 % The increase in selling, general, and administrative expenses for the year ended September 30, 2023 compared to the year ended September 24, 2022 was due to the following: Change (in thousands) Employee-related costs $ 66,549 Allocated overhead expenses and other 35,497 $ 102,046 Employee-related costs increased as a result of our full-time and contracted employee headcount growth within our selling, general, and administrative functions.
The use of words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. From time to time, we also may provide forward-looking statements in other materials we release to the public.
You can 46 Table of Contents identify these statements by the fact that they do not relate strictly to historical or current facts. The use of words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance.
Additionally, following the closing of the Business Combination, we purchased from an affiliated entity of the Symbotic Founder Common Units in New Symbotic Holdings for $300.0 million. During the year ended September 24, 2022, Walmart gross exercised the 714,022 vested warrant units for Legacy Warehouse Class A Units for a total of $277.8 million.
Additionally, during the year ended September 24, 2022, Walmart gross exercised their 714,022 vested warrant units for Legacy Warehouse Class A Units for a total of $277.8 million. As a result of this gross exercise, 714,022 shares of Legacy Warehouse Class A Common Units were issued to Walmart.
There was no such benefit or provision calculated for the year ended September 25, 2021. Non-GAAP Financial Measure In addition to providing financial measurements based on generally accepted accounting principles in the United States of America, or GAAP, we provide an additional financial metric that is not prepared in accordance with GAAP, or non-GAAP financial measure.
Refer to Note 11, Income Taxes , for further information. 52 Table of Contents Non-GAAP Financial Measures In addition to providing financial measurements based on generally accepted accounting principles in the United States of America, or GAAP, we provide additional financial metrics that are not prepared in accordance with GAAP, or non-GAAP financial measures.
For the year ended September 24, 2022, operation services gross profit decreased $1.9 million from the previous year-end from $(1.6) million to $(3.5) million. The decrease in operation services gross profit was driven by increased cost due to a need for additional operation services personnel at one of our customer sites.
The decrease in operation services gross profit is driven by an increased cost due to additional operation services personnel needed at one of our customer sites.
Key Components of Consolidated Statements of Operations Revenue We generate revenue through our design and installation of modular inventory management systems (“Systems”) to automate customers’ depalletizing, storage, selection, and palletization warehousing processes. The Systems have both a hardware component and an embedded software component that enables the systems to be programmed to operate within specific customer environments.
Business Combination Refer to Note 1, Organization and Operations to our consolidated financial statements for further details on the historical business organization and formation of Symbotic Inc. Key Components of Consolidated Statements of Operations Revenue We generate revenue through our design and installation of modular inventory management systems (“Systems”) to automate customers’ depalletizing, storage, selection, and palletization warehousing processes.
Year Ended September 24, 2022 September 25, 2021 September 26, 2020 (in thousands) Revenue: Systems $ 567,993 $ 227,563 $ 70,818 Software maintenance and support 3,735 4,009 2,614 Operation services 21,584 20,341 18,654 Total revenue 593,312 251,913 92,086 Cost of revenue: Systems 464,179 216,577 79,252 Software maintenance and support 4,390 2,962 3,681 Operation services 25,096 21,927 28,083 Total cost of revenue 493,665 241,466 111,016 Gross profit (loss) 99,647 10,447 (18,930) Operating expenses: Research and development expenses 124,141 73,386 55,861 Selling, general, and administrative expenses 115,881 59,442 35,586 Total operating expenses 240,022 132,828 91,447 Operating loss (140,375) (122,381) (110,377) Other income, net 1,286 67 809 Loss before income tax (139,089) (122,314) (109,568) Income tax benefit — — 47 Net loss $ (139,089) $ (122,314) $ (109,521) 48 Table of Contents Year Ended September 24, 2022 September 25, 2021 September 26, 2020 Revenue: Systems 96 % 90 % 77 % Software maintenance and support 1 2 3 Operation services 4 8 20 Total revenue 100 100 100 Cost of revenue: Systems 78 86 86 Software maintenance and support 1 1 4 Operation services 4 9 30 Total cost of revenue 83 96 121 Gross profit (loss) 17 4 (21) Operating expenses: Research and development expenses 21 29 61 Selling, general, and administrative expenses 20 24 39 Total operating expenses 40 53 99 Operating loss (24) (49) (120) Other income, net — — 1 Loss before income tax (23) (49) (119) Income tax benefit — — — Net loss (23) % (49) % (119) % * Percentages are based on actual values.
