What changed in this filing

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Item 1. Business

2023-12-11 compared with 2022-12-09 · 74 added, 39 removed, 418 unchanged (21% of the section changed)

27 unchanged sentences

Our systems are actively deployed in the warehouses of a number of the world’s largest retailers including Walmart, Albertsons, Target, Giant Tiger, and C&S Wholesale Grocers, which is one of the largest grocery wholesalers in the United States and an affiliate of Symbotic.

We have spent significant time working closely with our customers to develop, test, and refine our technology, and our success has translated into a $11.1 billion contracted backlog as of September 24, 2022 to deliver systems from 2022 through 2028, of which $6.1 billion was added to our contracted backlog on May 20, 2022 when we amended and restated the Walmart MAA as described below in “—Customers—Walmart.”

We have spent significant time working closely with our customers to develop, test, and refine our technology, and our success has translated into approximately $23.3 billion of backlog as of September 30, 2023 to deliver systems from 2023 through 2029, of which approximately $6.1 billion was added to our backlog on May 20, 2022 when we amended and restated the Walmart MAA as described below in “—Customers—Walmart” and approximately $11.5

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.

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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.

When considering deeper penetration in our initial verticals, adding additional adjacent verticals, and entering the European market, our total addressable market increases to $373 billion.

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

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In a typical supply chain operation, single-SKU pallets are delivered to a distribution center where hundreds, or thousands, of people are required to move and store pallets of goods, select individual cases from them, combine those individual cases into either store-ready pallets or, in the case of e-commerce fulfillment, unpack those cases so that individual items can be stored in totes or other storage structures before selecting and combining individual items for individual customer order fulfillment.

Even mechanized warehouses require significant human intervention, are very inflexible and face disruption from numerous single points of failure.

mechanized warehouses require significant human intervention, are very inflexible and face disruption from numerous single points of failure.

These factors contribute to high maintenance costs and damage, resulting in limited total cost savings.

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• Labor Scarcity and Cost —As the labor force matures and becomes more highly educated, warehouse labor is becoming increasingly scarce and expensive.

According to InsightQuote’s 2021 Warehousing & Fulfillment Costs & Pricing Survey, average salaries for warehouse management increased to nearly $56,000 in 2021, up 18% from approximately $47,500 in 2017, and average wages for warehouse staff in the U.S.

increased to $14.00 per hour in 2021, up 22% from $11.44 per hour in 2017.

Transportation, warehousing and utilities employment turnover increased 48% from 2016 to 2020, compared to a 35% increase for all workers during the same timeframe, according to the U.S.

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Faster movement enhances throughput and efficiency by clearing aisles more quickly and allowing for more storage and retrieval transactions per hour compared to tray, shuttle or crane-based systems.

Finally, our use of automation and software means our systems can approach true “lights-out” operation (100% up-time with zero human intervention).

use of automation and software means our systems can approach true “lights-out” operation (100% up-time with zero human intervention).

• Original (Native) Package Handling :

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The buffering structure of our platform, where goods are placed, stored, and retrieved, is composed of a number of levels stacked on top of each other.

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 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.

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Cohen is an accomplished business builder, as evidenced by his helping lead sales growth at C&S Wholesale Grocers from $14 million in 1974 to $27 billion in 2018.

Effectively running warehouse operations for the low margin grocery industry, Mr.

Effectively running warehouse operations for the low margin

grocery industry, Mr.

Cohen has been building, running, and innovating warehouses for two generations.

We believe our founder’s deep industry and operational expertise is a core competitive advantage for Symbotic.

Cohen has built a team of experienced board members and executives with a diverse range of technology expertise acquired at industry leading companies and institutions such as Flex, Fortna, IBM, Intuit, Manhattan Associates, MIT, Netezza, RealPage, SoftBank, Staples, Tesla and Walmart.

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.

