Symbotic Inc – March 30, 2023

In an era of rapid digital transformation and e-commerce growth, efficiency and speed in warehouse automation have become critical factors in supply chain management. The surge in online shopping, coupled with rising consumer expectations for fast delivery and seamless order processing, has put immense pressure on companies to modernize their warehouse operations and adapt to the changing landscape. Symbotic Inc is making this modernization possible.

The robotics and warehouse automation company designs, manufactures, and deploys advanced robotic solutions to streamline distribution center operations. Their integrated systems combine autonomous mobile robots, advanced software, and custom algorithms to optimize warehouse space, speed up order fulfillment, and reduce operational costs. And by utilizing artificial intelligence and machine learning, Symbotic’s technology continually adapts and improves, ensuring maximum efficiency in dynamic warehouse environments.

Serving a diverse range of customers, Symbotic’s solutions cater to industries such as retail, consumer packaged goods, and manufacturing. With a focus on the North American market, they have successfully deployed their technology in distribution centers across the United States and Canada, delivering significant improvements in efficiency, productivity, and cost savings for their clients, as it automates the processing of pallets and cases in large warehouses and distribution centers for some of the largest retail and wholesale companies in the world including Walmart and Target.

In addition to its robust product offerings, Symbotic has a strong emphasis on ongoing support. By offering comprehensive training, consultation, and maintenance services, the company ensures that its clients can fully leverage the benefits of their technology and achieve a strong return on investment.

Currently, Symbotic is in a growth phase as they continue to expand its market reach and refine its products, while investing in research and development to drive further innovation in the field and maintain its position as an industry leader in warehouse automation.

Symbotic was founded in 2007 by the third-generation C&S Wholesale Grocers owner, Rick Cohen, who saw the potential of robotic automation in transforming warehouse operations. Initially named CasePick Systems, the company began its journey by developing innovative automated material handling solutions that focused on space optimization and order accuracy.

In 2011, the company rebranded itself as Symbotic, which marked a significant shift in its business strategy. This rebranding was accompanied by the expansion of its product offerings, with an emphasis on developing fully integrated warehouse automation systems that combined advanced robotics, software, and custom algorithms.

As Symbotic progressed, so did its affiliation with C&S Wholesale Grocers, which allowed the company to scale its operations and accelerate its growth. By 2014, Symbotic had successfully deployed its cutting-edge warehouse automation systems in multiple distribution centers across the United States.

Over the years, Symbotic has continued to evolve its product range, introducing new robotic designs and software enhancements to better serve the growing demands of the warehouse automation market. In addition to its autonomous mobile robots, the company has developed software solutions for warehouse management, simulation, and optimization, further expanding its product offerings.

In recent years, Symbotic has also focused on expanding its market reach, entering the Canadian market, and also going public to further advance its efforts to reshape the global supply chain.

Founder Rick Cohen continues to serve Symbotic as chairman and chief executive officer, along with his ongoing role with C&S Wholesale Grocers as the executive chairman. Cohen spent his life building his family’s business from a regional player to a $25 billion powerhouse that is the eighth-largest privately held company in America. Concurrently, he has taken his extensive experience in the wholesale distribution business, his vision and experience in automation, a track record in entrepreneurship, investment and business development, and deep relationships in various industries, to turn Symbotic into an industry leader in supply chain solutions.

Cohen is joined by fellow C&S veterans, chief technology officer, George Dramalis, and chief strategy officer, Bill Boyd. Dramalis has been responsible for building and advancing all Symbotic’s technologies and solutions, bringing more than 20 years of experience in information services management with global names including Sharp Electronics and KPMG Consulting. While Boyd is responsible for planning and directing various operational, financial, and strategic activities for Symbotic. Also involved in the initial investment by Rick Cohen in CasePick Systems, his legal expertise has been applied to extensive distribution and logistics industry experience.

Symbotic’s product offerings center around the design and deployment of advanced warehouse automation solutions that streamline distribution center operations, optimize warehouse space, and accelerate order fulfillment. The company achieves this through a combination of autonomous mobile robots, advanced software, and custom algorithms.

Symbotic’s flagship product, the Symbotic System, is an integrated solution that utilizes autonomous robots that travel up to 25 miles per hour to efficiently pick, store, and transport products within a warehouse. These robots navigate the warehouse using intelligent algorithms, ensuring that the most efficient routes and storage locations are utilized. The revolutionary platform accelerates the movement of goods through the supply chain, improves SKU agility, fulfills orders with near-perfect accuracy, and does this all with less inventory and operating costs for customers.

The system is designed to be highly scalable and can be customized to accommodate warehouses of varying sizes and complexities. Systems can be as small as a single football field serving 25 or more stores and can scale to meet the needs of the world’s largest retailers.

