Symbotic Inc.

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sym-20230325

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 25, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to

Commission file number 001-40175

SYMBOTIC INC.

(Exact name of registrant as specified in its charter)

Delaware

98-1572401

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

200 Research Drive

Wilmington, MA 01887

(978) 284-2800

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock, par value $0.0001 per share

SYM

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of May 3, 2023, the following shares of common stock were outstanding:

61,446,512 shares of Class A common stock, par value $0.0001 per share

77,080,090 shares of Class V-1 common stock, par value $0.0001 per share

416,933,025 shares of Class V-3 common stock, par value $0.0001 per share


	TABLE OF CONTENTS
		Page
	Part I - Financial Information
Item 1.	Financial Statements	1
	Unaudited Condensed Consolidated Financial Statements	1
	Unaudited Condensed Consolidated Balance Sheets as of March 25, 2023 and September 24, 2022	1
	Unaudited Condensed Consolidated Statements of Operations for the T hree and S ix Months Ended March 25, 2023 and March 26, 2022	3
	Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended March 25, 2023 and March 26, 2022	4
	Unaudited Condensed Consolidated Statements of Changes in Redeemable Preferred and Common Units and Equity (Deficit) for the Three and Six Months Ended March 25, 2023 and March 26, 2022	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended March 25, 2 023 and March 26, 2022	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
	Part II - Other Information
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	36
	Signatures	37

CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements include, but are not limited to, our expectations or predictions of future financial or business performance or conditions. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning our possible or assumed future actions, business strategies, events, backlog, or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates,” or “intends” or similar expressions.

Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about our ability to, or expectations that we will:

•meet the technical requirements of existing or future supply agreements with our customers, including with respect to existing backlog;

•expand our target customer base and maintain our existing customer base;

•anticipate industry trends;

•maintain and enhance our platform;

•maintain the listing of the Symbotic Class A Common Stock on NASDAQ;

•develop, design, and sell systems that are differentiated from those of competitors;

•execute our research and development strategy;

•acquire, maintain, protect, and enforce intellectual property;

•attract, train, and retain effective officers, key employees, or directors;

•comply with laws and regulations applicable to our business;

•stay abreast of modified or new laws and regulations applicable to our business;

•execute its growth strategy;

•successfully defend litigation;

•issue equity securities in connection with future transactions;

•meet future liquidity requirements and, if applicable, comply with restrictive covenants related to long-term indebtedness;

•timely and effectively remediate any material weaknesses in our internal control over financial reporting;

•anticipate rapid technological changes; and

•effectively respond to general economic and business conditions

Forward-looking statements made in this Quarterly Report on Form 10-Q also include, but are not limited to, statements with respect to:

•the future performance of our business and operations;

•backlog;

•expectations regarding revenues, expenses, adjusted EBITDA loss and anticipated cash needs;

•expectations regarding cash flow, liquidity and sources of funding;

•expectations regarding capital expenditures;

•the effects of pending and future legislation;

•business disruption;

•risks related to the impact of the COVID-19 pandemic on the financial condition and results of operations of Symbotic;

•disruption to the business due to our dependency on certain customers;

•increasing competition in the warehouse automation industry;

•any delays in the design, production or launch of our systems and products;

•the failure to meet customers’ requirements under existing or future contracts or customers’ expectations as to price or pricing structure;

•any defects in new products or enhancements to existing products; and

•the fluctuation of operating results from period to period due to a number of factors, including the pace of customer adoption of our new products and services and any changes in our product mix that shift too far into lower gross margin products.

Such forward-looking statements involve risks and uncertainties that may cause actual events, results or performance to differ materially from those indicated by such statements. Certain of these risks are identified and discussed in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on December 9, 2022. These risk factors will be important to consider in determining future results and should be reviewed in their entirety. These forward-looking statements are expressed in good faith, and we believe there is a reasonable basis for them. However, there can be no assurance that the events, results or trends identified in these forward-looking statements will occur or be achieved. Forward-looking statements are provided for the purposes of assisting the reader in understanding our financial performance, financial position and cash flows as of and for periods ended on certain dates and to present information about management’s current expectations and plans relating to the future, and the reader is cautioned not to place undue reliance on these forward-looking statements because of their inherent uncertainty and to appreciate the limited purposes for which they are being used by management. While we believe that the assumptions and expectations reflected in the forward-looking statements are reasonable based on information currently available to management, there is no assurance that such assumptions and expectations will prove to have been correct.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made and are based on the beliefs, estimates, expectations and opinions of management on that date. We are not under any obligation, and expressly disclaim any obligation, to update, alter or otherwise revise any forward-looking statements made in this Quarterly Report on Form 10-Q, whether as a result of new information, future events or otherwise, except as required by law.

