What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-12-04 compared with 2023-12-11 · 154 added, 122 removed, 305 unchanged (48% of the section changed)

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Forward-looking statements give our current expectations or forecasts of future events.

identify these statements by the fact that they do not relate strictly to historical or current facts.

You can 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.

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.

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.

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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.

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.

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.

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 enhances 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 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.

It utilizes fully autonomous robots, collectively controlled by our artificial intelligence (“A.I.”) enabled system software to achieve at scale, real world supply chain improvements that are so compelling that we believe our approach can become the de facto standard approach for how warehouses operate.

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and automation technology for the warehouse.

Symbotic Holdings and Sunlight own 35% and 65% of GreenBox, respectively.

We own 35% of GreenBox and SoftBank Group owns 65% of GreenBox.

Business Combination

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Key Components of Consolidated Statements of Operations

We generate revenue through our design and installation of modular inventory management systems (“Systems”) to automate customers’ depalletizing, storage, selection, and palletization warehousing processes.

The Systems have both a hardware component and an embedded software component that enables the systems to be programmed to operate within specific customer environments.

We enter into contracts with customers that can include various combinations of services to design and install the Systems.

We generate revenue through our design and installation of supply chain automation systems to automate customers’ depalletizing, storage, selection, and palletization warehousing processes.

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

These services are generally distinct and accounted for as separate performance obligations.

As a result, each customer contract may contain multiple performance obligations.

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 have identified the following distinct performance obligations in our contracts with customers:

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.

The modular hardware and embedded software are each not capable of being distinct because our customers cannot benefit from

the hardware or software on their own.

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.

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.

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.

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.

The key metrics which describe our System from commencement to completion are as follows:

(1) “Start” is defined as when we sign a Statement of Work (“SOW”) with a customer;

(2) “Deployment” is defined as the period of time following the signed SOW until the acceptance of the System;

and (3) “Operational” is defined as achieving acceptance of a System.

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 refer to support services that provide our customers with technical support, updates, and upgrades to the embedded software license.

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.

“Software Maintenance and Support” is defined as support services that provide our customers with technical support, updates, and upgrades to the software license.

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.

Operation Services :

We provide our customers with assistance operating the system and ensuring user experience is optimized for efficiency and effectiveness.

“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.

Also included in Operation Services is revenue generated from the sales of spare parts to our customers as needed to service their System.

Cost of Revenue

Our cost of revenue is composed of the following for each of our distinct performance obligations:

Systems cost of revenue consists primarily of material and labor consumed in the production and installation of customer Systems, as well as depreciation expense.

Systems cost of revenue consists primarily of material and labor consumed in the production and installation of Systems, as well as depreciation expense.

The design, assembly, and installation of a System includes substantive customer-specified acceptance criteria that allow the customer to accept or reject Systems that do not meet the customer’s specifications.

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.

If acceptance criteria can be reasonably certain upon contract inception, Systems cost of revenue is expensed as incurred.

Software Maintenance and Support :

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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 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.

Operation Services cost of revenue is expensed as incurred.

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Selling, general, and administrative expenses include all costs that are not directly related to satisfaction of customer contracts or research and development.

Selling, general, and administrative expenses include items for our selling and administrative functions, such as sales, finance, legal, human resources, and information technology support.

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.

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.

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.

As a result of the Business Combination, we were appointed as the sole managing member of Symbotic Holdings.

Symbotic Holdings is a limited liability company that is treated as a partnership for U.S.

federal income tax purposes and for most applicable state and local income taxes.

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.

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.

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.

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.

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.

Any income tax items for the periods prior to the close of the Business Combination are related to the applicable subsidiary companies that are subject to foreign income tax.

