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What changed in Symbotic Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Symbotic Inc.'s 2023 and 2024 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 2024 report.

+667 added−639 removedSource: 10-K (2024-12-04) vs 10-K (2023-12-11)

Top changes in Symbotic Inc.'s 2024 10-K

667 paragraphs added · 639 removed · 541 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

171 edited+19 added−12 removed30 unchanged
Biggest changeWe 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.
Biggest changeWe have spent significant time working closely with our customers to develop, test, and refine our technology. This has translated into approximately $22.4 billion of backlog as of September 28, 2024, of which Walmart and GreenBox comprise the vast majority. We believe the potential market opportunity for our system is large and expanding.
Instead, bottom-lift handling reduces case damage and system rejection rates, thereby decreasing waste and cost. • End-to-End Integration : By being an integrated end-to-end system, we are able to comprehensively change a warehouse and a customer’s supply chain to maximize its efficiency. • System-of-Systems Design : Our system-of-systems architecture philosophy eliminates single points of failure, enhancing system resiliency.
Instead, bottom-lift handling reduces case damage and rejection rates, thereby decreasing waste and cost. • End-to-End Integration : By being an integrated end-to-end system, we are able to comprehensively change a warehouse and a customer’s supply chain to maximize its efficiency. • System-of-Systems Design : Our system-of-systems architecture philosophy eliminates single points of failure, enhancing system resiliency.
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.
Talent Management The engagement, development, and retention of employees is critical to meet our priorities and deliver braggingly happy customers. All management levels are engaged in talent management practices.
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.
We also issued Walmart a new warrant to purchase 258,972 units of Warehouse, or 3.5% of the total outstanding units of Warehouse at such time 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.
We have spent 15 years working at the confluence of product manufacturing and retail distribution to produce a fully automated system that allows more efficient handling, storage, selection, and transportation of goods once they are placed into the supply chain by manufacturers. We have accomplished this by combining “smart” software with “smart” hardware such as our autonomous mobile robots.
We have spent over 15 years working at the confluence of product manufacturing and retail distribution to produce a fully automated system that allows more efficient handling, storage, selection, and transportation of goods once they are placed into the supply chain by manufacturers. We have accomplished this by combining “smart” software with “smart” hardware such as our autonomous mobile robots.
The lift then brings the case to the appropriate level in the structure and places it onto a buffer shelf where the case will be picked up by a Symbot. The Symbot will then bring the case to the aisle storage position for that level. • Symbots : Symbots are our fully autonomous mobile goods handling robots.
The lift then brings the case to the appropriate level in the structure and places it onto a storage shelf where the case will be picked up by a Symbot. The Symbot will then bring the case to the aisle storage position for that level. • Symbots : Symbots are our fully autonomous mobile goods handling robots.
Once in the appropriate aisle, the Symbot accelerates rapidly up to 25 mph towards the specific location where it has been instructed to place the case. When the Symbot reaches the appropriate placement location it extends its finger lift system and places the case on the aisle position and is ready for its next task.
Once in the appropriate aisle, the Symbot accelerates rapidly up to 25 mph towards the specific location where it has been instructed to place the case. When the Symbot reaches the appropriate placement location, it extends its finger lift and places the case on the aisle position and is ready for its next task.
Distribution Centers E-Commerce Fulfillment Flow of Goods Upstream Downstream Typical Function Atomization and buffering between producers and next node Items selection Packing and shipping Typical Location Rural, Suburban Suburban, Urban Common Fulfillment Unit Pallets, Cases Items/Eaches Optimized for Low cost per case Speed of fulfillment & delivery Volume High Low to moderate SKU count/variety Low to Moderate High Current supply chain operations are generally manual, inflexible, expensive, require significant investments in inventory, and require goods to be manually handled multiple times before being shipped to stores or consumers.
Distribution Centers E-Commerce Fulfillment Flow of Goods Upstream Downstream Typical Function Singulate and buffering between producers and next node Items selection Packing and shipping Typical Location Rural, Suburban Suburban, Urban Common Fulfillment Unit Pallets, Cases Items/Eaches Optimized for Low cost per case Speed of fulfillment & delivery Volume High Low to moderate SKU count/variety Low to Moderate High Current supply chain operations are generally manual, inflexible, expensive, require significant investments in inventory, and require goods to be manually handled multiple times before being shipped to stores or consumers.
Our Growth Strategy The key elements of our strategy for growth include the following: • Further penetrate existing customers’ operations : Our existing customers are large companies, many of which have thousands of stores and hundreds of warehouses and distribution centers.
Our Growth Strategy The key elements of our strategy for growth include the following: • Further penetrate customers’ operations : Our customers are large companies, many of which have thousands of stores and hundreds of warehouses and distribution centers.
Others may combine multiple SKUs on heterogeneous pallets if the cases are the same size and the manufacturer is able to do so efficiently in their production process. Other products may be shipped un-palletized because a manufacturer does not produce or sell enough of one item to make full pallet shipping efficient.
Others may combine multiple SKUs on heterogeneous pallets if the cases are the same size and the manufacturer is able to do so efficiently in their production process. Other goods may be shipped un-palletized because a manufacturer does not produce or sell enough of one item to make full pallet shipping efficient.
Department of Commerce, we are prohibited from engaging in transactions involving certain persons and certain designated countries or territories, including Cuba, Iran, Syria, North Korea and the Crimea Region of Ukraine. In addition, our systems may be subject to export regulations that can involve significant compliance time and may add additional overhead cost to our systems.
Department of Commerce, we are prohibited from engaging in transactions involving certain persons and certain designated countries or territories, including Cuba, Iran, Syria, North Korea and the Crimea Region of Ukraine. In addition, our system may be subject to export regulations that can involve significant compliance time and may add additional overhead cost to our system.
We will continue to innovate our existing systems as well as introduce new offerings in specific areas for which we do not have a solution, such as tailoring our platform to handle non-ambient foods. This will not only allow us to deepen our penetration within existing customers, but also grow our customer base in adjacent applications.
We will continue to innovate our existing systems as well as introduce new offerings in specific areas for which we do not have a solution, such as tailoring our System to handle non-ambient foods. This will not only allow us to deepen our penetration within existing customers, but also grow our customer base in adjacent applications.
For example, the Export Control Reform Act of 2018 and regulatory guidance thereunder have imposed additional controls and may result in the imposition of further additional controls, on the export of certain “emerging and foundational technologies.” Our current and future systems may be subject to these heightened regulations, which could increase our compliance costs.
For example, the Export Control Reform Act of 2018 and regulatory guidance thereunder have imposed additional controls and may result in the imposition of further additional controls, on the export of certain “emerging and foundational technologies.” Our current and future system may be subject to these heightened regulations, which could increase our compliance costs.
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.
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 our systems with an aggregate purchase price of GreenBox’s purchase commitment.
Environmental Matters We are subject to domestic and foreign environmental laws and regulations governing our operations, including, but not limited to, emissions into the air and water and the use, handling, disposal and remediation of hazardous substances. A certain risk of environmental liability is inherent in our production activities, operation of our systems and the disposal of our systems.
Environmental Matters We are subject to domestic and foreign environmental laws and regulations governing our operations, including, but not limited to, emissions into the air and water and the use, handling, disposal and remediation of hazardous substances. A certain risk of environmental liability is inherent in our production activities, operation of our system and the disposal of our system.
By effectively “digitizing” each individual case and toted item and spreading them throughout the buffering structure, we create optionality for our picking and routing optimization algorithms. Merchandise is opportunistically placed throughout the buffering structure, similar to the way a random-access hard drive handles data.
By effectively “digitizing” each individual case and toted item and spreading them throughout the storage structure, we create optionality for our picking and routing optimization algorithms. Merchandise is opportunistically placed throughout the storage structure, similar to the way a random-access hard drive handles data.
In addition, our hardware and software systems are engineered for rapid serviceability utilizing field replaceable components wherever possible. • Scalable Modularity : Our architecture is highly modular and scalable, allowing us to install our systems in existing warehouse facilities while achieving full performance benefits.
In addition, our hardware and software are engineered for rapid serviceability utilizing field replaceable components wherever possible. • Scalable Modularity : Our architecture is highly modular and scalable, allowing us to install our system in existing warehouse facilities while achieving full performance benefits.
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 estimate the size of our initial addressable 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 are also able to install our systems in phases, allowing the warehouse facility to continue to operate while the transition to our systems is underway. Finally, we can easily reconfigure and expand our systems to accommodate SKU proliferation as our customers’ needs and strategies evolve.
We are also able to install our systems in phases, allowing the warehouse facility to continue to operate while the transition to our system is underway. We can easily reconfigure and expand our system to accommodate SKU proliferation as our customers’ needs and strategies evolve.
Simultaneously, our A.I.-enabled software determines the optimal randomized location in the structure for storage of that case. When a case reaches the lift to which it is assigned, the lift extends its finger lift system and picks up the case.
Simultaneously, our A.I.-enabled software determines the optimal location in the structure for storage of that case. When a case reaches the lift to which it is assigned, the lift extends its finger lift and picks up the case.
In addition, our hardware and software systems are engineered for rapid serviceability utilizing field-replaceable components wherever possible. • System Scalability : Our platform can be scaled to fit the needs of our customers and scale of their facilities.
In addition, our hardware and software are engineered for rapid serviceability utilizing field-replaceable components wherever possible. • System Scalability : Our system can be scaled to fit the needs of our customers and scale of their facilities.
The advantages of this approach are so compelling, as quantifiably measured by performance data in real world applications, that we believe our approach can become the de facto standard approach for how warehouses operate.
The advantages of this approach are so compelling, as measured by performance data in real world applications, that we believe our system can become the de facto standard approach for how warehouses operate.
Cases may then be stacked on 4-foot by 4-foot pallets as high as safely possible and then shrink-wrapped so the pallets retain integrity while in transit and the goods can be transported without damage.
Cases are then stacked on 4-foot by 4-foot pallets as high as safely possible and then shrink-wrapped so the pallets retain integrity while in transit and the goods can be transported without damage.
The engine builds a put-away task list as goods are received that is based on a put-away optimization which determines the best placement of goods within the buffering structure. Simultaneously, the engine builds a retrieval task list based on fulfillment requests.
The engine builds a put-away task list as goods are received that is based on put-away optimization, which determines the best placement of goods within the storage structure. Simultaneously, the engine builds a retrieval task list based on fulfillment requests.
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.
Our system is a modular, highly configurable capital asset purchase that we sell to our customer in the year of deployment. Over the remaining system life, which is typically 25-30 years, we charge a software maintenance and support fee. Finally, we provide training and system operation until the customer assumes operational duties.
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.
We also purchase lifts, fixed place robots, conveyors, and steel racking equipment from a wide range of vendors to complete our systems. 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.
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.
The principal purposes of our incentive plans are to attract, retain, and motivate key employees, directors, 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.
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.
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 A.I.
As the labor force shifts toward an older, more highly educated demographic, the warehouse labor pool is shrinking and becoming more expensive, while most well-located distribution centers are either operating manually or utilizing outdated, static mechanized conveyor systems.
As the labor force shifts toward an older, more highly educated demographic, the warehouse labor pool is shrinking and becoming more expensive, while most well-located warehouses are either operating manually or utilizing outdated, static mechanized conveyor systems.
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.
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 at such time as calculated following the exercise of the warrant and issuance of units thereunder, at an aggregate purchase price of $103,980,327.
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.
We are initially targeting the largest brick-and-mortar companies across five verticals: general merchandise, ambient grocery, ambient food distribution, consumer 3 Table of Contents packaged food, and apparel. Based on identified North American warehouses of the largest companies in each of these five verticals, we believe that our strategically addressed market opportunity is approximately $144 billion.