In addition to factors previously disclosed in our Annual Report on Form 10-K filed with the SEC on December 9, 2022, and those identified elsewhere in this Quarterly Report on Form 10-Q, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: failure to realize the benefits expected from adding to Symbotic’s base of outsourcing partners; the effects of pending and future legislation; and risks related to the impact of the COVID-19 pandemic on the financial condition and results of operations of Symbotic.

Annualized, pro forma, projected and estimated numbers are not forecasts and may not reflect actual results.

In this Quarterly Report on Form 10-Q, the terms “Symbotic,” “we,” “us,” and “our” refer to Symbotic Inc. and its subsidiaries, unless the context indicates otherwise.

iii

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

Symbotic Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except share data)


	March 25, 2023		September 24, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	256,954	$	353,457
Marketable securities	205,495		—
Accounts receivable	124,525		3,412
Unbilled accounts receivable	63,502		101,816
Inventories	140,441		91,900
Deferred expenses	36,878		29,150
Prepaid expenses and other current assets	38,605		25,663
Total current assets	866,400		605,398
Property and equipment, at cost	62,439		48,722
Less: Accumulated depreciation	(26,900)		(23,844)
Property and equipment, net	35,539		24,878
Intangible assets, net	427		650
Other long-term assets	7,163		337
Total assets	$	909,529	$	631,263
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	88,139	$	68,448
Accrued expenses and other current liabilities	70,527		47,312
Sales tax payable	25,720		12,953
Deferred revenue, current	665,440		394,244
Total current liabilities	849,826		522,957
Deferred revenue, long-term	23,734		31,465
Other long-term liabilities	14,528		7,901
Total liabilities	888,088		562,323

Commitments and contingencies (Note 12)	—		—

Equity:
Class A Common Stock, 3,000,000,000 shares authorized, 61,283,689 and 57,718,836 shares issued and outstanding at March 25, 2023 and September 24, 2022, respectively	6		6

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Class V-1 Common Stock, 1,000,000,000 shares authorized, 77,080,090 and 79,237,388 shares issued and outstanding at March 25, 2023 and September 24, 2022, respectively	8		8
Class V-3 Common Stock, 450,000,000 shares authorized, 416,933,025 shares issued and outstanding at March 25, 2023 and September 24, 2022	42		42
Additional paid-in capital - warrants	58,126		58,126
Additional paid-in capital	1,246,152		1,237,865
Accumulated deficit	(1,299,880)		(1,286,569)
Accumulated other comprehensive loss	(2,086)		(2,294)
Total stockholders’ equity	2,368		7,184
Noncontrolling interest	19,073		61,756
Total equity	21,441		68,940
Total liabilities and equity	$	909,529	$	631,263

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Symbotic Inc.

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except share and per share information)


	For the Three Months Ended				For the Six Months Ended
	March 25, 2023		March 26, 2022		March 25, 2023		March 26, 2022
Revenue:
Systems	$	257,603	$	89,572	$	455,504	$	160,794
Software maintenance and support	1,461		965		2,698		1,940
Operation services	7,790		5,747		14,964		10,614
Total revenue	266,854		96,284		473,166		173,348
Cost of revenue:
Systems	213,060		71,975		373,991		128,460
Software maintenance and support	2,106		1,145		3,777		1,955
Operation services	8,841		6,258		17,357		11,559
Total cost of revenue	224,007		79,378		395,125		141,974
Gross profit	42,847		16,906		78,041		31,374
Operating expenses:
Research and development expenses	49,666		23,355		100,406		45,539
Selling, general, and administrative expenses	50,898		23,512		104,921		38,871
Total operating expenses	100,564		46,867		205,327		84,410
Operating loss	(57,717)		(29,961)		(127,286)		(53,036)
Other income, net	2,284		58		4,118		80
Loss before income tax	(55,433)		(29,903)		(123,168)		(52,956)
Income tax benefit (expense)	17		—		(234)		—
Net loss	(55,416)		(29,903)		(123,402)		(52,956)
Net loss attributable to Legacy Warehouse unitholders prior to the Business Combination	—		(29,903)		—		(52,956)
Net loss attributable to noncontrolling interests	(49,298)		—		(110,091)		—
Net loss attributable to common stockholders	$	(6,118)	$	—	$	(13,311)	$	—