Year Ended September 30, 2023 September 24, 2022 (in thousands) Revenue: Systems $ 1,138,059 $ 567,993 Software maintenance and support 6,601 3,735 Operation services 32,231 21,584 Total revenue 1,176,891 593,312 Cost of revenue: Systems 940,076 464,179 Software maintenance and support 9,222 4,390 Operation services 37,854 25,096 Total cost of revenue 987,152 493,665 Gross profit 189,739 99,647 Operating expenses: Research and development expenses 195,042 124,141 Selling, general, and administrative expenses 217,927 115,881 Total operating expenses 412,969 240,022 Operating loss (223,230) (140,375) Other income, net 10,716 1,286 Loss before income tax (212,514) (139,089) Income tax benefit 4,620 — Net loss $ (207,894) $ (139,089) 49 Table of Contents Year Ended September 30, 2023 September 24, 2022 Revenue: Systems 97 % 96 % Software maintenance and support 1 1 Operation services 3 4 Total revenue 100 100 Cost of revenue: Systems 80 78 Software maintenance and support 1 1 Operation services 3 4 Total cost of revenue 84 83 Gross profit 16 17 Operating expenses: Research and development expenses 17 21 Selling, general, and administrative expenses 19 20 Total operating expenses 35 40 Operating loss (19) (24) Other income, net 1 — Loss before income tax (18) (23) Income tax benefit — — Net loss (18) % (23) % * Percentages are based on actual values.
The following table reconciles GAAP net loss to Adjusted EBITDA during the periods presented (in thousands): Year Ended September 24, 2022 September 25, 2021 September 26, 2020 Net loss $ (139,089) $ (122,314) $ (109,521) Interest income (1,287) (35) (1,329) Income tax benefit — — (47) Depreciation and amortization 5,989 4,491 5,734 Unit and Stock-based compensation 40,556 11,736 208 Business combination transaction expenses 4,069 2,761 — Adjusted EBITDA $ (89,762) $ (103,361) $ (104,955) Liquidity and Capital Resources As of September 24, 2022, our principal sources of liquidity were net proceeds received related to the Business Combination and cash received from customers upon the inception of contracts to install customer Systems.
The following table reconciles GAAP net loss to Adjusted EBITDA during the periods presented (in thousands): Year Ended September 30, 2023 September 24, 2022 September 25, 2021 Net loss $ (207,894) $ (139,089) $ (122,314) Interest income (11,391) (1,287) (35) Income tax benefit (4,619) — — Depreciation and amortization 9,475 5,989 4,491 Stock-based compensation 157,023 40,556 11,736 Business combination transaction expenses — 4,069 2,761 Joint venture formation fees 14,900 — — CEO transition charges 2,026 — — Restructuring charges 22,899 — — Adjusted EBITDA $ (17,581) $ (89,762) $ (103,361) We consider Adjusted gross profit and Adjusted gross profit margin to be important indicators of profitability which we use in our financial and operational decision-making and evaluation of our overall operating performance.
Net cash and cash equivalents used in investing activities during the year ended September 25, 2021 consisted primarily of $12.2 million of purchased property and equipment. Net cash and cash equivalents used in investing activities during the year ended September 26, 2020 consisted of $5.1 million of purchased property and equipment.
Investing Activities Our investing activities have consisted primarily of property and equipment purchases, capitalization of internal use software development costs, purchases of marketable securities, and proceeds from maturities of marketable securities. Net cash and cash equivalents used in investing activities during the year ended September 30, 2023 consisted of $15.7 million of purchased property and equipment.