Like fully autonomous cars operating in a smart city, our robots operate independently but act collectively to transport, sequence, and move cases through a warehouse. Our algorithms consider robot proximity, travel distance and other factors to solve for optimal overall performance while dynamically adjusting as anomalies arise.
Like fully autonomous cars operating in a smart city, our robots operate independently but act collectively to transport, sequence, and move cases through a 6 Table of Contents warehouse. Our algorithms consider robot proximity, travel distance and other factors to solve for optimal overall performance while dynamically adjusting as anomalies arise.
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.
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, recruiting, integrating, developing, motivating, and retaining our existing and new employees.
Retrieving a case is simply the reverse process of placing a case. • Outbound : Our outbound lifts retrieve cases delivered by Symbots and transfers them to the outbound level of the system. Our software utilizes the Symbots and lifts to sequence cases in an optimal order for outbound processing.
Retrieving a case is simply the reverse process of placing a case. • Outbound : Our outbound lift retrieves cases delivered by Symbots and transfers them to the outbound level of our system. Our software utilizes the Symbots and lifts to sequence cases in an optimal order for outbound processing.
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.
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 between producers and recipients of goods in a cost-effective manner.
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.
For each system, GreenBox will pay us: (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.
Our software also dynamically responds to changes in inventory availability to fulfill customer orders on time. By using machine learning and A.I. tools to process all the data our system is generating, our system is improved by the tasks it performs.
Our software also dynamically responds to changes in inventory availability to fulfill customer orders on time. By using A.I. tools to process all the data our system is generating, our system is improved by the tasks it performs.
We currently have the intention and technological capability to expand to the non-food consumer packaged goods, auto parts, and third-party logistics verticals.
We have the intention and technological capability to expand into the non-food consumer packaged goods, auto parts, and third-party logistics verticals.
Walmart also pays us for operation services for modules installed in the first four buildings for an operation service period for each module that ends on the third anniversary of preliminary acceptance of the final module installed in a building. The initial term of the Walmart MAA expires on May 20, 2034 with annual renewals of the term thereafter.
Walmart also pays us for operation services for systems installed in the first four buildings for an operation service period for each system that ends on the third anniversary of preliminary acceptance of the final system installed in a building. The initial term of the Walmart MAA expires on May 20, 2034 with annual renewals of the term thereafter.
In addition, the software enables our autonomous robots to independently place and retrieve various sizes of packages with different package material, make corrections to account for product movement, and efficiently navigate through our platform to complete the system’s objectives in the shortest amount of time and at the lowest cost.
In addition, the software enables our autonomous robots to independently place and retrieve various sizes of goods with different package material, make corrections to account for product movement, and efficiently navigate through our system to complete the system’s objectives in the shortest amount of time and at the lowest cost.
These three mismatches relate to the quantity, timing, and location of goods and arise because a small number of producers concentrate resources to serve many consumers in the pursuit of economies of scale. The first mismatch relates to the quantity of goods, as a relatively small number of producers generate a greater quantity of goods than any single consumer desires.
These three mismatches relate to the quantity, timing, and location of goods. They exist because a small number of producers concentrate resources to serve many consumers in the pursuit of economies of scale. The first mismatch relates to the quantity of goods. A relatively small number of producers generate a greater quantity of goods than any single consumer desires.
Unlike some of our competitors, we do not handle goods with grippers, which can crush products, or suction cups, which can drop goods. We also do not transfer goods to standardized trays, eliminating this additional handling of goods.
Unlike some of our competitors, we do not handle goods with grippers, which can crush them, or suction cups, which can drop goods. We also do not transfer goods to standardized trays, eliminating additional handling of goods.
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.
High-potential leaders are given exposure and visibility to members of our board of directors through formal project assignments and board presentations. We provide growth opportunities through formal and informal development programs that include training, coaching, networking, skills development, and on-the-job experience.
These space saving efforts are increased by the storage density of our platform, which allows us to retrofit our systems into our customers’ existing warehouse operations without interrupting ongoing supply chain operations or requiring capital to build new greenfield warehouse space. • Randomizing : Our platform function is analogous to that of a random-access computer hard drive.
These space saving efforts are increased by the storage density of our system, which allows us to retrofit our system into our customers’ existing warehouse operations without interrupting ongoing supply chain operations or requiring capital to build new greenfield warehouse space. • Dynamic Storage: Our system function is analogous to that of a random-access computer hard drive.
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.
Each level is approximately three feet tall, allowing a typical thirty-two-foot-tall warehouse to have ten levels of storage which optimizes space utilization. Each 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.
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.
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 our advanced A.I. and automation technology for the warehouse. We own 35% of GreenBox and SoftBank Group owns 65% of GreenBox.
Our singulating robots also use vision technology and other proprietary end-of-arm tools to orient each individual case optimally for storage and handling in the system’s buffering structure.
Our singulating robots also use vision technology and other proprietary end-of-arm tools to orient each case optimally for storage and handling in our system’s storage structure.
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.
As we progress, 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 system. Manufacturing and Suppliers We operate a repair/service facility center with engineering support in Wilmington, Massachusetts, and a facility with additional engineering support in Montreal, Quebec.
Item 1. Business 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.
Item 1. Business Company Overview Our vision is to make the supply chain work better for everyone. We do this by developing, commercializing, and deploying innovative, comprehensive technology solutions that dramatically improve supply chain operations.
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.
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 system and related applications to create a system with the ability to fundamentally change how the supply chain functions. Symbotic’s intellectual property is protected by a portfolio of over 700 issued and/or pending patents.
They are powered by rapid-charging ultracapacitors, so charging takes a matter of seconds as the Symbots drive over charge plates integrated into the floor of the buffering structure. This eliminates the need for Symbots to come out of service for charging, allowing them to operate all day for weeks at a time.
They are powered by rapid-charging ultracapacitors, so charging takes a matter of seconds as the Symbots drive over charge plates integrated into the floor of the storage structure. This eliminates the need for Symbots to come out of service for charging, which allows them to operate all day for weeks at a time.
By managing goods at the case and toted item level, rather than at the pallet level, our systems remove unused space from the distribution center, allowing merchandise to be stored more densely and increasing the speed of product throughput.
By managing goods at the case and toted item level, rather than at the pallet level, our system removes unused space from the distribution center, allowing merchandise to be stored more densely and increasing the speed of product throughput.
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.
We estimate that there is an additional $126 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). 10 Table of Contents Over time we plan to expand beyond our primary and secondary target verticals, into additional verticals such as pharmaceuticals and electronics.
Our systems manage every aspect of warehouse logistics, from the time merchandise is off-loaded from a producer’s truck or container until that merchandise is ready to be delivered to a store, pick-up location, or individual.
Our system manages every aspect of warehouse logistics, from the time merchandise is off-loaded from a producer’s truck or container until that merchandise is ready to be delivered to a store, pick-up location, or individual.
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.
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, our affiliate C&S Wholesale Grocers, GreenBox, and Target.
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.
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.
A pallet may commonly contain anywhere between 40 and 120 cases depending on the size and weight of the product inside and, therefore, could contain dozens to hundreds of individual items that will ultimately be sold to consumers. Some manufacturers produce homogeneous pallets with one SKU.
A pallet may commonly contain anywhere between 40 and 120 cases depending on the size and weight of the goods and, therefore, could contain dozens to hundreds of goods that will ultimately be sold to consumers. Some manufacturers produce homogeneous pallets with one SKU.
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.
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 our systems over a six-year period pursuant to an agreed-upon timeline with implementation of our systems which began in fiscal year 2024.
Competing warehouse systems handle pallets and more frequently partial pallets of goods. Pallets and partial pallets represent an increased level of on hand inventory and partial pallets leave unused volume within the warehouse. Volume adds expense because it has its own cost and because volume adds movement distance, slowing down the transport of goods through the supply chain.
Pallets and partial pallets represent an increased level of on hand inventory and partial pallets leave unused volume within the warehouse. Volume adds expense because it has its own cost and because volume adds movement distance, slowing down the transport of goods through the supply chain.
We fully expect that the value these customers receive in the contracted distribution centers will translate to winning full deployments at the remainder of their distribution centers and therefore, we expect to grow our market share. • Win additional customers in existing verticals : Given the size of our primary serviceable addressable market relative to the size of our current customer base, there is significant room for us to expand within existing verticals.
We fully expect that the value these customers receive from our system will translate into winning full deployments at the remainder of their warehouses and distribution centers and therefore, we expect to grow our market share. • Win additional customers in existing verticals : Given the size of our primary serviceable addressable market relative to the size of our customer base, there is significant room for us to expand in our primary addressable market.
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.
This helps us to develop algorithmic innovations that further improve system performance over time. • System Manager : The System Manager balances work across the inbound and outbound cells of our system. It does this by managing inbound inventory and inventory levels in the storage structure against fulfillment orders, optimized to fulfillment gate times.
Our Market Opportunity We define our primary strategically addressed market as the total potential spend on our systems over the next 15 years for U.S. warehouses in the general merchandise, ambient grocery, ambient food distribution, consumer packaged food, and apparel verticals.
Our Market Opportunity We define our primary addressable market as the total potential spend on our system over the next 15 years for U.S. warehouses in the general merchandise, ambient grocery, ambient food distribution, consumer packaged food, and apparel verticals.
Sales and Marketing We go to market via a direct sales model. Given the size, complexity and value of our technology system, our sales to date have come from long-term discussions between our management team and senior-level executives with our current customers.
Sales and Marketing We go to market via a direct sales model. Given the size, complexity, and value of our system, our sales have come from long-term discussions between our management team and senior-level executives at our customers.
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.
As a result, we have developed or created a significant amount of intellectual property protecting our core technology, including a patent portfolio with over 700 patent filings. First Mover Advantage with Differentiated System Architecture We believe we have developed highly unique system architecture, which uses fully autonomous robots at scale and in real world supply chain applications.
These two robotic arms work together placing a case onto a pallet in less than three seconds. Our Competitive Strengths Our people, technologies, and experience, underpinned by decades of leadership in supply chain operations and innovation provide us with significant advantages over our competitors.
These two robotic arms work together placing a case onto a pallet in less than three seconds. Our Competitive Strengths We have significant advantages over our competitors because of our people, technologies, and experience, underpinned by decades of leadership in supply chain operations and innovation.
We believe this capability is unique and will drive stronger supply chain efficiency through reduced handling and the ability to buffer inventory at either the precise unit, or case count. We believe our competitive positioning is highly differentiated because our upstream expertise facilitates our integration with other downstream applications, including our own in prototype development.
We believe this capability is unique and will drive supply chain efficiency through reduced handling and the ability to buffer inventory at either the precise unit, or case count. We believe our competitive positioning is highly differentiated because our upstream expertise facilitates our integration with other downstream applications, including our Breakpack system.
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.
We believe our founder’s deep industry and operational expertise is a core competitive advantage for us. Mr. Cohen 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, The Boeing Company, Fortna, Manhattan Associates, MIT, SoftBank, Staples, Tesla, Toyota, and Walmart.
We have numerous other potential customers in various stages of the sales cycle and expect to win new customers in our existing verticals. • Expand into new verticals : We believe that every vertical that involves the physical distribution of goods through a distribution center is a potential customer.
We have numerous other potential customers in various stages of the sales cycle and we expect to win new customers in our primary addressable market. • Expand into new verticals : We believe that every vertical that involves the physical distribution of goods through a warehouse or distribution center is a potential customer.
Tasks may then be reassigned, and the routes of the mobile robot recomputed. • Real-Time Data Analytics Software : Our proprietary software aggregates and synthesizes system data to provide real-time analytics and actionable insights regarding inventory levels, system throughput, accuracy, and performance.