Unique Team Culture

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Remaining Performance Obligations (“Backlog”)

As of September 24, 2022, Symbotic had a $11.1 billion backlog of orders from its customers, of which approximately 8% is expected to be recognized as revenue in the following twelve months.

As of September 30, 2023, Symbotic had approximately $23.3 billion of backlog of orders from its customers, of which approximately 8% is expected to be recognized as revenue in fiscal year 2024.

The backlog is largely structured on a cost-plus fixed profit basis.

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warehouses in the general merchandise, ambient grocery, ambient food distribution, consumer packaged food, and apparel verticals.

We estimate the size of our initial strategically addressed market to be $126 billion based on the number of warehouses in each of those verticals, our estimates of the percent of warehouses in each vertical that are addressable (over 1,500), and the expected average price of our system and associated recurring revenue.

We estimate that there is an additional $112 billion in market opportunity from our secondary verticals (non-food consumer packaged goods, home improvement, auto parts, third-party logistics, and refrigerated and frozen foods), implying a $238 billion total addressable market in the United States.

We estimate 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 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.

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market opportunity of $321 billion plus our market opportunity in Canada and Europe, which we estimate to be an additional $111 billion.

This implies a total addressable market of $373 billion (over 6,500 distribution centers).

This implies a total addressable market of $432 billion.

To estimate our market opportunity in foreign countries, we currently exclude Asia, but for the remaining countries we assume the number of warehouses in each country relative to the number of warehouses in the U.S.

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We then multiply the resulting number of warehouses by our estimate for the percent of those warehouses that are addressable and by our estimate for the average price of our system and associated recurring revenue outside the U.S.

The GreenBox joint venture was established to serve the needs for outsourced case handling.

Generally known as third party logistics, our focus is on the Warehouse-as-a-Service (WaaS) market.

The WaaS market has witnessed significant growth in recent years, driven by the increasing demand for flexible and scalable warehousing solutions across various industries.

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.

Our analysis of the WaaS market highlights the potential for sustained growth, underpinned by the rise of globalization, outsourcing, e-commerce, and the evolving preferences of businesses seeking cost-effective and agile warehousing solutions.

Our Growth Strategy

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We are currently evaluating opportunities in Europe, Latin America, and the Middle East.

We have started to address the WaaS market and intend to address the WaaS market through our GreenBox joint venture, which we believe is positioned to leverage our expertise and the technology of the Symbotic system, to capture opportunities, meet evolving customer needs, and drive sustainable value for our shareholders.

Most of our target market currently relies on conventional manual and semi-mechanized systems that are labor intensive.

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We do not consider these to be direct competitors at present because we are focused initially on fulfillment to physical stores;

however, they will potentially become partners or competitors as we expand into e-commerce, or if they

expand to brick-and-mortar retail.

however, they will potentially become partners or competitors as we expand into e-commerce, or if they expand to brick-and-mortar retail.

Today, however, these four companies focus primarily on e-commerce, lack case picking technology, and therefore cannot support large retailers with both online and offline operations.

Customer Base

We have a strong blue chip customer base that includes some of the world’s largest retailers and wholesale grocers, including Walmart, Albertsons, UNFI, Target and Giant Tiger, and our affiliate, C&S Wholesale Grocers.

Since inception, our customers have ordered approximately $12.1 billion of systems from us, and as of September 24, 2022, we had orders of approximately $11.1 billion in backlog that we expect to deliver and install over approximately the next eight years.

A substantial majority of the $11.1 billion in backlog relates to the Walmart MAA.

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.

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.

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On May 20, 2022, we again amended and restated the Walmart MAA to further expand our commercial relationship with Walmart and the scope of the Walmart MAA to the implementation of 188 modules, 20 of which are contingent on the satisfaction of certain conditions described in the Walmart MAA, across all of Walmart’s 42 regional distribution centers.

The amendment and restatement added an additional $6.1 billion to our backlog.

The amendment and restatement added approximately an additional $6.1 billion to our backlog.