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Other income, net 37,042 10,716

Loss before income tax (212,514) (139,089)

Income tax benefit 4,620 —

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)

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Other income, net 2 1

Loss before income tax (18) (23)

Income tax benefit — —

Loss before income tax and equity method investment (4) (18)

Income tax benefit (expense) — —

Loss from equity method investment — —

Net loss (5) % (18) %

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Total revenue $ 1,788,179 $ 1,176,891 $ 611,288 52 %

Systems revenue increased during the year ended September 30, 2023 as compared to the year ended September 24, 2022 due to there being thirty-five system deployments currently in progress as of September 30, 2023 as compared to seventeen deployments in progress as of September 24, 2022 as we continue to grow our business.

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 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.

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.

As we continue to increase the number of sites which have reached completion for our warehouse automation system, an increase in the number of operation services contracts is expected.

The following table sets forth our gross profit (loss) for the years ended September 30, 2023 and September 24, 2022:

Systems revenue increased for the year ended September 28, 2024, as compared to the year ended September 30, 2023, due to 44 Systems in Deployment for the fiscal year ended September 28, 2024, as compared to 35 Systems in Deployment for the fiscal year ended September 30, 2023.

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.

We expect the Master Automation Agreement to continue to generate Systems revenue as we install and implement the Systems at the remaining regional distribution centers through fiscal year 2029.

The increase in Software Maintenance and Support revenue is due to 25 Operational Systems which are under Software Maintenance and Support contracts for the year ended September 28, 2024, as compared to 12 Operational Systems which are under Software Maintenance and Support contracts for the year ended September 30, 2023.

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.

The increase results from the number of Operational Systems we have as well as spare parts sales to our customers for the year ended September 28, 2024, as compared to the year ended September 30, 2023.

As we continue to increase the number of Operational Systems, an increase in the number of Operation Services contracts is expected.

The following table sets forth our gross profit for the years ended September 28, 2024 and September 30, 2023:

September 28, 2024 September 30, 2023 Change

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Total gross profit $ 245,666 $ 189,739 $ 55,927

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.

The decrease in software maintenance and support gross profit is due to an increased cost for the year ended September 30, 2023 associated with an increase in headcount within our technical support team to appropriately support the expected rapid growth of our business.

The decrease in operation services gross profit is driven by an increased cost due to additional operation services personnel needed at one of our customer sites.

Systems gross profit increased $40.6 million for the year ended September 28, 2024, as compared to the year ended September 30, 2023.

The increase in gross profit is primarily driven by 44 Systems in Deployment during the fiscal year ended September 28, 2024, as compared to 35 Systems in Deployment during the fiscal year ended September 30, 2023.

The increase in Software Maintenance and Support gross profit is driven by the revenue from the additional Operational Systems which are under Software Maintenance and Support contracts for the year ended September 28, 2024, as compared to the year ended September 30, 2023, while costs to perform our Software Maintenance and Support services remained relatively flat.

The increase in Operation Services gross profit for the year ended September 28, 2024, as compared to the year ended September 30, 2023, is driven by an increase in the number of Operational Systems where we are performing Operation Services, efficiency improvement on our existing Systems where we are performing Operation Services, and profit generated from the sales of spare parts.

Research and Development Expenses

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Percentage of total revenue 10 % 17 %

The increase in research and development expenses for the year ended September 30, 2023 compared to the year ended September 24, 2022 was due to the following:

The decrease in research and development expenses for the year ended September 28, 2024, as compared to the year ended September 30, 2023, is due to the following:

(in thousands)

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Prototype-related costs, allocated overhead expenses, and other 5,518

Employee-related costs increased as a result of our headcount growth to our engineering team through full-time and contracted employees as we continue to grow our software and hardware engineering organizations to support the development of key projects such as next generation autonomous electric vehicle robots, and also to support the continued expansion of our A.I.

Employee-related costs decreased primarily as a result of a decrease in stock-based compensation expense and expense incurred for contractors.

As we apply the graded-vesting method of expense recognition to all stock-based compensation

awards with service-only conditions, lower expense was incurred during the year ended September 28, 2024, as compared to the year ended September 30, 2023, due to the expense recognized during the year ended September 30, 2023 for the issuance of restricted stock to our employees following the Business Combination.