As tasks are reassigned, the routes of the mobile robot are recomputed. • Real-Time Data Analytics Software : Our proprietary software aggregates and synthesizes system data to provide real-time analytics and actionable insights regarding inventory levels, system throughput, accuracy, and performance.
Hardware • Intelligent Autonomous Mobile Robots : Our intelligent, autonomous mobile robots utilize a suite of sensors to handle cases and locate, retrieve, and transport approximately 80% of the SKUs in our customers’ facilities at speeds of up to 25 mph (10 times faster than the average human) with 99.9999% accuracy.
Key elements of the hardware and software components are as follows: • Intelligent Autonomous Mobile Robots : Our intelligent, autonomous mobile robots utilize a suite of sensors to handle cases and locate, retrieve, and transport approximately 80% of the SKUs in our customers’ facilities at speeds of up to 25 mph (10 times faster than the average human) with 99.9999% accuracy.
Our platform has an approximate useful life of 25 to 30 years and is so space efficient that it can be installed in phases in operating distribution centers with minimal impact to operations.
Our system has an approximate useful life of 25 to 30 years and is so space efficient that it can be installed in phases in operating warehouses with minimal impact to operations.
The Symbot picks up a case from the lift and enters the transfer deck on its way to the appropriate aisle. The Symbots are routed by our proprietary artificial intelligence software to the aisle and location where a case is to be placed.
The Symbot picks up a case from the lift and enters the transfer deck on its way to the appropriate aisle. The Symbot is routed by our proprietary A.I. software to the aisle and location where a case is to be placed.
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.
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 our system for GreenBox.
Since the flow of goods through our platform is highly dynamic and related parameters are constantly changing, the engine reoptimizes every task that needs to be completed multiple times per second. The re-optimization is based on the supply of goods on hand, the location of those goods, and the assets available within the buffering structure.
Since the flow of goods through our system is highly dynamic and the related parameters are constantly changing, the engine reoptimizes every task that needs to be completed multiple times per second. The re-optimization is based on the supply of goods, the location of those goods, and the storage shelves available within the storage structure.
We are also able to install our systems in phases, allowing the existing warehouse facility to continue to operate while the transition to our systems is underway. Finally, we can easily reconfigure and expand our systems to accommodate SKU proliferation as our customers’ needs and strategies evolve.
We are also able to install our system in phases, allowing the existing warehouse facility to continue to operate during the transition to our system. Finally, we can easily reconfigure and expand our system to accommodate SKU proliferation as our customers’ needs and strategies evolve.
At the same time, manufacturers continue to adopt mass personalization product strategies, adding to a growing number of new SKUs and accelerating the frequency and speed of SKU transitions. These trends require retailers to find a way to efficiently store, handle, and make available a wider variety of SKUs while managing seasonal and geographic variability.
At the same time, manufacturers continue to adopt mass personalization product strategies, which adds to an already growing number of SKUs and accelerates the frequency and speed of SKU transitions. These trends require retailers to find a way to efficiently store, handle, and make available a wider variety of SKUs while managing seasonal and geographic variability.
Walmart We have worked with Walmart since 2015 and entered into the initial Walmart MAA in 2017 and restated and amended that agreement in January 2019.
Walmart We have worked with Walmart since 2015 and entered into the initial Walmart Master Automation Agreement (“MAA”) in 2017 and restated and amended that agreement in January 2019.
It also determines, orders, and assigns all the tasks to be performed by the system. Finally, the engine manages the safety systems within the platform by monitoring physical access and related zonal lockouts.
It also determines, orders, and assigns all the tasks to be performed by our system. Finally, the Storage and Retrieval Engine manages safety within our system by monitoring physical access and related zonal lockouts.
This gives us approximately 200,000 linear feet of storage in our average sized platform. The levels are connected vertically by a series of lifts. • Lifts : Upon exit from the scan tunnel, the case moves to a collection of lifts that function like a bank of elevators in a building.
Our average sized system has 200,000 linear feet of storage. The levels are connected vertically by a series of lifts. • Lifts : Upon exit from the scan tunnel, the case moves to a collection of lifts that function like a bank of elevators in a building.
Next, the location and status of every platform asset and every case of goods is evaluated, and mobile robot routes are assigned to optimally perform all the put-away and retrieval tasks.
Next, the location and status of every part of our system and every case of goods is evaluated, and mobile robot routes are assigned to optimally perform all the put-away and retrieval tasks.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf 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).
Biggest changeIf our remediation of the material weaknesses is not effective, or we identify additional material weaknesses or other adverse findings in the future, our ability to report our financial condition or results of operations accurately or timely or prevent fraud may be adversely affected, which may result in a loss of investor confidence in our financial reports, significant expenses to remediate any internal control deficiencies, and ultimately have an adverse effect on the trading price of our common stock. • Risk related to intellectual property, including that: • We may need to bring, or defend ourselves against, IP infringement or misappropriation claims, which may adversely affect our business, financial condition and results of operations by limiting our ability to use certain IP and causing us to incur substantial costs. • Our business, financial condition and results of operations may be adversely affected and the value of our brand, System and other intangible assets may be diminished if we are unable to maintain and protect our IP (including maintaining the confidentiality and control of our proprietary source code and other trade secrets) from unauthorized use, infringement or misappropriation by third parties. • Risks related to cybersecurity, software deficiencies, service interruptions and data privacy, including that: • We have experienced cybersecurity incidents in the past and may experience further cybersecurity incidents or security breaches of our IT or OT in the future, which may result in system disruptions, shutdowns, unauthorized access to or disclosure of confidential or personal information. • Our ability to efficiently manage and expand our business depends significantly on the reliability, capacity and protection of our IT.
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.
Risk Factors In evaluating our business and the Company, 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.
In the future, we expect to obtain financing or to further increase our capital resources by issuing additional shares of our capital stock or offering debt or other equity securities, including senior or subordinated notes, debt securities convertible into equity, or shares of preferred stock.
In the future, we expect to obtain financing or further increase our capital resources by issuing additional shares of our capital stock or offering debt or other equity securities, including senior or subordinated notes, debt securities convertible into equity, or shares of preferred stock.
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.
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.
When we acquire New Symbotic Holdings Common Units from existing unitholders, both the existing basis and the anticipated basis adjustments are likely to increase (for tax purposes) depreciation and amortization deductions allocable to us from New Symbotic Holdings and therefore reduce the amount of income tax that we would otherwise be required to pay in the future.
When we acquire New Symbotic Holdings Common Units from existing unitholders, both the existing basis and anticipated basis adjustments are likely to increase (for tax purposes) depreciation and amortization deductions allocable to us from New Symbotic Holdings and therefore reduce the amount of income tax that we would otherwise be required to pay in the future.
In addition, future mergers or acquisitions may require us to obtain additional equity or debt financing, which may not be available on attractive terms. Moreover, to the extent a transaction financed by non-equity consideration results in goodwill, it will reduce our tangible net worth, which might have an adverse effect on credit availability.
Future mergers or acquisitions may require us to obtain additional equity or debt financing, which may not be available on attractive terms. Moreover, to the extent a transaction financed by non-equity consideration results in goodwill, it will reduce our tangible net worth, which might have an adverse effect on credit availability.
In addition, our software platform contains third-party open source components, which may expose us to greater security risks than the use of non-open source third-party commercial software. We have experienced cyber threats and incidents in the past, although none have been material or had a material adverse effect on our business or financial condition.
In addition, our software contains third-party open source components, which may expose us to greater security risks than the use of non-open source third-party commercial software. We have experienced cyber threats and incidents in the past, although none have been material or had a material adverse effect on our business or financial condition.
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.
In the past, an unauthorized actor gained access to our IT, 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.
This concentrated control will limit or preclude your ability to influence corporate matters for the foreseeable future. Transfers by holders of Class V-3 common stock will generally result in those shares converting to Class V-1 common stock, subject to limited exceptions, such as certain transfers effected for estate planning or charitable purposes.
This concentrated control will limit or preclude your ability to influence our corporate matters for the foreseeable future. Transfers by holders of our Class V-3 common stock will generally result in those shares converting to Class V-1 common stock, subject to limited exceptions, such as certain transfers effected for estate planning or charitable purposes.
Alternatively, if a court were to find the choice of forum provision contained in the Charter to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.
Alternatively, if a court were to find the choice of forum provision contained in our Charter to be inapplicable or unenforceable, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations and financial condition.
Real or perceived failures or security breaches of our systems and IT could disrupt our operations, lead to loss of proprietary information, damage our relationships with customers, result in regulatory investigations and penalties, lead to liability, negatively impact our reputation and otherwise adversely affect our business, financial condition and results of operations.
Real or perceived failures or security breaches of our IT could disrupt our operations, lead to loss of proprietary information, damage our relationships with customers, result in regulatory investigations and penalties, lead to liability, negatively impact our reputation and otherwise adversely affect our business, financial condition and results of operations.
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.
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 Exchanges, and the tax rates then in effect.
Supply chain interruptions may increase our costs or reduce our revenue. We depend on good vendor relationships and the effectiveness of our supply chain management systems to ensure reliable and sufficient supply, on reasonably favorable terms, of materials used in our manufacturing processes.
Supply chain interruptions may increase our costs or reduce our revenue. We depend on good vendor relationships and the effectiveness of our supply chain management to ensure reliable and sufficient supply, on reasonably favorable terms, of materials used in our manufacturing processes.
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.
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; • competitors or third parties may reverse engineer, circumvent or design around our technology or IP or independently discover or develop technologies 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; 30 Table of Contents • 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; • any goodwill that we have developed in our 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.
If we are unable to continue offering innovative systems, software, services and products, we may be unable to attract additional customers or retain our existing customers, which could harm our business, results of operations and financial condition.
If we are unable to continue offering innovative software, services and products, we may be unable to attract additional customers or retain our existing customers, which could harm our business, results of operations and financial condition.
If we cannot successfully defend any large claim, maintain our general liability insurance on acceptable terms or maintain adequate coverage against potential claims, our financial results could be adversely impacted. If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards and changing business needs, requirements or preferences, our products may become less competitive.
If we cannot successfully defend any large claim, maintain our general liability insurance on acceptable terms or maintain adequate coverage against potential claims, our financial results could be adversely impacted. If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards and changing business needs, requirements or preferences, our System may become less competitive.
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.
Although we monitor our use of open-source software to avoid subjecting our System 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 System.
Our business, financial condition and results of operations may be adversely affected and the value of our brand, products and other intangible assets may be diminished if we are unable to maintain and protect our IP (including maintaining the confidentiality and control of our proprietary source code and other trade secrets) from unauthorized use, infringement or misappropriation by third parties.
Our business, financial condition and results of operations may be adversely affected and the value of our brand, System and other intangible assets may be diminished if we are unable to maintain and protect our IP (including maintaining the confidentiality and control of our proprietary source code and other trade secrets) from unauthorized use, infringement or misappropriation by third parties.
Our operating costs are subject to fluctuations, particularly due to changes in prices for commodities, parts, raw materials, energy and related utilities, freight and cost of labor which may be driven by inflation, prevailing price levels, exchange rates, changes in trade agreements and trade protection measures including tariffs and other economic factors.
Our operating costs are subject to fluctuations, particularly due to changes in prices for commodities, parts, raw materials, energy and related utilities, freight and labor, which may be driven by inflation, prevailing price levels, exchange rates, changes in trade agreements and trade protection measures including tariffs and other economic factors.
Our business also uses IT resources on a dispersed basis for a wide variety of key functions including product and software development, engineering, manufacturing, sales, accounting, human resources and IT security. Our vendors, partners, employees and customers have access to, and share, information across multiple locations via various digital technologies.
Our business also uses IT resources on a dispersed basis for a wide variety of key functions including hardware and software development, engineering, manufacturing, sales, accounting, human resources and security. Our vendors, partners, employees and customers have access to, and share, information across multiple locations via various digital technologies.