The implementation of the modules under the Walmart MAA began in 2021 and will continue based upon an agreed-upon timeline, subject to limited adjustment, with the implementation of all modules to begin by the end of 2028.

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On December 12, 2021, we entered into an Investment and Subscription Agreement (the “Investment and Subscription Agreement”) with Walmart.

Pursuant to such agreement, in connection with the amendment and restatement of the Walmart MAA on May 20, 2022, Walmart exercised a warrant to purchase 267,281 units of Warehouse, or 3.7% of the total outstanding units of Warehouse as calculated following the exercise of the warrant and issuance of units thereunder, at an aggregate purchase price of $103,980,327.

Pursuant to such agreement, in connection with the amendment and restatement of the Walmart

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.

We also issued Walmart a new warrant to purchase 258,972 units of Warehouse, or 3.5% of the total outstanding units of Warehouse as calculated on a pro forma basis at the time of the issuance of the warrant, subject to customary adjustments, at an exercise price of $614.34 per unit, which is the estimated value of a unit of Warehouse on the date of the Merger Agreement based on the Exchange Ratio assuming one share of Class A Common Stock is $10.00.

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Additionally, pursuant to the Investment and Subscription Agreement and subject to certain exceptions described therein, Walmart is subject to a standstill agreement that limits Walmart’s ability to pursue certain transactions with respect to Warehouse and the Company until the earlier of (i) December 12, 2025 and (ii) the later of (a) the date on which Walmart owns less than 5% of the fully diluted equity interests of Warehouse or, after the closing of the Business Combination (the “Closing”), the Company and (b) the date that is six months after Walmart no longer has the board observer rights described above.

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.

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 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.

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.

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.

At any time, either party may terminate the commercial agreement in the event of insolvency of the other party or a material breach of the other party that has not been cured.

Our system is typically sold in three parts:

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Finally, we provide training and system operation until the customer assumes operational duties.

Our typical deployment model is to install the system over a period of six to twelve months, operate the system for a limited time, and then transfer daily operation to the customer.

Our typical deployment model is to build and install the system, operate the system for a limited time, and then transfer daily operation to the customer.

Omni-Channel Application

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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.

It does this by managing inbound inventory and inventory levels in the buffering structure against fulfillment orders, optimized to fulfillment gate times.

The System Manager module also creates the pallet build plan based on a variety of factors including the aforementioned inventory levels, but also store and aisle specific plan-o-grams, pallet structure, and even more granular criteria such as isolating hazardous products that require special handling.

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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 newest version of these robots uses vision technology in addition to our autonomous routing algorithms (described above) to achieve optimal speed, safety, and routing.

Our newest version of these

robots uses vision technology in addition to our autonomous routing algorithms (described above) to achieve optimal speed, safety, and routing.

• A.I.-Powered De-Palletizing Robotic Systems :

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Manufacturing and Suppliers

We operate two manufacturing centers with co-located engineering support in Wilmington, Massachusetts, and Montreal, Quebec.

Our Wilmington facility assembles our fully autonomous mobile robots while our facility in Montreal assembles de-palletizing and palletizing robotic cells.

Both facilities use Oracle NetSuite for procurement, and to track & control production.

Each factory is roughly 40,000 square feet in size and is staffed with a mix of permanent and temporary employees to manage peak production and can operate on two shifts.

To increase production, we intend to increase utilization of our installed manufacturing capacity, as well as continue partnering with subcontractors to take on an increasing amount of production.

We purchase a variety of components from a variety of vendors to assemble our autonomous robots.

We operate a repair/service facility center with engineering support located in Wilmington, Massachusetts, with additional engineering support located in Montreal, Quebec.

Our Wilmington facility services previously built autonomous mobile robots for warranty and field repair returns.

Our facility in Montreal conducts testing and engineering developmental work on de-palletizing and palletizing robotic cells.