Loss per share of Class A Common Stock: (1)
Basic and Diluted	$	(0.10)	N/M		$	(0.22)	N/M
Weighted-average shares of Class A Common Stock outstanding:
Basic and Diluted	60,503,119		N/M		59,352,634		N/M

(1) Loss per share information has not been presented for periods prior to the Business Combination (as defined in Note 1, Organization and Operations), as it resulted in values that would not be meaningful to the users of these unaudited condensed consolidated financial statements. This has been indicated on these statements of operations as “N/M”.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Symbotic Inc.

Unaudited Condensed Consolidated Statements of Comprehensive Loss

(in thousands)


	For the Three Months Ended				For the Six Months Ended
	March 25, 2023		March 26, 2022		March 25, 2023		March 26, 2022
Net loss	$	(55,416)	$	(29,903)	$	(123,402)	$	(52,956)
Less: Net loss attributable to Legacy Warehouse unitholders prior to the Business Combination	—		(29,903)		—		(52,956)
Less: Net loss attributable to noncontrolling interests	(49,298)		—		(110,091)		—
Net loss attributable to common stockholders	$	(6,118)	$	—	$	(13,311)	$	—
Other comprehensive income (loss):
Foreign currency translation adjustments	(290)		345		(482)		51
Changes in unrealized gain on investments, net of income taxes of $0 for the three and six months ended March 26, 2022	2,352		—		2,352		—
Total other comprehensive income	2,062		345		1,870		51
Less: other comprehensive income attributable to Legacy Warehouse unitholders prior to the Business Combination	—		345		—		51
Less: other comprehensive income attributable to noncontrolling interests	1,834		—		1,662		—
Other comprehensive income attributable to common stockholders	$	228	$	—	$	208	$	—
Comprehensive loss	(53,354)		(29,558)		(121,532)		(52,905)
Less: Comprehensive loss attributable to Legacy Warehouse unitholders prior to the Business Combination	—		(29,558)		—		(52,905)
Less: Comprehensive loss attributable to noncontrolling interests	(47,464)		—		(108,429)		—
Total comprehensive loss attributable to common stockholders	$	(5,890)	$	—	$	(13,103)	$	—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Symbotic Inc.

Unaudited Condensed Consolidated Statements of Changes in Redeemable Preferred and Common Units and Equity (Deficit)

(in thousands, except unit and share information)


	Three Months Ended March 25, 2023
	Class A Common Stock			Class V-1 Common Stock			Class V-3 Common Stock			Additional Paid-in Capital - Warrants		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Noncontrolling Interest		Total Equity (Deficit)
	Shares	Amount		Shares	Amount		Shares	Amount
Balance at December 24, 2022	58,584,690	$	6	78,389,034	$	8	416,933,025	$	42	$	58,126	$	1,243,217	$	(2,314)	$	(1,293,762)	$	44,979	$	50,302
Net loss	—	—		—	—		—	—		—		—		—		(6,118)		(49,298)		(55,416)
Issuance of common stock under stock plans, net of shares withheld for employee taxes	1,659,578	—		—	—		—	—		—		(1,163)		—		—		(10,554)		(11,717)
Issuance of common stock under employee stock purchase plan, net of shares withheld for employee taxes	98,171	—		—	—		—	—		—		119		—		—		868		987
Exchange of Class V-1 common stock	941,250	—		(941,250)	—		—	—		—		90		—		—		(90)		—
Cancellation of Class V-1 common stock	—	—		(367,694)	—		—	—		—		—		—		—		—		—
Stock-based compensation	—	—		—	—		—	—		—		3,889		—		—		31,334		35,223
Other comprehensive loss	—	—		—	—		—	—		—		—		228		—		1,834		2,062
Balance at March 25, 2023	61,283,689	$	6	77,080,090	$	8	416,933,025	$	42	$	58,126	$	1,246,152	$	(2,086)	$	(1,299,880)	$	19,073	$	21,441