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.
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 34 Table of Contents regulations or other obligations could result in claims and litigation against us, regulatory investigations and other proceedings, legal liability, fines, damages and other costs.
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.
Our business, financial condition, results of operations and 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 COVID-19, which could adversely affect our business, financial condition and results of operations.
Risks Related to Cybersecurity, Software Deficiencies, Service Interruptions and Data Privacy We have experienced cybersecurity incidents in the past and may experience further cybersecurity incidents or security breaches of our systems or IT in the future, which may result in system disruptions, shutdowns or unauthorized access to or disclosure of confidential or personal information.
Risks Related to Cybersecurity, Software Deficiencies, Service Interruptions and Data Privacy We have experienced cybersecurity incidents in the past and may experience further cybersecurity incidents or security breaches of our IT or OT in the future, which may result in system disruptions, shutdowns, unauthorized access to or disclosure of confidential or personal information.
In addition, we publish privacy policies and other documentation regarding our collection, use, disclosure, and other processing of personal information. Although we endeavor to adhere to these policies and documentation, we and the third parties on which we rely may at times fail to do so or may be perceived to have failed to do so.
We publish privacy policies and other documentation regarding our collection, use, disclosure, and other processing of personal information. Although we endeavor to adhere to these policies and documentation, we, and the third parties on which we rely, may at times fail to do so or may be perceived to have failed to do so.
Despite the implementation of security measures, our IT and OT systems may be subject to unauthorized access or harm by nation states, cyber-criminals, malicious insiders and other actors who may engage in fraud, theft of confidential or proprietary information, sabotage or other criminal activity.
Despite our implementation of security measures, our IT and OT may be subject to unauthorized access or harm by nation states, cyber-criminals, malicious insiders and other actors who may engage in fraud, theft of confidential or proprietary information, sabotage or other criminal activity.
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.
Even in the absence of any security breach, customer concerns about security, privacy or data protection may deter them from using our System, software and services, which could negatively impact our reputation and otherwise adversely affect our business, financial condition and results of operations.
The actual increase in our allocable share of New Symbotic Holdings’ tax basis in its assets, as well as the amount and timing of any payments under the Tax Receivable Agreement, vary depending upon a number of factors, including the timing of Exchanges, the market price of our Class A Common Stock at the time of the Exchanges, the extent to which such Exchanges are taxable, the amount and timing of the recognition of our income, the tax rate then applicable, and the portion of our payments under the Tax Receivable Agreement constituting imputed interest.
The actual increase in our allocable share of New Symbotic Holdings’ tax basis in its assets, as well as the amount and timing of any payments under the TRA, vary depending upon a number of factors, including the timing of Exchanges, the market price of our Class A Common Stock at the time of the Exchanges, the extent to which such Exchanges are taxable, the amount and timing of the recognition of our income, the tax rate then applicable, and the portion of our payments under the TRA constituting imputed interest.
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.
Among other things, our Charter and/or Bylaws includes the following provisions: • prohibition on stockholder action by written consent, which means that our stockholders will only be able to act at a meeting of stockholders and will not be able to act by written consent; • forum selection clause, which means certain litigation against us can only be brought in Delaware; • authorization of undesignated preferred stock, the terms of which may be established and shares 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.
Our ability to efficiently manage and expand our business depends significantly on the reliability, capacity and protection of our systems and IT.
Our ability to efficiently manage and expand our business depends significantly on the reliability, capacity and protection of our IT.
The actual payment amounts may materially differ from these hypothetical amounts, as potential future reductions in tax payments for us and Tax Receivable Agreement payments by us are calculated using the market value of our Class A Common Stock at the time of an Exchange and the prevailing tax rates applicable to us over the life of the Tax Receivable Agreement and is dependent on us generating sufficient future taxable income to realize the benefit.
The actual payment amounts may materially differ from these hypothetical amounts, as potential future reductions in tax payments for us and TRA payments by us are calculated using the market value of our Class A Common Stock at the time of an Exchange and the prevailing tax rates applicable to us over the life of the TRA and is dependent on us generating sufficient future taxable income to realize the benefit.
If New Symbotic Holdings were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, we and New Symbotic Holdings might be subject to potentially significant tax inefficiencies, and we would not be able to recover payments previously made by us under the Tax Receivable Agreement even if the corresponding tax benefits were subsequently determined to have been unavailable due to such status.
If New Symbotic Holdings were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, we and New Symbotic Holdings might be subject to potentially significant tax inefficiencies, and we would not be able to recover payments previously made by us under the TRA even if the corresponding tax benefits were subsequently determined to have been unavailable due to such status.
Our business requires the collection, use, handling, processing, transfer and storage of employee and customer data, and such activities may be regulated by third-party agreements and our own privacy policies as well as certain federal, state and foreign laws and regulations.
Our business requires the collection, use, handling, processing, transfer and storage of employee and customer data, and such activities may be regulated by third-party agreements, our own privacy policies and certain federal, state and foreign laws and regulations.
Our success depends on our ability to protect our IP (including by obtaining and enforcing our patents and trademarks and maintaining the confidentiality of our proprietary source code and other trade secrets), and the failure to adequately maintain, protect or enforce our IP could result in our competitors offering products or services similar or superior to ours, which would adversely affect our business, prospects, financial condition and operating results.
Our success depends on our ability to protect our IP (including by obtaining and enforcing our patents and trademarks and maintaining the confidentiality of our proprietary source code and other trade secrets), and the failure to adequately maintain, protect or enforce our IP could result in our competitors offering products or services similar or superior to ours, which would adversely affect our business, financial, condition or results of operations.
Our operating costs have in the past and may continue to be impacted by price inflation. The U.S. has enacted various trade actions, including imposing tariffs on certain goods we import from other countries, which has also contributed to higher costs for some commodities and raw materials.
In the past, our operating costs have been impacted by price inflation and these costs may continue to be so impacted. The U.S. has enacted various trade actions, including imposing tariffs on certain goods we import from other countries, which has also contributed to higher costs for some commodities and raw materials.
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.
Our IT and OT could be compromised by malware (including ransomware), cyber-attacks 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 System to a risk of compromise.
Compliance with state, federal and foreign privacy regulations, such as the California Consumer Privacy Act or the European Union’s General Data Protection Regulation, could increase our operating costs as part of our efforts to protect and safeguard our sensitive data and personal information. Failure to maintain information privacy could result in legal liability or reputational harm.
Compliance with state, federal and foreign privacy regulations, such as the California Consumer Privacy Act or the European Union’s General Data Protection Regulation, could increase our operating costs as part of our efforts to protect and safeguard our sensitive data and personal information. Failure to maintain information privacy and security could result in business interruption, legal liability and reputational harm.
If we are unable to develop new solutions, adapt to technological change, sell our software, services and products into new markets or further penetrate our existing markets, our revenue may not grow as expected.
If we are unable to develop new solutions, adapt to technological change, sell our software, services and System into new markets or further penetrate our existing markets, our revenue may not grow as expected.
If our business does not generate the level of revenue required to support our investment, our business, financial condition and results of operations could be adversely affected. Our ability to effectively manage our anticipated growth and expansion of our operations will also require us to enhance our operational, financial and management controls and infrastructure, human resources policies and reporting systems.
If we do not generate the level of revenue required to support our investment, our business, financial condition and results of operations could be adversely affected. Our ability to effectively manage our anticipated growth and expansion will also require us to enhance our operational, financial and management controls and infrastructure, human resources policies and reporting systems.
Additional tariffs imposed by the U.S., or further retaliatory trade measures taken by other countries, could increase the cost of our products that we may not be able to offset.
Additional tariffs imposed by the U.S., or further retaliatory trade measures taken by other countries, could increase the cost of our System that we may not be able to offset.
In addition, monitoring and complying with these laws and regulations may be expensive and disruptive to our business, and our real or perceived failure to comply with them could adversely affect our business, financial condition and results of operations.
Monitoring and complying with these laws and regulations may be expensive and disruptive to our business, and our real or perceived failure to comply with them could adversely affect our business, financial condition and results of operations.
Investment banks may also be less likely to agree to underwrite secondary offerings on behalf of Symbotic than they might if Symbotic became a public reporting company by means of a traditional underwritten initial public offering, because they may be less familiar with the Company as a result of more limited coverage by analysts and the media.
Investment banks may also be less likely to agree to underwrite secondary offerings on behalf of us than they might if we became a public reporting company by means of a traditional underwritten initial public offering, because they may be less familiar with us as a result of more limited coverage by analysts and the media.
Any revenue, if any, we may generate from these or other new warehouse automation systems, software, services or products may be lower than revenue generated from our existing warehouse automation systems, software, services and products and may not be sufficient for us to recoup our development or customer acquisition costs incurred, particularly if launch dates are delayed for our new warehouse automation systems, software, services or products or we are unable to scale such systems, products, software or services.
Any revenue we may generate from these or other new Systems, software, services or products may be lower than revenue generated from our existing System, software and services and may not be sufficient for us to recoup our development or customer acquisition costs incurred, particularly if launch dates are delayed for any new System, software, services or products or we are unable to scale such System, products, software or services.
Because the holders of New Symbotic Holdings Common Units hold their economic interests directly in New Symbotic Holdings, rather than through Symbotic, the interests of such holders may conflict with those of the holders of shares of Class A Common Stock of Symbotic.
Because the holders of New Symbotic Holdings Common Units hold their economic interests directly in New Symbotic Holdings, rather than through us, the interests of such holders may conflict with those of the holders of shares of our Class A Common Stock.
Despite our precautions, it may be possible for unauthorized third parties to copy our offering and use information that we regard as proprietary to create products that compete with ours.
Despite our precautions, it may be possible for unauthorized third parties to copy our solution and use information that we regard as proprietary to create products that compete with ours.
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.
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 Limited Liability Company Agreement (“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.
Payments under the Tax Receivable Agreement are expected to give rise to certain additional tax benefits attributable to either further increases in basis or in the form of deductions for imputed interest, depending on the circumstances. Any such benefits are covered by the Tax Receivable Agreement and will increase the amounts due thereunder.
Payments under the TRA are expected to give rise to certain additional tax benefits attributable to either further increases in basis or in the form of deductions for imputed interest, depending on the circumstances. Any such benefits are covered by the TRA and will increase the amounts due thereunder.
This could allow our competitors to create similar product or service offerings with lower development effort and time and ultimately could result in a loss of our competitive advantages.
This could allow our competitors to create similar products or service offerings with lower development effort and time and ultimately could result in a loss of our competitive advantages.
Cybersecurity incidents may also compromise third parties upon which we rely for our operations, and we are limited in our ability to prevent or mitigate those compromises.
Cybersecurity incidents may also compromise third parties upon which we rely for our operations, and we are limited in our ability to prevent or mitigate those compromises or their effects.
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.
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.
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.
To the extent that we are unable to make payments under the TRA for any reason, such payments will accrue interest until paid. Pursuant to the TRA, we are required to make payments to equity holders of New Symbotic Holdings for certain tax benefits we may claim, and those payments may be substantial.
These enhancements and improvements will require significant capital expenditures, investments in additional headcount and other operating expenditures and allocation of valuable management and employee resources. Our future financial performance and our ability to execute on our business plan will depend, in part, on our ability to effectively manage any future growth and expansion.
These enhancements and improvements will require significant capital expenditures, additional headcount, other capital expenditures and allocation of valuable management and employee resources. Our future financial performance and our ability to execute on our business plan will depend, in part, on our ability to effectively manage our growth and expansion.
In addition, even if all of our patent claims are allowed and cover their intended scope, our competitors may circumvent or design around our issued patents, which may adversely affect our business, prospects, financial condition and operating results. Finally, our issued patents may be challenged and invalidated.