The increase in operation services revenue is due to two additional operating sites in fiscal year 2022 as compared to fiscal year 2021. 49 Table of Contents Gross Profit The following table sets forth our gross profit for the years ended September 24, 2022 and September 25, 2021: Year Ended September 24, 2022 September 25, 2021 Change (in thousands) Systems $ 103,814 $ 10,986 $ 92,828 Software maintenance and support (655) 1,047 (1,702) Operation services (3,512) (1,586) (1,926) Total gross profit (loss) $ 99,647 $ 10,447 $ 89,200 For the year ended September 24, 2022, Systems gross profit increased $92.8 million from the previous year-end from $11.0 million to $103.8 million.
Gross Profit The following table sets forth our gross profit (loss) for the years ended September 30, 2023 and September 24, 2022: Year Ended September 30, 2023 September 24, 2022 Change (in thousands) Systems $ 197,983 $ 103,814 $ 94,169 Software maintenance and support (2,621) (655) (1,966) Operation services (5,623) (3,512) (2,111) Total gross profit $ 189,739 $ 99,647 $ 90,092 Systems gross profit increased during the year ended September 30, 2023 as compared to the year ended September 24, 2022 due to there being thirty-five system deployments currently in progress as of September 30, 2023 as compared to seventeen deployments in progress as of September 24, 2022.
Based on that estimated fair value, we determined warrant charges, which were recorded as a reduction of the transaction price. Off-Balance Sheet Arrangements: As of September 24, 2022, we had no off-balance sheet arrangements as defined in Instruction 8 to Item 303(b) of Regulation S-K.
We estimated the fair value of unvested warrants, considered to be probable of vesting, at the time. Based on that estimated fair value, we determined warrant charges, which are recorded as a reduction of the transaction price.
As a result of this gross exercise, 714,022 shares of Legacy Warehouse Class A Common Units were issued to Walmart. In connection with the Business Combination, the Class A Common Units attributable to Walmart’s warrant exercise converted into units in Symbotic Holdings and Symbotic Inc. Class V-1 Common Stock.
In connection with the Business Combination, the Class A Common Units attributable to Walmart’s warrant exercise converted into units in Symbotic Holdings and Symbotic Inc. Class V-1 Common Stock. Contractual Obligations and Commitments and Liquidity Outlook Our cash flows from operations along with equity infusions have historically been sufficient to fund our operating activities and other cash requirements.
Financing Activities Our financing activities have consisted of Class B-1 Preferred Unit member contributions as well as proceeds from the exercise of the vested warrants issued to Walmart as further described in Note 17, Stock-Based Compensation and Warrant Units to the consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, as well as the net proceeds received from the equity infusion from our Business Combination, offset by the purchase of interest from the noncontrolling interest, as further described in Note 3, Business Combination and Note 4, Noncontrolling Interests , respectively, to the consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.
Financing Activities Our financing activities have consisted of payments and proceeds related to our equity incentive plans for both RSUs and ESPP, as well as proceeds from the exercise of the vested warrants issued to Walmart and the equity infusion from our Business Combination, offset by the purchase of interest from the noncontrolling interest.
Net cash used in operating activities was due to our net loss of $109.5 million adjusted for non-cash items of $5.8 million, primarily consisting of $5.7 million depreciation and amortization and $0.1 million of unit-based compensation, offset by use of cash for operating assets and liabilities of $20.6 million due to the timing of cash payments to vendors and cash receipts from customers.
Additionally, sources of cash provided by operating assets and liabilities of $252.6 million due to the timing of cash payments to vendors and cash receipts from customers.
Allocated overhead and other expenses increased due primarily to additional audit, tax, and consulting services in support of the Business Combination. 53 Table of Contents Other income, net Year Ended Change September 25, 2021 September 26, 2020 Amount % (dollars in thousands) Other income, net $ 67 $ 809 $ (742) (92 %) Percentage of total revenue 0 % 1 % The decrease in other income, net was primarily due to a decrease in interest income as a result of interest rates and dividend income.
Other income, net Year Ended Change September 30, 2023 September 24, 2022 Amount % (dollars in thousands) Other income, net $ 10,716 $ 1,286 $ 9,430 733 % Percentage of total revenue 1 % — % Other income, net increased due to higher interest earned on invested cash balances and marketable securities as a result of increased interest rates.