Each facility is staffed with a mix of permanent and temporary employees to manage peak workload and can operate two shifts when needed.

We have transitioned to third party contract manufacturers to efficiently scale production capabilities, optimizing resources and foster agility in meeting growing market demand.

We also purchase lifts, fixed place robots, conveyors, and steel racking equipment from a wide range of vendors to complete our systems.

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Unpatented research, development, know-how and engineering skills make an important contribution to our business and core technology, but we pursue patent protection when we believe it is possible and consistent with our overall strategy for safeguarding our intellectual property.

As of September 24, 2022, we had 315 issued patents in 10 countries and an additional 179 patents pending worldwide.

Our issued patents are scheduled to expire between August 2024 and May 2041.

As of September 30, 2023, we had over 375 issued patents in 10 countries and over 190 additional patents pending worldwide.

Our issued patents are scheduled to expire between August 2024 and February 2042.

Employees and Human Capital Resources

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As of September 30, 2023, we had approximately 1,300 full-time employees, including approximately 1,160 based in the United States.

Approximately 53% of our employees work in our offices in Wilmington, Massachusetts and Montreal, Quebec.

However, due to the nature of the COVID-19 pandemic, many in our workforce have been and continue to work remotely.

Approximately 50% of our employees are based out of our offices in Wilmington, Massachusetts and Montreal, Quebec.

The remainder of our employees install, commission, operate or maintain our systems at customers’ facilities.

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A significant proportion of our employees are engaged in engineering, research and development, and related functions.

We have been investing in our people for over a decade and our team possesses decades of combined technical and engineering experience, with a majority of our full-time employees holding technical degrees and a substantial portion of our total employee base holding advanced degrees, including numerous PhDs in engineering.

We consider our relationship with our employees to be in good standing and have yet to experience any work stoppages.

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 additional employees.

Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing, and integrating our existing and new employees.

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.

By fostering a culture of Diversity, Equity and Inclusion, we strive for a workplace that celebrates the uniqueness of each employee and embraces diversity to enable innovation as we reimagine the supply chain industry.

Talent Attraction

Our ability to attract and retain key talent is crucial to the success of our business.

We invest in talent acquisition initiatives to have the right people in key positions.

Our workforce strategy includes recruiting top talent, building a talent pipeline through university partnerships, providing ongoing training and development opportunities, and fostering a workplace culture that promotes innovation and collaboration.

In the coming years, we anticipate continued competition for skilled professionals in our industry, and our talent acquisition strategy will focus on building our reputation as a destination for top talent and recruiting individuals with expertise in robotics and industrial automation.

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.

Our board of directors discusses key talent strategy in each regular board meeting, including periodic detailed discussions of our global leadership talent, with a focus on key positions at the executive leader level.

We recognize that investing in strong talent management practices drives business performance, customer satisfaction, and employee engagement.

Therefore, our talent interventions utilize various tools such as an annual performance management process, individual development interventions to facilitate a specific individual’s career growth, and development programs and learning plans to meet each employee where they are in their career.

High-potential leaders are given exposure and visibility to members of our board of directors through formal project assignments and board

presentations.

We provide opportunities for growth through formal and informal development programs that include training, coaching, networking, skills development, and on the job experience.

In our fiscal year 2023, we transitioned our Symbotic University learning management system to a more integrated, digitally enabled offering to support our employees in furthering their skills, career growth and personal aspirations.

Competitive Pay and Benefits

At Symbotic, we have designed our compensation plans to attract and retain the best talent in the industry.

Our goal is to drive employee performance by aligning incentive pay with short and long-term company results.

Our employee benefit programs are comprehensive and competitive, and we continuously evaluate them to ensure that they are competitive and effective.

Government Regulations

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We make available free of charge through our internet website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, registration statements and amendments to those reports filed or furnished pursuant to the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish them to the SEC.

The SEC maintains a website that contains reports, proxy statements and other information regarding issuers that file electronically with the SEC.

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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business