In addition, even if all of our patent claims are allowed and cover their intended scope, our competitors may circumvent or design around our issued patents, which may adversely affect our business, financial, condition or results of operations. Finally, our issued patents may be challenged and invalidated.
Moreover, no assurance can be given that these agreements will be enforceable or will be effective in controlling access to, distribution, use, misuse, misappropriation, reverse engineering or disclosure of our proprietary information, know-how and trade secrets. Further, these agreements may not prevent our competitors from independently developing technologies that are substantially equivalent or superior to our offering and platform capabilities.
Moreover, no assurance can be given that these agreements will be enforceable or will be effective in controlling access to, distribution, use, misuse, misappropriation, reverse engineering or disclosure of our proprietary information, know-how and trade secrets. Further, these agreements may not prevent our competitors from independently developing technologies that are substantially equivalent or superior to our System.
We rely on partners and vendors, including cloud providers, for a wide range of outsourced activities as part of our internal IT infrastructure and our commercial offerings.
We rely on partners and vendors, including cloud providers, for a wide range of outsourced activities as part of our internal IT infrastructure and our commercial solution.
If we or the third parties we rely on to operate our business and deliver our services fail to comply, or are perceived as failing to comply, with our legal or contractual obligations relating to privacy, data security, or data protection, or our policies and documentation relating to personal information, we could face: governmental enforcement action; litigation with our customers, individuals or others; fines and civil or criminal penalties for us or company officials; obligations to cease offering our services or to substantially modify them in ways that make them less effective in certain jurisdictions; negative publicity and harm to our brand and reputation; and reduced overall demand for our services.
If we, or the third parties we rely on to operate our business and deliver our services fail to comply, or are perceived as failing to comply, with our legal or contractual obligations relating to privacy, data security, or data protection, or our policies and documentation relating to personal information, we could face: governmental enforcement action; litigation with our customers, individuals or others; fines and civil or criminal penalties for us or our executives; obligations to cease offering our System or to substantially modify it in ways that make it less effective in certain jurisdictions; negative publicity and harm to our brand and reputation; and reduced overall demand for our System.
We entered into the Tax Receivable Agreement, which generally provides for the payment by us to the TRA Holders of their proportionate share of 85% of the tax savings, if any, in U.S. federal and state income tax that we realize (or are deemed to realize in certain circumstances) as a result of (i) the existing tax basis in certain assets of New Symbotic Holdings that is allocable to the relevant New Symbotic Holdings Common Units, (ii) any step-up in tax basis in New Symbotic Holdings’ assets resulting from the relevant Exchanges and certain distributions (if any) by New Symbotic Holdings and payments under the Tax Receivable Agreement, and (iii) tax benefits related to imputed interest deemed to be paid by us as a result of payments under the Tax Receivable Agreement.
We entered into the TRA, which generally provides for the payment by us to certain legacy equity holders of New Symbotic Holdings (“TRA Holders”) of their proportionate share of 85% of the tax savings, if any, in U.S. federal and state income tax that we realize (or are deemed to realize in certain circumstances) as a result of (i) the existing tax basis in certain assets of New Symbotic Holdings that is allocable to the relevant New Symbotic Holdings Common Units, (ii) any step-up in tax basis in New Symbotic Holdings’ assets resulting from the relevant Exchanges and certain distributions (if any) by New Symbotic Holdings and payments under the TRA, and (iii) tax benefits related to imputed interest deemed to be paid by us as a result of payments under the TRA.
We rely on a combination of patents, trade secrets (including know-how), employee and third-party invention assignment and nondisclosure agreements, copyright, trademark, and other IP licenses and contractual rights to establish, maintain and protect the IP in and to our systems and technology.
We rely on a combination of patents, trade secrets (including know-how), employee and third-party invention assignment and nondisclosure agreements, copyright, trademark, and other IP licenses and contractual rights to establish, maintain and protect the IP in and to our System.
Our investments in our technology, products and services may not be successful on the timeline we anticipate or at all, and may not result in increased revenue growth.
Our investments in our System, technology and services, may not be successful on the timeline we anticipate or at all and may not result in increased revenue growth.
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.
We may receive inquiries from IP owners inquiring whether we have infringed upon, misappropriated or violated their 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 supply chain automation, may allege infringement, misappropriation or violation of such rights.
A successful claim of infringement, violation or misappropriation against us could materially adversely affect our business, prospects, financial condition and operating results. Any legal proceedings or claims, whether valid or invalid, could result in substantial costs and diversion of resources.
A successful claim of infringement, violation or misappropriation against us could materially adversely affect our business, financial, condition or results of operations. Any legal proceedings or claims, whether valid or invalid, could result in substantial costs and diversion of resources.
Moreover, because we have no independent means of generating revenue, our ability to make tax payments and payments under the Tax Receivable Agreement is dependent on the ability of New Symbotic Holdings to make distributions to us in an amount sufficient to cover our tax obligations and obligations under the Tax Receivable Agreement.
Moreover, because we have no independent means of generating revenue, our ability to make tax payments and payments under the TRA is dependent on the ability of New Symbotic Holdings to make distributions to us in an amount sufficient to cover our tax obligations and obligations under the TRA.
Fluctuations in our operating results and financial condition may be due to a number of factors, including: • the portion of our revenue attributable to software license and maintenance fees and system operation service fees versus milestone payments for system installation and other sales; • changes in pricing by us in response to competitive pricing actions; • the ability of our equipment vendors to continue to manufacture high-quality products and to supply sufficient products to meet our demands; • the impact of shortages of components, commodities or other materials, including semiconductors and integrated circuits, and other supply chain disruptions; • our ability to control costs, including our operating expenses and the costs of the equipment we purchase; • the timing and success of introductions of new solutions, products or upgrades by us or our competitors; • changes in our business and pricing policies or those of our competitors; • competition, including entry into the industry by new competitors and new offerings by existing competitors; • our ability to successfully manage any past or future acquisitions, strategic transactions and integrations of businesses; • our ability to obtain, maintain, protect or enforce our IP (as defined herein), including our trademarks and patents, and maintaining the confidentiality of our trade secrets; • the amount and timing of expenditures, including those related to expanding our operations, increasing research and development, improving facilities and introducing new warehouse automation systems; • the ability to effectively manage growth within existing and new markets domestically and abroad; • changes in the payment terms for our warehouse automation systems; • the strength of regional, national and global economies; • the impact of cybersecurity incidents or security breaches; and • the impact of natural disasters, health pandemics or man-made problems such as terrorism.
Fluctuations in our operating results and financial condition may be due to a number of factors, including: • the portion of our revenue attributable to software license and maintenance fees and System operation service fees versus milestone payments for System installation and other sales; • changes in pricing by us in response to competitive pricing actions; • the ability of our equipment vendors to continue to manufacture high-quality products and to supply sufficient products to meet our demands; • the impact of shortages of components, commodities or other materials, including semiconductors and integrated circuits, and other supply chain disruptions; • our ability to control costs, including our operating expenses and the costs of the equipment we purchase; • the timing and success of introductions of new solutions, products or upgrades by us or our competitors; • changes in our business and pricing policies or those of our competitors; • competition, including entry into the industry by new competitors and new offerings by existing competitors; • our ability to successfully manage any past or future acquisitions, strategic transactions and integrations of businesses; • our ability to obtain, maintain, protect or enforce our intellectual property or proprietary rights (“IP”) and maintain the confidentiality of our trade secrets; • the amount and timing of expenditures, including those related to expanding our operations, increasing research and development, improving facilities and introducing new supply chain automation solutions; • the ability to effectively manage growth within existing and new markets domestically and abroad; • changes in the payment terms for our System; • the strength of regional, national and global economies; • the impact of cybersecurity incidents or security breaches; and • the impact of natural disasters, health pandemics or man-made problems such as terrorism.
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.
Additionally, certain functional areas of our workforce work remotely and such a remote work 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, cybersecurity attacks and unauthorized dissemination of sensitive, proprietary or confidential information.
In addition, we may be exposed to recalls, product replacements or modifications, write-offs of inventory, property, plant and equipment or intangible assets, and significant warranty and other expenses such as litigation costs and regulatory fines.
In addition, we 25 Table of Contents may be exposed to recalls, product replacements or modifications, write-offs of inventory, property, plant and equipment or intangible assets, and significant warranty and other expenses such as litigation costs and regulatory fines.
We, our customers, and third parties whom we work with are subject to numerous evolving and increasingly stringent foreign and domestic laws and requirements relating to privacy, data security, and data protection that are increasing the cost and complexity of operating our business.
We, our customers, and third parties whom we work with are subject to numerous evolving and increasingly stringent foreign and domestic laws and requirements relating to privacy, data security, and data loss prevention that are increasing the cost and complexity of operating our business.
Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our offering and platform capabilities, impair the functionality of our offering and platform capabilities, delay introductions of new solutions, result in our substituting inferior or more costly technologies into our offering, or injure our reputation.
Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our System, impair the functionality of our System, delay introductions of new solutions, result in our substituting inferior or more costly technologies into our System, and injure our reputation.
To the extent that we are unable to make timely payments under the Tax Receivable Agreement for any reason, the unpaid amounts will be deferred and will accrue interest until paid; however, nonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement and therefore accelerate payments due under the Tax Receivable Agreement, as further described below.
To the extent that we are unable to make timely payments under the TRA for any reason, the unpaid amounts will be deferred and will accrue interest until paid; however, nonpayment for a specified period may constitute a material breach of a material obligation under the TRA and therefore accelerate payments due under the TRA, as further described below.
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.
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.
For example, the holders of New Symbotic Holdings Common Units may have a different tax position from the holders of Class A Common Stock of Symbotic, which could influence decisions regarding whether and when New Symbotic Holdings should dispose of assets or incur new indebtedness, undergo certain changes of control within the meaning of the Tax Receivable Agreement, or terminate the Tax Receivable Agreement.
For example, the holders of New Symbotic Holdings Common Units may have a different tax position from the holders of our Class A Common Stock, which could influence decisions regarding whether and when New Symbotic Holdings should dispose of assets or incur new indebtedness, undergo certain changes of control within the meaning of the TRA, or terminate the TRA.
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.
If supply chain automation technology does not continue to gain broader market acceptance as an alternative to conventional manual operations, or if the marketplace adopts supply chain automation technologies that differ from ours, we may not be able to increase or sustain the level of sales of our solution, 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 robotics and supply chain automation industries are still developing and may restrict our business or increase the costs of our System, making our System less competitive or adversely affecting our revenue growth.
As with any company with limited resources, there can be no guarantee that we will be able to attract such individuals or that the presence of such individuals will necessarily translate into profitability for us.
As 22 Table of Contents with any company with limited resources, there can be no guarantee that we will be able to attract such individuals or that the presence of such individuals will necessarily translate into profitability for us.
Real or perceived errors, failures, bugs or defects in our systems or IT could adversely lead to liability and litigation, disrupt our operations and could negatively impact our reputation and otherwise adversely affect our business, financial condition and results of operations.
All of which could adversely affect our business and results of operations. Real or perceived errors, failures, bugs or defects in our IT could adversely lead to liability and litigation, disrupt our operations and could negatively impact our reputation and otherwise adversely affect our business, financial condition and results of operations.
Our overlapping executive officers and directors with C&S Wholesale Grocers may result in the diversion of corporate opportunities to C&S Wholesale Grocers and other conflicts, and provisions in our certificate of incorporation may provide us no remedy in those circumstances.
Our overlapping executive officers and directors with C&S Wholesale Grocers may result in the diversion of corporate opportunities to C&S Wholesale Grocers and other conflicts, and provisions in our Charter may provide us no remedy in those circumstances.