Additionally, we experienced a decrease in the expense related to contractors as a result of a combination of hiring full time employees and outsourcing certain business activities to third parties.

These decreases were partially offset by an increase in payroll related costs as we continue to grow our software and hardware engineering organizations to support the development of key projects and to support the continued expansion of our A.I.

and analytics capabilities.

Employee-related costs also increased as a result of equity expense attributable to the issuance of restricted stock units to our employees following the Business Combination.

The decrease in prototype-related costs, allocated overhead expenses, and other during the year ended September 30, 2023 as compared to the year ended September 24, 2022 is due to a decrease in prototype expenses related to our Omni-Channel platform, which was developed in 2022 and went into production during the first fiscal quarter of 2023.

This resulted in less prototype-related costs during fiscal year 2023.

The increase in prototyping-related costs, allocated overhead expenses, and other during the year ended September 28, 2024, as compared to the year ended September 30, 2023, is primarily attributable to an increase in allocated overhead expenses from selling, general, and administrative expenses to research and development expenses resulting from an increase to general overhead expenses such as rent and other occupancy expenses for the year ended September 28, 2024.

Selling, General, and Administrative Expenses

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Percentage of total revenue 11 % 19 %

The increase in selling, general, and administrative expenses for the year ended September 30, 2023 compared to the year ended September 24, 2022 was due to the following:

The decrease in selling, general, and administrative expenses for the year ended September 28, 2024, as compared to the year ended September 30, 2023, is due to the following:

(in thousands)

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Allocated overhead expenses and other 5,933

Employee-related costs increased as a result of our full-time and contracted employee headcount growth within our selling, general, and administrative functions.

Employee-related costs also increased as a result of equity expense attributable to the issuance of restricted stock units to our employees following the Business Combination.

We increased headcount primarily to support a shift in the rapid acceleration of system deployments and business transformation.

We incurred incremental costs related to building both shorter-term as well as permanent processes and infrastructure to ramp partnerships and operations.

Allocated overhead and other expenses increased due to an increase in hardware and software 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.

For the year ended September 30, 2023, we experienced higher legal and advisor expenses as compared to the year ended September 24, 2022, which is primarily due to the costs associated with the GreenBox transaction.

Employee-related costs decreased primarily as a result of a decrease in stock-based compensation expense and expense incurred for contractors.

As we apply the graded-vesting method of expense recognition to all stock-based compensation awards with service-only conditions, lower expense was incurred during the year ended September 28, 2024, as compared to the year ended September 30, 2023, due to the expense recognized during the year ended September 30, 2023 for the issuance of restricted stock to our employees following the Business Combination.

Additionally, we experienced a decrease in the expense related to contractors as a result of a combination of hiring full time employees and outsourcing certain business activities to third parties.

These decreases were partially offset by an increase to payroll-related expenses incurred as our business continues to grow.

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.

Other income, net

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Percentage of total revenue 2 % 1 %

Other income, net increased due to higher interest earned on invested cash balances and marketable securities as a result of increased interest rates.

For the year ended September 24, 2022, we did not hold any marketable securities as these were acquired during the first quarter of fiscal year 2023.

The increase in other income, net for the year ended September 28, 2024, as compared to the year ended September 30, 2023, is due to higher interest earned on invested cash balances and marketable securities as a result of increased interest rates and higher cash balance.

Year Ended Change

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(dollars in thousands)

Income tax benefit $ 4,620 $ — $ 4,620 100 %

We recorded an income tax benefit for the year ended September 30, 2023, primarily related to the release of $6.1 million of previously established valuation allowances related to domestic and foreign deferred tax assets.

Income tax benefit (expense) $ (4,212) $ 4,620 $ (8,832) (191 %)

Percentage of total revenue — % — %

We recorded an income tax expense for the year ended September 28, 2024, primarily related to the establishment of $3.9 million of a valuation allowance related to foreign deferred tax asset, as compared to a benefit for the year ended September 30, 2023, which was primarily related to the release of $6.1 million of previously established valuation allowances related to foreign deferred tax assets.