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	Six Months Ended March 25, 2023
	Class A Common Stock			Class V-1 Common Stock			Class V-3 Common Stock			Additional Paid-in Capital - Warrants		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Noncontrolling Interest		Total Equity (Deficit)
	Shares	Amount		Shares	Amount		Shares	Amount
Balance at September 24, 2022	57,718,836	$	6	79,237,388	$	8	416,933,025	$	42	58,126		$	1,237,865	(2,294)		$	(1,286,569)	61,756		$	68,940
Net loss	—	—		—	—		—	—		—		—		—		(13,311)		(110,091)		(123,402)
Issuance of common stock under stock plans, net of shares withheld for employee taxes	1,677,078	—		—	—		—	—		—		(1,163)		—		—		(10,554)		(11,717)
Issuance of common stock under employee stock purchase plan, net of shares withheld for employee taxes	98,171	—		—	—		—	—		—		119		—		—		868		987
Exchange of Class V-1 common stock	1,789,604	—		(1,789,604)	—		—	—		—		200		—		—		(200)		—
Cancellation of Class V-1 common stock	—	—		(367,694)	—		—	—		—		—		—		—		—		—
Stock-based compensation	—	—		—	—		—	—		—		9,131		—		—		75,632		84,763
Other comprehensive loss	—	—		—	—		—	—		—		—		208		—		1,662		1,870
Balance at March 25, 2023	61,283,689	$	6	77,080,090	$	8	416,933,025	$	42	$	58,126	$	1,246,152	$	(2,086)	$	(1,299,880)	$	19,073	$	21,441

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	Three Months Ended March 26, 2022
	Redeemable Preferred and Common Units												Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Equity (Deficit)
	Common Units, Class C			Preferred Units, Class B-1			Preferred Units, Class B			Common Voting Units, Class A
	Units	Amount		Units	Amount		Units	Amount		Units	Amount
Balance at December 25, 2021	428,571	$	152,195	1	$	235,182	1	$	464,744	6,444,373	$	217,604	$	(2,386)	$	(1,193,831)	$	(978,613)
Retroactive application of recapitalization ratio (1)	24,493,538	—		24,041,299	—		47,508,299	—		388,481,909	—		—		—		—
Adjusted balance, beginning of period	24,922,109	$	152,195	24,041,300	$	235,182	47,508,300	$	464,744	394,926,282	$	217,604	$	(2,386)	$	(1,193,831)	$	(978,613)
Net loss	—	—		—	—		—	—		—	—		—		(29,903)		(29,903)
Granted	139,564	—		—	—		—	—		—	—		—		—		—
Forfeited	(139,564)	—		—	—		—	—		—	—		—		—		—
Unit-based compensation	—	22		—	—		—	—		—	—		—		—		—
Accretion of Class C Units to redemption value	—	16,396		—	—		—	—		—	—		—		(16,396)		(16,396)
Other comprehensive loss	—	—		—	—		—	—		—	—		345		—		345
Preferred Return	—	—		—	2,903		—	5,738		—	—		—		(8,641)		(8,641)
Balance at March 26, 2022	24,922,109	$	168,613	24,041,300	$	238,085	47,508,300	$	470,482	394,926,282	$	217,604	$	(2,041)	$	(1,248,771)	$	(1,033,208)

(1) As part of the Business Combination, all per share information has been retroactively adjusted using the Exchange Ratio as stipulated by the Merger Agreement


	Six Months Ended March 26, 2022
	Redeemable Preferred and Common Units												Additional Paid-In Capital - Warrants		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Equity (Deficit)
	Common Units, Class C			Preferred Units, Class B-1			Preferred Units, Class B			Common Voting Units, Class A
	Units	Amount		Units	Amount		Units	Amount		Units	Amount
Balance at September 25, 2021	428,571	$	144,975	1	$	232,278	1	$	459,007	5,997,632	$	16,809	$	26,999	$	(2,092)	$	(1,154,944)	$	(1,113,228)
Retroactive application of recapitalization ratio (1)	24,493,538	—		24,041,299	—		47,508,299	—		361,551,314	—		—		—		—		—
Adjusted balance, beginning of period	24,922,109	$	144,975	24,041,300	$	232,278	47,508,300	$	459,007	367,548,946	$	16,809	$	26,999	$	(2,092)	$	(1,154,944)	$	(1,113,228)
Net loss	—	—		—	—		—	—		—	—		—		—		(52,956)		(52,956)
Granted	492,428	—		—	—		—	—		—	—		—		—		—		—
Forfeited	(492,428)	—		—	—		—	—		—	—		—		—		—		—
Unit-based compensation	—	49		—	—		—	—		—	—		—		—		—		—
Accretion of Class C Units to redemption value	—	23,589		—	—		—	—		—	—		—		—		(23,589)		(23,589)
Exercise of warrants	—	—		—	—		—	—		27,377,336	200,795		(26,999)		—		—		173,796
Other comprehensive loss	—	—		—	—		—	—		—	—		—		51		—		51
Preferred Return	—	—		—	5,807		—	11,475		—	—		—		—		(17,282)		(17,282)
Balance at March 26, 2022	24,922,109	$	168,613	24,041,300	$	238,085	47,508,300	$	470,482	394,926,282	$	217,604	$	—	$	(2,041)	$	(1,248,771)	$	(1,033,208)