Further, if a high profile security breach occurs with respect to another provider of supply chain automation solutions, our customers and potential customers may lose trust in the security of our services or in the supply chain automation industry generally, which could adversely impact our ability to retain existing customers or attract new ones.
Further, if a high-profile security breach occurs with respect to another provider of supply chain automation solutions, our customers may lose trust in the security of our System or in the supply chain automation industry generally, which could adversely impact our ability to retain existing customers or attract new ones.
In addition, because Symbotic did not become a public reporting company by means of a traditional underwritten initial public offering, security or industry analysts may not provide, or be less likely to provide, coverage of Symbotic.
In addition, because we did not become a public reporting company by means of a traditional underwritten initial public offering, security or industry analysts may not provide, or be less likely to provide, coverage of us.
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.
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 87.4% of the voting power of our outstanding common stock and are able to control all matters submitted to our stockholders for approval.
To the extent C&S Wholesale Grocers decides not to renew its current contracts with us or to implement additional Symbotic warehouse automation systems in their distribution centers, our business, financial condition or results of operations may be materially and adversely affected.
To the extent C&S Wholesale Grocers decides not to renew its contracts with us or to implement additional Systems in their distribution centers, our business, financial condition or results of operations may be materially and adversely affected.
The Up-C structure allows the Warehouse unitholders to retain their equity ownership in New Symbotic Holdings, an entity that is classified as a partnership for U.S. federal income tax purposes, in the form of New Symbotic Holdings Common Units.
The Up-C structure allows the Warehouse Technologies LLC unitholders to retain their equity ownership in New Symbotic Holdings, an entity that is classified as a partnership for U.S. federal income tax purposes, in the form of common units of New Symbotic Holdings (“New Symbotic Holdings Common Units”).
As a result, in certain circumstances we could make payments under the Tax Receivable Agreement in excess of our actual income or franchise tax savings, which could materially impair our financial condition.
As a result, in certain circumstances we could make payments under the TRA in excess of our actual income or franchise tax savings, which could materially impair our financial condition.
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.
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 supply chain automation system (“System”), as well as investments in further optimizing our System, technology 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.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our corporate headquarters is in an approximately sixty-six thousand square foot facility that we lease in Wilmington, Massachusetts. The lease expires in May 2025, and we have the option to extend for an additional five-year period. Our other leased facilities are summarized below.
Biggest changeItem 2. Properties Our corporate headquarters is in an approximately 66,000 square foot facility that we lease in Wilmington, Massachusetts. The lease expires in May 2025, and subsequent to our fiscal year end we opted to extend the lease to December 2030. As of September 28, 2024, our leased facilities are summarized below.
Location ~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
Location ~Size (sq. ft.) Lease Expiration Purpose Wilmington, MA (Main) 66,000 May 2025 Headquarters, R&D & Admin Wilmington, MA 185,000 December 2030 Innovation Center & Testing Montreal, QC 48,000 June 2026 Canadian Headquarters, R&D & Testing Waltham, MA 15,000 March 2025 R&D & Testing

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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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.
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.
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.
Item 3. Legal Proceedings We are subject from time to time to various claims, lawsuits and other legal and administrative proceedings (including those described below). 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 and penalties, non-monetary sanctions or relief.
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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
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For additional information, see “Risk Factors – Risks Related to Our Common Stock - We are party to pending litigation, and we may be subject to future litigation in the operation of our business.
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An adverse outcome in one or more proceedings could adversely affect our business.” SEC Request for Information We have been responding to requests for information from the SEC relating to an investigation by the SEC of alleged violations by us of Rule 21F-17, which prohibits actions to impede an individual from communicating directly with the SEC staff about a possible securities law violation.
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We intend to continue to defend this matter vigorously and cannot predict the outcome of this investigation. 46 Table of Contents Securities Class Actions On August 14, 2024, a putative class action captioned Fox v.
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Symbotic Inc. et al., Case No. 24-cv-12090 was filed in the United States District Court for the District of Massachusetts by an alleged holder of our common stock.
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The complaint asserts claims for violations of federal securities laws against us and two of our officers on the grounds that, among other things, we made false and/or misleading statements related to its expected earnings for the third quarter of fiscal year 2024.
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Based on these allegations, the plaintiff brings claims seeking unspecified damages, attorneys’ fees, expert fees, and other costs and relief on behalf of herself and a putative class of persons who purchased our stock between May 6, 2024 and July 29, 2024.
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On September 11, 2024, the court entered a stipulation staying our deadline to respond to the complaint until after a lead plaintiff has been appointed pursuant to the Private Securities Litigation Reform Act. On October 15, 2024, four alleged shareholders filed motions seeking to be appointed as lead plaintiff.
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As of November 7, 2024, one alleged shareholder has withdrawn her motion for appointment as lead plaintiff, and two others have filed papers stating that they do not oppose the competing motion of the movant who claimed the largest losses, Dr. Seshagiri Rao Kalapala, and his selection of Levi & Korsinsky, LLP as lead counsel.
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As of December 3, 2024, the court has not yet ruled on the pending lead plaintiff motions. On December 3, 2024, a putative class action captioned Decker v. Symbotic Inc. et al., Case No. 24-cv-12976 was filed in the United States District Court for the District of Massachusetts by an alleged purchaser of our common stock.
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The complaint asserts claims for violations of federal securities laws against us and three of our officers on the grounds that we made false and/or misleading statements related to our revenue recognition and the effectiveness of our disclosure controls and procedures.
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Based on these allegations, the plaintiff brings claims seeking unspecified damages, attorneys’ fees, expert fees, and other costs and relief on behalf of himself and a putative class of persons who purchased our stock between February 8, 2024 and November 26, 2024. We intend to vigorously defend these cases.
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If a court ultimately determines that we are liable in either or both of these cases, we may be subject to substantial damages. We cannot predict with any degree of certainty the outcome of these matters or determine the extent of any potential liabilities. We also cannot provide an estimate of the possible loss or range of loss.
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Any adverse outcome in these matters could expose us to substantial damages that may have a material adverse impact on our operations and cash flows.
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Despite the potential for significant damages, we do not believe, based on currently available information, that the outcome of these proceedings will have a material adverse effect on our financial condition, although the outcome could be material to our operating results for any particular period, depending, in part, upon the operating results for such period.
Added
Shareholder Derivative Actions On October 2, 2024, two putative shareholder derivative actions captioned Austen v. Cohen et al., 24-cv-12522 and Kukreja v. Cohen et al., 24-cv-12523 were filed in the United States District Court for the District of Massachusetts by our alleged shareholders.
Added
The actions assert claims on behalf of us against certain senior officers and members of our board of directors for, among others, breach of fiduciary duty, unjust enrichment, and violations of federal securities laws based primarily on allegations that the defendants caused or allowed us to disseminate misleading and inaccurate information to shareholders in connection with our expected earnings for the third quarter of fiscal year 2024.
Added
The actions also contend that the defendants wasted corporate assets by exposing us to the securities class action lawsuit filed on August 14, 2024. The actions seek compensatory damages, changes to corporate governance and internal procedures, restitution, costs and attorneys’ fees, and other unspecified relief.
Added
On November 19 and November 20, 2024, the parties filed motions seeking to consolidate the two actions into a single matter, appoint lead plaintiffs’ counsel, and stay any obligation of the defendants to respond to the complaint based on the pendency of the related Fox v. Symbotic securities class action lawsuit (described above). We intend to vigorously defend these cases.
Added
If a court ultimately determines that we are liable, we may be subject to substantial damages. We cannot predict with any degree of certainty the outcome of this matter or determine the extent of any potential liabilities. We also cannot provide an estimate of the possible loss or range of loss.
Added
Any adverse outcome in this matter could expose us to substantial damages that may have a material adverse impact on our operations and cash flows.
Added
Despite the potential for significant damages, we do not believe, based on currently available information, that the outcome of this proceeding will have a material adverse effect on our financial condition, although the outcome could be material to our operating results for any particular period, depending, in part, upon the operating results for such period. Item 4.
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Mine Safety Disclosures Not applicable. PART II 47 Table of Contents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+1 added−1 removed4 unchanged
Biggest changeHolders 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.
Biggest changeHolders of our Common Stock As of December 2, 2024, there were approximately 14 holders of record of our Class A Common Stock, approximately 39 holders of our Class V-1 Common Stock and approximately 15 holders of record of our Class V-3 Common Stock.
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.
Recent Sales of Unregistered Securities None, other than as set forth in our Current Report on Form 8-K filed on July 24, 2023. 48 Table of Contents 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.
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.
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 28, 2024.
Removed
Performance 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.
Added
Performance Graph The following graph shows a 43-month comparison of cumulative total returns for our Class A common stock, the Standard & Poor’s (“S&P”) 500 Index, and the S&P 500 Information Technology Index.

Item 7. Management's Discussion & Analysis

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

88 edited+26 added−18 removed65 unchanged
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.
Biggest changeThe following table shows net cash and cash equivalents provided by (used in) operating activities, net cash and cash equivalents provided by (used in) investing activities, and net cash and cash equivalents provided by (used in) financing activities during the periods presented: Year Ended September 28, 2024 September 30, 2023 (in thousands) Net cash provided by (used in): Operating activities $ (58,077) $ 230,794 Investing activities $ 156,481 $ (299,464) Financing activities $ 371,036 $ (24,101) 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 gains and losses, marketable securities gains and losses, provision for excess and obsolete inventory, and stock-based compensation, as well as changes in operating assets and 57 Table of Contents liabilities.
When we cannot objectively determine that acceptance criteria will be met upon contract inception, cost of revenue relating to systems is deferred and expensed at a point in time upon final acceptance from the customer. If acceptance can be reasonably certain upon contract inception, systems cost of revenue is expensed as incurred.
When we cannot objectively determine that acceptance criteria will be met upon contract inception, cost of revenue relating to Systems is deferred and expensed at a point in time upon final acceptance from the customer. If acceptance criteria can be reasonably certain upon contract inception, Systems cost of revenue is expensed as incurred.
The projection of future taxable income involves significant judgment. In projecting future taxable income, we consider our historical results and incorporate certain assumptions including the growth rate of the Company and the amount, character, and timing of the taxable income in the future. Actual taxable income may differ from our estimates, which could significantly impact the liability under the TRA.
The projection of future taxable income involves significant judgment. In projecting future taxable income, we consider our historical results and incorporate certain assumptions including our growth rate and the amount, character, and timing of the taxable income in the future. Actual taxable income may differ from our estimates, which could significantly impact the liability under the TRA.
We determine whether performance obligations are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether our commitment to provide the services to the customer is separately identifiable from other obligations in the contract.
We determine whether performance obligations are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether our commitment to provide the services to the customer is separately identifiable from other promises in the contract.
Cost of Revenue Our cost of revenue is composed of the following for each of our distinct performance obligations: Systems : Systems cost of revenue consists primarily of material and labor consumed in the production and installation of customer Systems, as well as depreciation expense.
Cost of Revenue Our cost of revenue is composed of the following for each of our distinct performance obligations: Systems : Systems cost of revenue consists primarily of material and labor consumed in the production and installation of Systems, as well as depreciation expense.
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.
The third-party valuations of our 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.
Fees for systems are typically either fixed or cost-plus fixed fee amounts that are due based on the achievement of a variety of milestones beginning at contract inception through final acceptance. The substantial majority of our embedded software component is sold as a perpetual on-premise license, however, we do sell an immaterial amount of term-based on-premise licenses.
Fees for Systems are typically either fixed or cost-plus fixed fee amounts that are due based on the achievement of a variety of milestones beginning at contract inception through final acceptance. The substantial majority of our software is sold as a perpetual on-premise license, however, we do sell an immaterial amount of term-based on-premise licenses.