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, or GAAP, we provide additional financial metrics that are not prepared in accordance with GAAP, or 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.

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.

These non-GAAP financial measures are Adjusted EBITDA, Adjusted gross profit, Adjusted gross profit margin, and Free cash flow, as discussed below.

We believe that these non-GAAP financial measures reflect our ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business, as it facilitates comparing financial results across accounting periods and to those of peer companies.

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business combination transaction expenses;

Joint venture formation fees;

CEO transition charges;

Restructuring;

joint venture formation fees;

restructuring charges;

equity financing transaction costs;

equity method investment;

and other infrequent items that may arise from time to time.

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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.

Our stock-based compensation non-GAAP financial measures exclusion includes non-cash stock-based compensation expense and payroll taxes related to stock-based compensation awards.

• Business combination transaction expenses – Business combination transaction expenses represent the expenses incurred related to the Business Combination, which we completed on June 7, 2022 as well as other strategic acquisition opportunities.

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.

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.

These amounts are impacted by the timing of the Business Combination or other strategic acquisition opportunities which we may pursue.

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 formed on July 21, 2023.

It primarily includes investment banker fees, legal fees, transaction fees, advisory fees, and certain other professional fees.

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• CEO transition charges – CEO transition charges represent the charges incurred associated with the separation agreement we entered into with Michael Loparco in November 2022.

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.

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.

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.

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.

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.

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.

In addition, these charges do not necessarily provide meaningful insight into the fundamentals of current or past operations of our business.

• Equity financing transaction costs – Equity financing transaction costs represent the costs incurred, including for legal and accountant fees, transaction fees, advisory fees, due diligence costs, and certain other professional fees that are directly related to our equity financing transaction which occurred in February 2024.

We exclude these costs 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.

• Equity method investment – Equity method investment represents our proportionate share of income or loss of unconsolidated variable interest entities.

We exclude this 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.

The following table reconciles GAAP net loss to Adjusted EBITDA during the periods presented (in thousands):

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Interest income (36,907) (11,391) (1,287)

Income tax benefit (4,619) — —

Income tax benefit (expense) 4,212 (4,619) —

Depreciation and amortization 20,845 9,475 5,989

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Restructuring charges 33,431 22,899 —

Equity financing transaction costs 1,985 — —

Equity method investment 777 — —

Adjusted EBITDA $ 61,692 $ (17,581) $ (89,762)

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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.

depreciation,

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.

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Adjusted gross profit margin 16.9 % 18.4 % 16.9 %

We consider Free cash flow to be an important indicator of financial liquidity, which we use in our financial and operational decision-making and evaluation of our overall operating performance.

We define Free cash flow as net cash provided by or used in operating activities less purchases of property and equipment and capitalization of internal use software development costs.

The following table reconciles GAAP net cash provided by (used in) operating activities to Free cash flow during the periods presented (in thousands):

September 28, 2024 September 30, 2023 September 24, 2022

Net cash provided by (used in) operating activities $ (58,077) $ 230,794 $ (148,247)

Purchases of property and equipment (42,237) (15,688) (17,950)

Capitalization of internal use software development costs (2,137) (5,638) —

Free cash flow $ (102,451) $ 209,468 $ (166,197)

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.

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:

As of September 28, 2024, our principal sources of liquidity were cash received upon exercise of warrants and equity financing transactions, proceeds received from the maturities of marketable securities, and cash received from customers upon the inception and continuation of contracts to install Systems.

The 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:

September 28, 2024 September 30, 2023

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Operating Activities

Our net cash and cash equivalents provided by (used in) operating activities consists of net loss adjusted for certain non-cash items, including depreciation and amortization, foreign currency losses, losses on abandonment or sales of assets, and stock-based compensation, as well as changes in operating assets and liabilities.