(1) As part of the Business Combination, all per share information has been retroactively adjusted using the Exchange Ratio as stipulated by the Merger Agreement

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Symbotic Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)


	For the Six Months Ended
	March 25, 2023		March 26, 2022
Cash flows from operating activities:
Net loss	$	(123,402)	$	(52,956)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	4,146		2,774
Foreign currency (gains) / losses	(6)		(45)
Loss on abandonment of assets	—		4,098
Loss on impairment of assets	123		—
Stock-based compensation	84,763		50
Changes in operating assets and liabilities:
Accounts receivable	(121,137)		(25,606)
Inventories	(48,693)		(38,544)
Prepaid expenses and other current assets	25,372		(20,949)
Deferred expenses	(7,729)		480
Other long-term assets	(5,483)		(19)
Accounts payable	19,718		26,796
Accrued expenses and other current liabilities	34,583		(8,764)
Deferred revenue	263,464		49,354
Other long-term liabilities	6,645		429
Net cash provided by (used in) operating activities	132,364		(62,902)
Cash flows from investing activities:
Purchases of property and equipment	(13,007)		(8,560)
Purchases of marketable securities	(203,140)		—
Net cash used in investing activities	(216,147)		(8,560)
Cash flows from financing activities:
Proceeds from issuance of Class A Common Units	—		173,796
Payment for taxes related to net share settlement of stock-based compensation awards	(11,713)		—
Net proceeds from issuance of common stock under employee stock purchase plan	987		—
Net cash provided by (used in) financing activities	(10,726)		173,796
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	138		76
Net increase (decrease) in cash, cash equivalents, and restricted cash	(94,371)		102,410
Cash, cash equivalents, and restricted cash — beginning of period	353,457		156,634
Cash, cash equivalents, and restricted cash — end of period	$	259,086	$	259,044

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Symbotic Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Organization and Operations

SVF Investment Corp. 3, formerly known as SVF Investment III Corp. (“SVF 3” and, after the Domestication as described below, “Symbotic” or the “Company”), was a blank check company incorporated as a Cayman Islands exempted company on December 11, 2020. SVF 3 was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses. Warehouse Technologies LLC (“Legacy Warehouse”), a New Hampshire limited liability company, was formed in December 2006 to make investments in companies that develop new technologies to improve operating efficiencies in modern warehouses. Symbotic LLC (“Symbotic US”), a technology company that develops and commercializes innovative technologies for use within warehouse operations and Symbotic Group Holdings, ULC (“Symbotic Canada”) were wholly owned subsidiaries of Legacy Warehouse. On December 12, 2021, (i) SVF 3 entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Legacy Warehouse, Symbotic Holdings LLC, a Delaware limited liability company (“Symbotic Holdings”), and Saturn Acquisition (DE) Corp., a Delaware corporation and wholly owned subsidiary of SVF 3 (“Merger Sub”) and (ii) Legacy Warehouse entered into an Agreement and Plan of Merger (the “Company Merger Agreement”) with Symbotic Holdings.

On June 7, 2022, as contemplated by the Company Merger Agreement, Legacy Warehouse merged with and into Symbotic Holdings (the “Company Reorganization”), with Symbotic Holdings surviving the merger (“Interim Symbotic”). Immediately following such merger, on June 7, 2022, as contemplated by the Merger Agreement, SVF 3 filed a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and filed a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which SVF 3 was transferred by way of continuation from the Cayman Islands and domesticated as a Delaware corporation, changing its name to “Symbotic Inc.” (the “Domestication”). Immediately following the Domestication of SVF 3, on June 7, 2022, as contemplated by the Merger Agreement, SVF 3, Symbotic Holdings, and Merger Sub merged with and into Interim Symbotic (the “Merger” and, together with the Company Reorganization, the “Business Combination”), with Interim Symbotic surviving the merger as a subsidiary of Symbotic (“New Symbotic Holdings”).