We exclude these CEO transition charges 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 are not representative of our normal operating activities. • Restructuring charges – Restructuring charges represent the charges incurred associated with certain actions to restructure parts of the Company within the U.S. and Canada.
We exclude these CEO transition charges 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 are not representative of our normal operating activities. • Restructuring charges – Restructuring charges represent charges incurred associated with certain actions to our restructure within the U.S. and Canada.
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.
Additionally, sources of cash provided by operating assets and liabilities of $252.6 million was due to the timing of cash payments to vendors and cash receipts from customers.
Tax Receivable Agreement We entered into the TRA with Legacy Warehouse Holders that provides for the payment by the Company to the Legacy Warehouse Holders of 85% of the benefits, if any, that the Company realizes, or is deemed to realize (calculated using certain assumptions), as a result of (i) the existing tax basis in certain assets of New Symbotic Holdings that is allocable to the relevant New Symbotic Holdings Common Units, (ii) any step-up in tax basis in New Symbotic Holdings’ assets resulting from the relevant Exchanges and certain distributions (if any) by New Symbotic Holdings and payments under the Tax Receivable Agreement, and (iii) tax benefits related to imputed interest deemed to be paid by us as a result of payments under the Tax Receivable Agreement.
Tax Receivable Agreement We entered into the TRA with Legacy Warehouse Holders that provides for the payment by the Company to the Legacy Warehouse Holders of 85% of the benefits, if any, that the Company realizes, or is deemed to realize (calculated using certain assumptions), as a result of (i) the existing tax basis in certain assets of New Symbotic Holdings that is allocable to the relevant New Symbotic Holdings Common Units, (ii) any step-up in tax basis in New Symbotic Holdings’ assets resulting from the relevant Exchanges and certain distributions (if any) by New Symbotic Holdings and payments under the Tax Receivable Agreement, and (iii) tax benefits related to imputed interest deemed to be paid by us as a result of payments under 62 Table of Contents the Tax Receivable Agreement.
The impact of any changes in the projected obligations under the TRA as a result of changes in the geographic mix of the Company’s earnings, changes in tax legislation and tax rates or other factors that may impact the Company’s tax savings will be reflected in income before taxes on the Consolidated Statements of Operations in the period in which the change occurs.
The impact of any changes in the projected obligations under the TRA as a result of changes in the geographic mix of our earnings, changes in tax legislation and tax rates or other factors that may impact our tax savings will be reflected in income before taxes on the Consolidated Statements of Operations in the period in which the change occurs.
Fees for the software maintenance and support services are typically payable in advance on a quarterly, or annual basis over the term of the software maintenance and support service contract, which term can range from one to 15 years but, for a substantial majority of our software maintenance and support contracts, is 15 years.
Fees for Software Maintenance and Support are typically payable in advance on a quarterly, or annual basis over the term of the Software Maintenance and Support contract, which term can range from one to 15 years but, for a substantial majority of our Software Maintenance and Support contracts, is 15 years.
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 have identified the following distinct performance obligations in our contracts with customers: Systems : We design, assemble, and install Systems and perform configuration of essential software. Systems include the delivery of hardware and an essential software component, sold as either a perpetual or term-based on-premise license, that automate our customers’ depalletizing, storage, selection, and palletization warehousing processes.
Any taxable income or loss generated by Symbotic Holdings is passed through to and included in the taxable income or loss of its members, including the Company, on a pro rata basis, subject to applicable tax regulations.
Any taxable income or loss generated by Symbotic Holdings is passed through to and included in the taxable income or loss of its members, including us, on a pro rata basis, subject to applicable tax regulations.
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.
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.
The Symbotic platform is based on a unique approach to connecting producers of goods to end users, in a way that resolves the mismatches of quantity, timing and location that arise between the two, while reducing costs. The underlying architecture of our platform is what differentiates our solution from anything else in the marketplace.
Our System is based on a unique approach to connecting producers of goods to end users, in a way that resolves the mismatches of quantity, timing and location that arise between the two, while reducing costs. The underlying architecture of our System is what differentiates our solution from anything else in the marketplace.
Accordingly, stock-based compensation expense associated with performance-based RSUs may differ significantly from the amount recorded in the current period. The assumptions used in calculating the fair value of stock-based compensation awards represents management’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment.
Accordingly, stock-based 60 Table of Contents compensation expense associated with performance-based RSUs may differ significantly from the amount recorded in the current period. The assumptions used in calculating the fair value of stock-based compensation awards represents management’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment.
Because the VAP Units are settleable in cash, they are treated as liability classified awards. Accordingly, the carrying value of the liability is adjusted to fair value at each reporting period through a charge to earnings (until such time as the VAP Units are settled or forfeited).
Because the VAP 61 Table of Contents Units are settleable in cash, they are treated as liability classified awards. Accordingly, the carrying value of the liability is adjusted to fair value at each reporting period through a charge to earnings (until such time as the VAP Units are settled or forfeited).
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.
Company Overview Our vision is to make the supply chain work better for everyone. We do this by developing, commercializing, and deploying innovative, comprehensive 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.
We exclude these items 53 Table of Contents from our non-GAAP financial measures when evaluating our continuing business performance as such items vary significantly based on the magnitude of the restructuring action and do not reflect future expected operating expenses.
We exclude these items from our non-GAAP financial measures when evaluating our continuing business performance as such items vary significantly based on the magnitude of the restructuring action and do not reflect future expected operating expenses.
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.
Off-Balance Sheet Arrangements: As of September 28, 2024, 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.
The primary changes in working capital items, such as the changes in accounts receivable and deferred revenue, result from the difference in timing of payments from our customers related to system installations and the associated costs incurred by us to fulfill the system installation performance obligation.
The primary changes in working capital items, such as the changes in accounts receivable and deferred revenue, result from the difference in timing of payments from our customers related to Deployments and the associated costs incurred by us to fulfill the System performance obligation.
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.
We exclude Business combination transaction expenses from our non-GAAP financial measures to provide a useful comparison of 55 Table of Contents 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 formed on July 21, 2023.
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.
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.
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.
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; CEO transition charges; joint venture formation fees; restructuring charges; equity financing transaction costs; equity method investment; and other infrequent items that may arise from time to time.
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.
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.
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.
The Systems have both a hardware component and an essential 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 49 Table of Contents the Systems. These services are generally distinct and accounted for as separate performance obligations.
We rely on either observable standalone sales or an expected cost plus a margin approach to determine the standalone selling price of offerings, depending on the nature of the performance obligation.
We rely on either observable standalone sales or an expected cost 59 Table of Contents plus a margin approach to determine the standalone selling price of offerings, depending on the nature of the performance obligation.
Other Income, Net Other income, net primarily consists of dividend and interest income earned on our money market accounts and the impact of foreign currency transaction gains and losses associated with monetary assets and liabilities. Income Taxes As a result of the Business Combination, the Company was appointed as the sole managing member of Symbotic Holdings.
Other Income (Expense), Net Other income (expense), net primarily consists of dividend and interest income earned on our money market accounts and the impact of foreign currency transaction gains and losses associated with monetary assets and liabilities. Income Taxes As a result of the Business Combination, we were appointed as the sole managing member of Symbotic Holdings.
Operation services : We provide our customers with assistance operating the system and ensuring user experience is optimized for efficiency and effectiveness. Fees for operation services are typically invoiced to our customers on a time and materials basis monthly in arrears or using a fixed fee structure.
Operation Services : “Operation Services” is defined as assistance services we provide our customers operating the System and ensuring user experience is optimized for efficiency and effectiveness. Fees for Operation Services are typically invoiced to our customers on a time and materials basis monthly in arrears or using a fixed fee structure.
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 .
Warrant Transactions Warrants to purchase units accounted for as equity instruments represent the warrants issued to Walmart and Sunlight as discussed in Note 21, Stock -Based Compensation and Warrant Units .
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.
Results of Operations for the Years Ended September 28, 2024 and September 30, 2023 The following tables set forth certain consolidated financial data in U.S. dollar amounts and as a percentage of total revenue.
We also received proceeds of $2.6 million from the issuance of common 55 Table of Contents stock under the ESPP upon the expiration of the first two offering periods at the end of December 2022 and June 2023, respectively.
We also received proceeds of $2.6 million from the issuance of common stock under our ESPP upon the expiration of the first two offering periods at the end of December 2022 and June 2023, respectively.
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.
For the discussion and analysis covering the year ended September 30, 2023 compared to the year ended September 24, 2022, 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 30, 2023, as filed with the SEC on December 11, 2023.
Our cash provided by operating assets and liabilities was primarily attributable to an increase in cash receipts from customers as compared to the timing of costs incurred by us to fulfill the system installation performance obligation resulting from the increase in customer contracts and system installations in process during the current fiscal year.
Our cash provided by operating assets and liabilities was primarily attributable to an increase in cash receipts from customers as compared to the timing of costs incurred by us to fulfill the System installation performance obligation resulting from the increase in customer contracts and System installations in process during the year ended September 30, 2023.
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.
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 supply chain automation systems to automate customers’ depalletizing, storage, selection, and palletization warehousing processes.
We define Adjusted gross profit, a non-GAAP financial measure, as GAAP gross profit excluding the following items: depreciation, stock-based compensation, and restructuring charges. We define Adjusted gross profit margin, a non-GAAP financial measure, as non-GAAP Adjusted gross profit divided by total revenue.
We define Adjusted gross profit, a non-GAAP financial measure, as GAAP gross profit excluding the following items: depreciation, 56 Table of Contents stock-based compensation expense, and restructuring charges. We define Adjusted gross profit margin, a non-GAAP financial measure, as non-GAAP Adjusted gross profit divided by total revenue.
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.
The hardware and essential 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.
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.
This section provides an analysis of our financial results for the year ended September 28, 2024 as compared to the year ended September 30, 2023.
Our systems enhance operations at the front end of the supply chain, and therefore benefit all supply partners further down the chain, irrespective of fulfillment strategy.
Our System enhances operations at the front end of the supply chain, and therefore benefit all supply partners further down the chain, irrespective of fulfillment strategy.
It primarily includes investment banker fees, legal fees, professional fees for accountants, transaction fees, advisory fees, due diligence costs, certain other professional fees, and other direct costs associated with strategic activities. These amounts are impacted by the timing of the Business Combination.
It primarily includes investment banker fees, legal fees, professional fees for accountants, transaction fees, advisory fees, due diligence costs, certain other professional fees, and other direct costs associated with strategic activities. These amounts are impacted by the timing of the Business Combination or other strategic acquisition opportunities which we may pursue.
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.
Refer to Note 12, Income Taxes , for further information. Non-GAAP Financial Measures In addition to providing financial measurements based on generally accepted accounting principles in the United States of America, (“GAAP” or “U.S. GAAP”), we provide additional financial metrics that are not prepared in accordance with GAAP, or non-GAAP financial measures.
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.
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. We own 35% of GreenBox and SoftBank Group owns 65% of GreenBox.
The Company is subject to U.S. federal income taxes, in addition to state and local income taxes, with respect to its allocable share of any taxable income or loss of Symbotic Holdings. The Company also has foreign subsidiaries which are subject to income tax in their local jurisdictions.
We are subject to U.S. federal income taxes, in addition to state and local income taxes, with respect to our allocable share of any taxable income or loss of Symbotic Holdings. We also have foreign subsidiaries which are subject to income tax in their local jurisdictions.
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.
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.
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.
The following table summarizes our current and long-term material cash requirements as of September 28, 2024 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 $ 1,286,282 $ 1,206,331 $ 79,951 $ — $ — 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.
As of September 27, 2020, we adopted FASB Accounting Standards Update 2019-08, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606) (“ASU 2019-08”), which requires entities to measure and classify share-based payment awards granted to a customer by applying the guidance under Topic 718.