Removed
Business Combination SVF Investment Corp. 3, formerly known as SVF Investment III Corp., (“SVF ” and, after the Domestication as described below, “Symbotic” or the “Company”) was a blank check company incorporated as a Cayman Islands exempted company on December 11, 2020.
Added
This section provides an analysis of our financial results for the year ended September 30, 2023 as compared to the year ended September 24, 2022.
Removed
SVF 3 was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses. Warehouse Technologies LLC (“Legacy Warehouse”), a New Hampshire limited liability company, was formed in December 2006 to make investments in companies that develop new technologies to improve operating efficiencies in modern warehouses.
Added
For the discussion and analysis covering the year ended September 24, 2022 compared to the year ended September 25, 2021, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended September 24, 2022, as filed with the SEC on December 9, 2022.
Removed
Symbotic LLC, a technology company that develops and commercializes innovative technologies for use within warehouse operations and Symbotic Group Holdings, ULC (“ Symbotic Canada”) were wholly owned subsidiaries of Legacy Warehouse.
Added
On July 23, 2023, we, along with New Symbotic Holdings, and Symbotic US (collectively, the “Symbotic Group”), entered into a Framework Agreement (the “Framework Agreement”) with Sunlight Investment Corp.
Removed
On December 12, 2021, (i) SVF 3 entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Legacy Warehouse, Symbotic Holdings LLC, a Delaware limited liability company (“Symbotic Holdings”), and Saturn Acquisition (DE) Corp., a Delaware corporation and wholly owned subsidiary of SVF 3 (“Merger Sub”) and (ii) Legacy Warehouse entered into an Agreement and Plan of Merger (the “Company Merger Agreement”) with Symbotic Holdings.
Added
(“Sunlight”), SVF II Strategic Investments AIV LLC (“SVF” and, together with Sunlight, “SoftBank”), and GreenBox Systems LLC (“GreenBox”), related to the formation of GreenBox as a strategic joint venture between the Symbotic Group and SoftBank, the entry into a Limited Liability Company Agreement of GreenBox and Master Services, License and Equipment Agreement (the “Commercial Agreement”) and issuance of a warrant to purchase Class A Common Stock of Symbotic (the “GreenBox Warrant”).
Removed
On June 7, 2022, as contemplated by the Merger Agreement, Legacy Warehouse merged with and into Symbotic Holdings (the “Company Reorganization”), with Symbotic Holdings surviving the merger (“Interim Symbotic”).
Added
GreenBox was established on July 21, 2023, and will build and automate supply chain networks globally by operating and financing our advanced A.I. and automation technology for the warehouse. Symbotic Holdings and Sunlight own 35% and 65% of GreenBox, respectively.
Removed
Immediately following such merger, on June 7, 2022, as contemplated by the Merger Agreement, SVF 3 filed a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and filed a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which SVF 3 was transferred by way of continuation from the Cayman Islands and domesticated as a Delaware corporation, changing its name to “Symbotic Inc.” (the “Domestication”).
Added
As a result, each customer contract may contain multiple performance obligations.
Removed
Immediately following the Domestication of SVF 3, on June 7, 2022, as contemplated by the Merger Agreement, Merger Sub merged with and into Interim Symbotic (the “Merger” and, together with the Company Reorganization, the “Business Combination”), with Interim Symbotic surviving the merger as a subsidiary of Symbotic (“New Symbotic Holdings”).
Added
The increase in software maintenance and support revenue is due to there being five additional sites under software maintenance and support contracts for the year ended September 30, 2023 as compared to the year ended September 24, 2022. 50 Table of Contents The increase in operation services revenue is attributable to an increase in sites where we are performing operation services during the year ended September 30, 2023 as compared to the year ended September 24, 2022.
Removed
We have identified the following distinct performance obligations in our contracts with customers: Systems : We design, assemble, and install modular hardware systems and perform configuration of embedded software.
Added
As we continue to increase the number of sites which have reached completion for our warehouse automation system, an increase in the number of operation services contracts is expected.
Removed
The Company recorded zero income tax 47 Table of Contents expense for the period of June 7, 2022, through September 24, 2022, which is the period following the Business Combination, as the Company incurred a pre-tax loss for the period and recorded a full valuation allowance against both its domestic and foreign deferred tax assets.