The 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.

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.

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

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.

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.

Net cash used in operating activities was driven by our net loss of $(84.7) million, which was adjusted for non-cash items of $163.2 million, primarily consisting of $112.2 million stock-based compensation expense, $23.5 million depreciation and amortization, $33.3 million provision for excess and obsolete inventory, offset by $(10.1) million gain on investments.

Changes in operating assets and liabilities from the prior fiscal year resulted in use of cash for operating assets and liabilities of $(136.6) million, and was mainly due to the timing of cash payments to vendors, cash receipts from customers, and the timing of invoicing to our customers.

Net cash provided by operating activities was $230.8 million for the year ended September 30, 2023.

Net cash provided by operating activities was due to our net loss of $(207.9) million adjusted for non-cash items of $186.1 million, primarily consisting of $154.2 million stock-based compensation expense, $11.3 million depreciation and amortization, $22.3 million provision for excess and obsolete inventory, offset by $(4.6) million deferred tax assets, net.

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.

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.

Net cash used in operating activities was $148.2 million during the year ended September 24, 2022.

Net cash used in operating activities was due to our net loss of $139.1 million adjusted for non-cash items of $38.0 million, primarily consisting of $26.9 million stock-based compensation expense, $6.0 million depreciation and amortization and $4.1 million of losses on disposal of assets, offset by use of cash for operating assets and liabilities of $47.1 million due to the timing of cash payments to vendors and cash receipts from customers.

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.

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.

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.

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.

Additionally, during the year ended September 28, 2024, we purchased U.S.

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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 acquired strategic investments of $90.5 million, which primarily consists of the investment we have made into the GreenBox VIE.

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.

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.

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.

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.

For the year ended September 28, 2024, the cash provided by financing activities primarily consisted of proceeds of $258.0 million related to the issuance of Class A common stock upon completion of our equity financing in March 2024.

Cash of $158.7 million was also received in December 2023 related to the gross exercise by Walmart of their vested Warrant Units.

To offset the receipt of cash, we incurred a payment of $48.2 million related to distributions to Symbotic Holdings LLC partners.

No other significant financing activities occurred during the year ended September 28, 2024.

For the year ended September 30, 2023, we incurred a payment of $26.7 million for the taxes related to the net share settlement of stock-based compensation awards.

We also received proceeds of $2.6 million from the issuance of common

stock under the ESPP upon the expiration of the first two offering periods at the end of December 2022 and June 2023, respectively.

In connection with the Business Combination, for the year ended September 24, 2022 we received net proceeds of $384.7 million, and purchased Common Units in New Symbotic Holdings from an affiliated entity of the Symbotic Founder for $300.0 million.

Additionally, during the year ended September 24, 2022, Walmart gross exercised their 714,022 vested warrant units for Legacy Warehouse Class A Units for a total of $277.8 million.

As a result of this gross exercise, 714,022 shares of Legacy Warehouse Class A Common Units were issued to Walmart.

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.

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.

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 30, 2023, we have a cash and cash equivalents balance of $258.8 million and short-term available for sale marketable securities balance of $286.7 million.

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.

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.

As of September 28, 2024, we have a cash and cash equivalents balance of $727.3 million.

Our cash requirements for the year ended September 28, 2024 were primarily related to capital expenditures,

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.

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 foreseeable cash needs, in addition to our recurring operating expenses, include our expected capital expenditures to support expansion of our infrastructure and workforce, funding to GreenBox which we may be required to make based on contractual commitments to them (as further disclosed within Note 18, Variable Interest Entities ), 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.

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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.

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.

To determine stand-alone selling price, we maximize the use of observable standalone sales and observable data, where available.

When there is an insufficient history of standalone sales, we use judgment to estimate the standalone selling price.

These estimates leverage available information that may include other observable inputs or use the expected cost-plus margin approach to estimate the price we would charge if the products and services were sold separately.

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.