Symbotic is an automation technology company established to develop technologies to improve operating efficiencies in modern warehouses. The Company’s vision is to make the supply chain work better for everyone. The Company does this by developing innovative, end-to-end technology solutions that dramatically improve supply chain operations. The Company currently automates the processing of pallets and cases in large warehouses or distribution centers for some of the largest retail companies in the world. Its 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 Company’s headquarters are located in Wilmington, Massachusetts, and its Canadian headquarters are located in Montreal, Quebec.

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in U.S. dollars, in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Certain information and note disclosures normally included in the Company’s annual audited consolidated financial statements and accompanying notes prepared in accordance with GAAP have been condensed in, or omitted from, these interim financial statements. Accordingly, these unaudited condensed consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto as of and for the year ended September 24, 2022, which are included within the Company’s Annual Report on Form 10-K, filed with the SEC on December 9, 2022. The September 24, 2022 consolidated balance sheet included herein is derived from the Company’s audited consolidated financial statements.

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The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries and majority-owned subsidiaries and reflect all adjustments (consisting solely of normal, recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods presented. All intercompany balances and transactions have been eliminated in consolidation. The consolidated financial statements include 100% of the accounts of wholly-owned and majority-owned subsidiaries and the ownership interest of the minority investor is recorded as a non-controlling interest in a subsidiary. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any future period or the entire fiscal year.

The Company operates and reports using a 52-53 week fiscal year ending on the last Saturday of September of each calendar year. Each of the Company’s fiscal quarters end on the last Saturday of the third month of each quarter.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, and the amounts disclosed in the related notes to the consolidated financial statements. Actual results and outcomes may differ materially from management’s estimates, judgments, and assumptions. Significant estimates, judgments, and assumptions used in these financial statements include, but are not limited to, those related to revenue, useful lives and realizability of long-lived assets, accounting for income taxes and related valuation allowances, and stock-based compensation. Estimates are periodically reviewed in light of changes in circumstances, facts, and experience.

Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, to the audited consolidated financial statements and related notes thereto as of and for the year ended September 24, 2022. Except as noted below, there have been no material changes to the significant accounting policies during the six month period ended March 25, 2023.

Leases

The Company determines if an arrangement is a lease at its inception. When the arrangements include lease and non-lease components, the Company separates them and does not account for them as a single lease component. Leases with an initial term of less than 12 months are not reported on the balance sheet, but rather recognized as lease expense on a straight-line basis over the lease term. Arrangements may include options to extend or terminate the lease arrangement. These options are included in the lease term used to establish right-of-use (“ROU”) assets and lease liabilities when it is reasonably certain they will be exercised. The Company will reassess expected lease terms based on changes in circumstances that indicate options may be more or less likely to be exercised.

The Company has lease arrangements that include variable rental payments. The future variability of these payments and adjustments are unknown and therefore are not included in minimum rental payments used to determine the ROU assets and lease liabilities. The Company has lease arrangements where it makes separate payments to the lessor based on the lessor’s common area maintenance expenses, property and casualty insurance costs, property taxes assessed on the property, and other variable expenses. Variable rental payments are recognized in the period in which their associated obligation is incurred.

As most of the Company’s lease arrangements do not provide an implicit interest rate, an incremental borrowing rate is applied in determining the present value of future payments. The Company’s incremental borrowing rate is selected based upon information available at the lease commencement date, and represents the Company’s estimate of an interest rate that it would be able to obtain from a lender to borrow, on a collateralized basis, over a similar term to obtain an asset of similar value in a similar economic environment.

The ROU assets are reported as “Other long-term assets” and lease liabilities are reported as “Other current liabilities” and “Other long-term liabilities” on the consolidated balance sheets. Operating lease expense is recognized on a straight-line basis over the lease term and is included in “Selling, general, and administrative expenses” in the consolidated statements of operations. Variable lease expense is included in “Selling, general, and administrative expenses” in the consolidated statements of operations.