Added
The decrease in prototype-related costs, allocated overhead expenses, and other during the year ended September 30, 2023 as compared to the year ended September 24, 2022 is due to a decrease in prototype expenses related to our Omni-Channel platform, which was developed in 2022 and went into production during the first fiscal quarter of 2023.
Removed
No income tax expense was recorded in 2021 due to Legacy Warehouse's pass-through status and foreign subsidiaries having a full valuation allowance against their deferred tax assets.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+1 added−1 removed1 unchanged
Biggest changeCash and cash equivalents include cash on hand and investments with original maturities of three months or less, are stated at cost, and approximate fair value. Our investment policy and strategy are focused on preservation of capital, supporting our liquidity requirements, and delivering competitive returns subject to prevailing market conditions.
Biggest changeOur investment policy and strategy are focused on preservation of capital, supporting our liquidity requirements, and delivering competitive returns subject to prevailing market conditions. We were not exposed to material risks due to changes in market interest rates given the liquidity of the cash and investments with original maturities of three months.
The Company has no significant off-balance sheet risk such as foreign exchange contracts, options contracts, or other hedging arrangements. 60 Table of Contents The Company believes its credit policies are prudent and reflect normal industry terms and business risk. The Company generally does not require collateral from its customers and generally requires payment 30 days from the invoice date.
The Company has no significant off-balance sheet risk such as foreign exchange contracts, options contracts, or other hedging arrangements. The Company believes its credit policies are prudent and reflect normal industry terms and business risk. The Company generally does not require collateral from its customers and generally requires payment 30 days from the invoice date.
Although the Company’s deposits may exceed federally insured limits, the financial institutions that the Company uses have high investment-grade credit ratings and, as a result, the Company believes that, as of September 24, 2022, its risk relating to deposits exceeding federally insured limits was not significant.
Although the Company’s deposits may exceed federally insured limits, the financial institutions that the Company uses have high investment-grade credit ratings and, as a result, the Company believes that, as of September 30, 2023, its risk relating to deposits exceeding federally insured limits was not significant.
Foreign currency transaction losses were less than $0.1 million for the year ended September 24, 2022, $0.1 million for the year ended September 25, 2021, and less than $0.1 million for the year ended September 26, 2020, and were recorded within other income, net on the consolidated statements of operations.
Foreign currency transaction losses were less than $0.1 million for the years ended September 30, 2023 and September 24, 2022, and $0.1 million for the year ended September 25, 2021, and were recorded within other income, net on the consolidated statements of operations.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risk, including changes to interest rates and foreign currency exchange rates. Interest Rate Sensitivity We had cash and cash equivalents totaling $353.5 million and $156.6 million as of September 24, 2022, and September 25, 2021, respectively.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risk, including changes to interest rates and foreign currency exchange rates. 60 Table of Contents Interest Rate Sensitivity We had cash and cash equivalents totaling $258.8 million and $353.5 million as of September 30, 2023, and September 24, 2022, respectively.
At September 24, 2022, three customers accounted for over 10% of the Company’s accounts receivable balance, and one customer accounted for over 10% of the Company’s accounts receivable balance at September 25, 2021. 61 Table of Contents
At September 30, 2023, two customers accounted for over 10% of the Company’s accounts receivable balance, and three customers accounted for over 10% of the Company’s accounts receivable balance at September 24, 2022. 61 Table of Contents
We were not exposed to material risks due to changes in market interest rates given the liquidity of the cash and investments with original maturities of three months. Foreign Currency Risk Although we are exposed to foreign currency risk from our international operations, we do not consider it to have a material impact.
Foreign Currency Risk Although we are exposed to foreign currency risk from our international operations, we do not consider it to have a material impact. Certain transactions of the Company and its subsidiaries are denominated in currencies other than the functional currency.
Removed
Certain transactions of the Company and its subsidiaries are denominated in currencies other than the functional currency.
Added
Cash and cash equivalents include cash on hand and investments with original maturities of three months or less, are stated at cost, and approximate fair value. We had short-term available for sale marketable securities consisting of U.S. Treasury Securities of $286.7 million at September 30, 2023 and no marketable securities at September 24, 2022.

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