We have previously adopted Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update 2019-08, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606) (“ASU 2019-08”), which requires entities to measure and classify share-based payment awards granted to a customer by applying the guidance under Topic 718.
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 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.
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.
We expect our current cash and cash equivalents, 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.
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.
Our cash requirements for the year ended September 28, 2024 were primarily related to capital expenditures, 58 Table of Contents inventory purchases in order to deliver to our customers our Systems in an orderly manner in line with our installation timelines, and purchases of marketable securities in order to diversify the composition of our cash balance.
These charges include severance and related expenses for workforce reductions, impairments of inventory and long-lived assets that will no longer be used in operations, and termination fees for any contracts cancelled as part of these programs.
These charges include severance and related expenses for workforce reductions, lower of cost and net realizable value adjustments to inventory and long-lived assets that will no longer be used in operations, and termination fees for any contracts cancelled as part of these actions.
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.
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 performance obligation. Net cash used in operating activities was $(58.1) million for the year ended September 28, 2024.
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.
The following table reconciles GAAP net loss to Adjusted EBITDA during the periods presented (in thousands): Year Ended September 28, 2024 September 30, 2023 September 24, 2022 Net loss $ (84,672) $ (207,894) $ (139,089) Interest income (36,907) (11,391) (1,287) Income tax benefit (expense) 4,212 (4,619) — Depreciation and amortization 20,845 9,475 5,989 Stock-based compensation 120,608 157,023 40,556 Business combination transaction expenses 324 — 4,069 Joint venture formation fees 1,089 14,900 — CEO transition charges — 2,026 — Restructuring charges 33,431 22,899 — Equity financing transaction costs 1,985 — — Equity method investment 777 — — Adjusted EBITDA $ 61,692 $ (17,581) $ (89,762) 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.
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.
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.
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.
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.
Selling, general, and administrative expenses include items for our selling and administrative functions, such as sales, finance, legal, human resources, and information technology support. These functions include costs for items such as salaries and benefits and other personnel-related costs, maintenance and supplies, professional fees for external legal, accounting, and other consulting services, intangible asset amortization, and depreciation expense.
These functions include costs for items such as salaries and benefits and other personnel-related costs, maintenance and supplies, professional fees for external legal, accounting, and other consulting services, intangible asset amortization, and depreciation expense.
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.
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 Inc.
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.
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 provided by investing activities for the year ended September 28, 2024 consisted of $42.2 million of purchased property and equipment.
Deferred tax assets are reduced by a valuation allowance when we believe that it is more-likely- than-not that some portion or all of the deferred tax assets will not be realized. In accordance with ASC 740 we assess whether it is more likely than not that some or all of our deferred tax assets will not be realized.
Income Taxes Deferred tax assets are reduced by a valuation allowance when we believe that it is more-likely- than-not that some portion or all of the deferred tax assets will not be realized. Significant judgment is required in estimating valuation allowances for deferred tax assets.
A significant change in one or more of these estimates could affect the profitability of one of more of our performance obligations and could have a material impact on our financial condition and results of operations. Our warehouse automation systems generally carry a limited warranty that promises the customer that delivered products are as specified.
A significant change in one or more of these estimates could affect the profitability of one of more of our performance obligations and could have a material impact on our financial condition and results of operations.
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.
Financing Activities Our financing activities typically consist of payments and proceeds related to our equity incentive plans for RSUs and our ESPP, and also include proceeds from the exercise of the vested warrants issued to Walmart as well as proceeds from equity financing transactions.
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.
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.
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.
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. To determine stand-alone selling price, we maximize the use of observable standalone sales and observable data, where available.
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.
Allocated overhead and other expenses increased primarily due to an increase in information technology related costs as well as audit and tax expenses as compared to the prior year as our employee base and infrastructure continue to grow.
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.
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.
We consider the nature, frequency, and severity of current and cumulative losses as well as the reversal of existing deferred tax liabilities, historical and forecasted taxable income (exclusive of reversing temporary differences and carryforwards) in our assessment. In evaluating such projections, we consider our history of profitability and cumulative earnings/losses, the competitive environment, and general economic conditions.
The realization of a deferred tax asset ultimately depends on the existence of sufficient taxable income in the applicable carryback or carryforward periods. We consider the nature, frequency, and severity of current and cumulative losses as well as the reversal of existing deferred tax liabilities, historical and forecasted taxable income (exclusive of reversing temporary differences and carryforwards) in our assessment.
Our contractual obligations consist of operating lease liabilities that are included in our consolidated balance sheet and vendor commitments associated with agreements that are legally binding. Our operating lease cash requirements have not changed materially since September 24, 2022, and are disclosed within Note 6, Leases , included elsewhere in this Annual Report on Form 10-K.
Our operating lease cash requirements have not changed materially since September 30, 2023, and are disclosed within Note 7, Leases , included elsewhere in this Annual Report on Form 10-K.
Operation services : Operation services cost of revenue consists primarily of labor cost for our operations team who is providing services to our customers to run their System within their distribution center. Operation services cost of revenue is expensed as incurred. Research and Development Costs incurred in the research and development of our products are expensed as incurred.
Operation Services : Operation Services cost of revenue consists primarily of labor cost for our operations team who is providing services to our customers to run their System within their warehouse. Operation Services cost of revenue also includes the cost of spare parts sold to our customers as needed to service their System.
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.
Year Ended September 28, 2024 September 30, 2023 (in thousands) Revenue: Systems $ 1,705,440 $ 1,138,059 Software maintenance and support 14,173 6,601 Operation services 68,566 32,231 Total revenue 1,788,179 1,176,891 Cost of revenue: Systems 1,466,841 940,076 Software maintenance and support 8,949 9,222 Operation services 66,723 37,854 Total cost of revenue 1,542,513 987,152 Gross profit 245,666 189,739 Operating expenses: Research and development expenses 173,457 195,042 Selling, general, and administrative expenses 188,934 217,927 Total operating expenses 362,391 412,969 Operating loss (116,725) (223,230) Other income, net 37,042 10,716 Loss before income tax and equity method investment (79,683) (212,514) Income tax benefit (expense) (4,212) 4,620 Loss from equity method investment (777) — Net loss $ (84,672) $ (207,894) 51 Table of Contents Year Ended September 28, 2024 September 30, 2023 Revenue: Systems 95 % 97 % Software maintenance and support 1 1 Operation services 4 3 Total revenue 100 100 Cost of revenue: Systems 82 80 Software maintenance and support 1 1 Operation services 4 3 Total cost of revenue 86 84 Gross profit 14 16 Operating expenses: Research and development expenses 10 17 Selling, general, and administrative expenses 11 19 Total operating expenses 20 35 Operating loss (7) (19) Other income, net 2 1 Loss before income tax and equity method investment (4) (18) Income tax benefit (expense) — — Loss from equity method investment — — Net loss (5) % (18) % * Percentages are based on actual values.
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.
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.
Research and development costs include personnel, contracted services, materials, and indirect costs involved in the design and development of new products and services, as well as depreciation expense. Selling, General, and Administrative Selling, general, and administrative expenses include all costs that are not directly related to satisfaction of customer contracts or research and development.
Operation Services cost of revenue is expensed as incurred. Research and Development Costs incurred in the research and development of our products are expensed as incurred. Research and development costs include personnel, contracted services, materials, and indirect costs involved in the design and development of new products and services, as well as depreciation expense.
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.
The increase in Operation Services revenue is attributable to an increase in Operational Systems where we are performing Operation Services for the year ended September 28, 2024, as compared to the year ended September 30, 2023.
Additionally, during the year ended September 30, 2023, we purchased U.S. Treasury securities for $408.2 million, and received proceeds of $130.0 million upon the maturity of certain U.S. Treasury securities. We also capitalized $5.6 million of internal use software development costs related to internal projects which are targeted to improve the capabilities of our warehouse automation system software.
We also capitalized $5.6 million of internal use software development costs related to internal projects which are targeted to improve the capabilities of our System software.
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 30, 2023 consisted of $15.7 million of purchased property and equipment. Additionally, during the year ended September 30, 2023, we purchased U.S. Treasury securities for $408.2 million, and received proceeds of $130.0 million upon the maturity of certain U.S. Treasury securities.
In addition, we consider the time frame over which it would take to utilize the deferred tax assets prior 59 Table of Contents to their expiration.
In evaluating such projections, we consider our history of profitability and cumulative earnings/losses, the competitive environment, and general economic conditions. In addition, we consider the timeframe over which it would take to utilize the deferred tax assets prior to their expiration.
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.
Gross Profit The following table sets forth our gross profit for the years ended September 28, 2024 and September 30, 2023: Year Ended September 28, 2024 September 30, 2023 Change (in thousands) Systems $ 238,599 $ 197,983 $ 40,616 Software maintenance and support 5,224 (2,621) 7,845 Operation services 1,843 (5,623) 7,466 Total gross profit $ 245,666 $ 189,739 $ 55,927 Systems gross profit increased $40.6 million for the year ended September 28, 2024, as compared to the year ended September 30, 2023.
Our foreseeable cash needs, in addition to our recurring operating expenses, include our expected capital expenditures to support expansion of our infrastructure and workforce, and minimum contractual obligations. Contractual obligations are cash that we are obligated to pay as part of certain contracts that we have entered into during our course of business.
Contractual obligations are cash that we are obligated to pay as part of certain contracts that we have entered into during our course of business. Our contractual obligations consist of operating lease liabilities that are included in our consolidated balance sheet and vendor commitments associated with agreements that are legally binding.
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.
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. As of September 28, 2024, we have a cash and cash equivalents balance of $727.3 million.
Software maintenance and support : Software maintenance and support refer to support services that provide our customers with technical support, updates, and upgrades to the embedded software license.
The majority of Systems revenue occurs during Deployment, and once a System reaches acceptance, software maintenance and support begins. Software Maintenance and Support : “Software Maintenance and Support” is defined as support services that provide our customers with technical support, updates, and upgrades to the software license.
The increase resulting from the increased deployments of our warehouse automation system is primarily due to the ongoing Master Automation Agreement with Walmart, for which we are performing the installation and implementation of our warehouse automation system within all of Walmart's 42 regional distribution centers, which is expected to continue to produce systems revenue as the warehouse automation systems are installed and implemented at the remaining regional distribution centers through fiscal year 2028.
The increase in Deployments is primarily due to the continued build out of our Systems included in the Walmart Master Automation Agreement. Pursuant to the Master Automation Agreement, we are installing and implementing our System within all of Walmart’s 42 regional distribution centers.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeForeign 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.
Biggest changeForeign currency transaction losses were less than $0.1 million for the years ended September 28, 2024, September 30, 2023 and September 24, 2022, and were recorded within other income, net on the consolidated statements of operations. Credit Risk Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable.
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.
The Company has no significant off-balance sheet risk such as foreign exchange contracts, options contracts, or other hedging arrangements. 63 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.
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.
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 of our transactions (and those of our subsidiaries) are denominated in currencies other than the functional currency.
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.
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 no marketable securities at September 28, 2024 and short-term available for sale marketable securities consisting of U.S. Treasury Securities of $286.7 million at September 30, 2023.
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.
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 $727.3 million and $258.8 million as of September 28, 2024, and September 30, 2023, respectively.
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.
The Company’s cash and cash equivalents are generally held with large financial institutions. 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 28, 2024, its risk relating to deposits exceeding federally insured limits was not significant.
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
At September 28, 2024, one customer accounted for over 10% of the Company’s accounts receivable balance, and two customers accounted for over 10% of the Company’s accounts receivable balance at September 30, 2023. 64 Table of Contents
Removed
Credit Risk Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company’s cash and cash equivalents are generally held with large financial institutions.

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