Complementing the robotic systems, Symbotic offers a suite of software solutions that manage and optimize warehouse operations. Their Warehouse Execution System software oversees the entire warehouse workflow, from receiving to shipping, ensuring that all processes are running smoothly and efficiently. Additionally, Symbotic’s Simulation and Optimization software enables clients to model and analyze warehouse operations, identify potential bottlenecks, and test new strategies for improvement.

Symbotic’s product offerings are widely adopted by customers from various industries, with notable clients that have implemented Symbotic’s solutions in their distribution centers including:
– C&S Wholesale Grocers: As one of the largest wholesale grocery supply companies in the United States, C&S has deployed Symbotic’s automation solutions in multiple distribution centers to improve efficiency, reduce labor costs, and enhance order accuracy.
– Walmart: The retail giant has partnered with Symbotic to automate its regional distribution centers, leading to significant improvements in warehouse productivity and the ability to handle increased e-commerce demand.
– Coca-Cola: Symbotic’s robotic systems have been implemented in Coca-Cola’s distribution centers to streamline the handling and storage of beverage products, resulting in increased efficiency and cost savings.

The versatility of Symbotic’s solutions allows them to be tailored to the unique needs of each customer, ensuring seamless integration with existing warehouse infrastructures and processes. Additionally, Symbotic’s commitment to continuous innovation enables its clients to stay ahead of the curve in the rapidly evolving world of warehouse automation.

Symbotic believes that the global supply chain has reached a point of critical stress, driving an inflection in demand for warehouse automation across all industries. 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.

The dramatic growth in e-commerce has also increased supply chain complexity by putting pressure on retailers to support multiple sales channels and orders of individual items in addition to cases and pallets. Meanwhile, consumer expectations have evolved to demand a larger variety of items to be delivered quickly and seamlessly. This has placed significant strain on the traditional supply chain and the people who support it.

A key element of Symbotic’s strategy for growth includes further penetrating existing customers’ operations. Its existing customers are large companies, many of which have thousands of stores and hundreds of warehouses and distribution centers. In most cases, the company is serving a portion of these customers’ distribution centers, which Symbotic expects will translate to winning full deployments across additional distribution footprints. Given the size of Symbotic’s serviceable market relative to the size of its current customer base, there is significant room for the company to expand within existing verticals which cover general merchandise, ambient grocery and food distribution, consumer packaged food, and apparel.

In addition, there is an enormous market opportunity from secondary verticals within non-food consumer packaged goods, home improvement, auto parts, third-party logistics, and refrigerated and frozen foods. Over time Symbotic also plans to expand beyond these primary and secondary markets, into additional verticals such as pharmaceuticals and electronics. Effectively, every business that involves the physical distribution of goods through a distribution center is considered a potential customer, ultimately offering a total addressable market of $393 billion.

Symbotic has been experiencing remarkable revenue growth in recent years, delivering close to $600 million in total revenue for the full 2022 year after blitzing the prior year’s result by more than 135%. That record continued in the first quarter of 2023 as the company initiated a record six system deployments, which led to revenue of $206.3 million for the period, achieving a 168% increase on the prior comparative. Furthermore, demand for Symbotic’s solutions looking ahead continues to grow as the company’s backlog also increased to a record $12.0 billion in the last quarter.

In addition to strong revenue growth, Symbotic has also improved its gross margins and operating expenses following its efforts to establish multiple worldwide outsourcing partnerships to support its robust growth plans.

Looking ahead, Symbotic expects revenue of $205 million to $230 million, more than double the 2022 comparative period. While analysts have consensus expectations of revenue for the full year coming in at $980 million, representing year-on-year growth of 65%. Analysts are also expecting full-year earnings per share to record a loss of $0.07 for FY23, for a 40% improvement on FY22’s loss of $0.13 per share.

The competitive environment for Symbotic in the warehouse automation and robotics industry is intense, as several established players and emerging start-ups are vying for market share. With rapid digital transformation, increased e-commerce adoption, and the need for faster and more efficient supply chain operations, companies are investing heavily in technology and innovation to stay ahead of the curve. Major competitors in the space include Amazon Robotics (formerly Kiva Systems), Swisslog, Dematic, and Knapp, who all have well-established solutions and portfolios within automation and robotics solutions for logistics and warehousing.

A major risk of particular note for Symbotic is its significant customer concentration. Walmart accounted for 94% of Symbotic’s revenue in FY22, and continues to form the vast majority of the company’s $12 billion backlog, making it heavily dependent on the retail giant. Any change in Walmart’s business strategy or a reduction in demand for Symbotic’s solutions could obviously have a dramatic impact on the company’s financial performance.

As the world continues to experience rapid e-commerce growth, the demand for warehouse automation solutions has surged. Symbotic’s innovative integrated systems have enabled the company to benefit from this rapid growth as it pioneers the latest technology and developments. If the company can further deliver expansion across the globe, while diversifying its customer base, this success looks set to continue.