As we further discuss in Note 2, Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K, for the majority of contracts with customers entered into, revenue from the sales of our Systems is recognized over time as the asset created by our performance does not have alternative use to us and an enforceable right to payment for performance completed to date is present.

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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.

We do not consider these assurance-type warranties as a separate performance obligation and therefore, we account for such warranties under ASC 460, Guarantees .

Stock-based Compensation

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As the Business Combination is accounted for as a reverse recapitalization, all periods prior to the Business Combination have been retroactively adjusted using the Exchange Ratio as stipulated by the Merger Agreement for the equivalent number of shares outstanding immediately after the Merger to effect the reverse recapitalization.

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

This is presented within the consolidated statements of changes in redeemable preferred and common units and equity (deficit).

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Such estimates are revised, if necessary, in subsequent periods when the underlying factors change our evaluation of the probability of achieving the financial performance objectives.

Accordingly, stock-based compensation expense associated with performance-based RSUs may differ significantly from the amount recorded in the current period.

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.

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As there was no public market for our common units prior to the Business Combination, the estimated fair value of our Class C Units had been determined based on enterprise valuations performed by management with the assistance of a third-party valuation firm.

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.

In accordance with the Practice Guide, the following methods of valuation were considered:

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an IPO and a non-IPO scenario accounting for all other potential future exits.

Under both scenarios, the enterprise value was

determined using a combination of the income approach, specifically a discounted cash flow analysis, and the market approach, specifically the similar transactions method and public company market multiple method.

Under both scenarios, the enterprise value was 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 relative probabilities between the future exit scenarios were based on an analysis of performance and market conditions at the time, including then-current IPO valuations of similarly situated companies and expectations as to the timing and likely prospects of future event scenarios.

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Value Appreciation Units (“VAP Units”) may be exercised for a cash payment equal to the appreciation in the fair market value of 1/100th of a Class C Unit and are subject to three exercisability triggers before any vested award may be exercised, with the achievement of each trigger allowing one third of the vested award to be exercised.

Because the VAP Units are settleable in cash, they are treated as liability classified awards.

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).

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Warrant Transactions

Warrants to purchase Class A Units may be accounted for as either liability or equity instruments depending on the terms of the warrant agreements.

The warrants issued by us are accounted for as equity instruments due to our ability to settle the warrants through the issuance of units and the absence of terms which would require liability classification, including the rights of the grantee to require cash settlement.

We classify these equity instruments within additional paid-in capital on the consolidated balance sheets.

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 .

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.

In order to calculate warrant charges, we utilized both the Monte Carlo simulation model and the Black-Scholes pricing model, which required key inputs including volatility and risk-free interest rate and certain unobservable inputs for which there is little or no market data, requiring us to develop our own assumptions.

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Based on that estimated fair value, we determined warrant charges, which are recorded as a reduction of the transaction price.

We account for income taxes in accordance with ASC 740, “Accounting for Income Taxes” (“ASC 740”), using the asset and liability method.

Deferred income taxes are provided on temporary differences between the financial reporting and tax bases of its assets and liabilities.

Such net tax effects of temporary differences are reflected on our Consolidated Balance Sheets as deferred tax assets and liabilities and are measured by applying the enacted tax rates in effect for the year in which the temporary differences are expected to reverse.

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.

Significant judgment is required in estimating valuation allowances for deferred tax assets.

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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 time frame over which it would take to utilize the deferred tax assets prior

to their expiration.

In addition, we consider the timeframe over which it would take to utilize the deferred tax assets prior to their expiration.

To the extent we determine that, based on the weight of available evidence, all or a portion of our valuation allowance is no longer necessary, we will recognize the change in the period such determination occurs.

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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.

the Tax Receivable Agreement.

We record liabilities for amounts payable under the TRA in the period in which the payment is deemed to be probable.

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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.

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.

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.

Off-Balance Sheet Arrangements:

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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 7. Management’s Discussion and Analysis