Presentation of Restricted Cash

Restricted cash consists of collateral required for a credit card processing program. The short-term or long-term classification is determined in accordance with the required amount of time the cash is to be held as collateral, which is short-term for less than 12 months, and long-term for greater than 12 months from the balance sheet date. As the cash is required to

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be held as collateral for a period which is greater than 12 months from March 25, 2023, it is presented in other long-term assets. The following table summarizes the end-of-period cash and cash equivalents from the Company’s Consolidated Balance Sheets and the total cash, cash equivalents, and restricted cash as presented on the accompanying Consolidated Statements of Cash Flows (in thousands):


	Six Months Ended
	March 25, 2023		March 26, 2022
Cash and cash equivalents	$	256,954	$	259,044
Restricted cash classified in:
Other long-term assets	2,132		—
Cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	259,086	$	259,044

Volume of Business

The Company has concentration in the volume of purchases it conducts with its suppliers. For the three and six months ended March 25, 2023, there was one supplier that accounted for greater than 10% of total purchases, and the aggregate purchases amounted to $35.8 million and $64.1 million, respectively. For the three and six months ended March 26, 2022, there was one supplier that accounted for greater than 10% of total purchases, and the aggregate purchases amounted to $13.9 million and $24.7 million, respectively.

Emerging Growth Company

The Company is an emerging growth company (“EGC”), as defined in Section 2(a) of the Securities Act of 1933, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Section 102(b)(1) of the JOBS Act exempts EGCs from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an EGC can elect to opt out of the extended transition period and comply with the requirements that apply to non-EGCs but any such an election to opt out is irrevocable. The Company has not elected to opt out of such extended transition period which means that when a financial accounting standard is issued or revised and it has different application dates for public or private companies, the Company, as an EGC, can adopt the new or revised standard at the time private companies adopt the new or revised standard. The Company will be eligible to use this extended transition period under the JOBS Act until the earlier of the date it (i) is no longer an EGC or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the Company’s financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies, which may make comparison of the Company’s financials to those of other public companies more difficult.

The Company will cease to be an EGC on the date that is the earliest of (i) the end of the fiscal year in which total annual gross revenue exceeds $1.235 billion, (ii) the last day of the Company’s fiscal year following March 11, 2026 (the fifth anniversary of the date on which SVF 3 consummated the initial public offering of SVF 3); (iii) the date on which the Company has issued more than $1.0 billion in non-convertible debt during the preceding three-year period; or (iv) the end of the fiscal year in which the market value of the Company’s common stock held by non-affiliates exceeds $700 million as of the last business day of the most recently completed second fiscal quarter. As of the last business day of the most recently completed second fiscal quarter ended March 25, 2023, the market value of the Company’s common stock held by non-affiliates was approximately $517.3 million (based on the closing sales price of the Class A common stock on March 24, 2023 of $21.68), and therefore, the Company expects to continue to be an EGC as of the end of the current fiscal year ended September 30, 2023.

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Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (“ASU 2016-02”). The ASU requires lessees to recognize the assets and liabilities on their balance sheet for the rights and obligations created by most leases and continue to recognize expenses on their income statements over the lease term. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which provides entities with a new transition method where comparative periods presented in the financial statements in the period of adoption will not need to be restated. Under this new transition method, an entity initially applies the provisions of the standard at the adoption date, versus at the beginning of the earliest period presented, and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company adopted ASU 2016-02 and ASU 2018-11 on September 25, 2022, as required by the ASUs, and utilized the cumulative effect adjustment approach, which did not result in an adjustment to the Company’s opening balance of retained earnings. At adoption, the Company recognized ROU assets and lease liabilities of $5.5 million and $6.4 million, respectively, on the balance sheet at September 25, 2022. The new standard did not materially impact the statements of operations, cash flows, or stockholders’ equity (deficit). In addition, the Company provides expanded disclosures related to its leasing arrangements in accordance with these ASUs. Refer to Note 5, Leases, for additional information.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes—Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles as well as clarifying and amending existing guidance to improve consistent application. The guidance is effective to the Company for fiscal years beginning after December 15, 2021, and for interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted. The Company adopted ASU 2019-12 on September 25, 2022 and there was not a material impact of the adoption to the Company’s financial statements.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments. This may result in the earlier recognition of allowances for losses. The guidance is effective to the Company for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. The Company does not expect the new standard to have a material impact on its consolidated financial statements.

Other recent accounting pronouncements that are or will be applicable to the Company did not, or are not expected to, have a material impact on the Company’s present or future financial statements.

3. Noncontrolling Interests

Noncontrolling interests represent the portion of net assets in consolidated entities that are not owned by the Company. Following the Business Combination, Legacy Warehouse unitholders hold their economic interests directly in New Symbotic Holdings. Upon completion of the Business Combination, Symbotic Inc. issued to Legacy Warehouse unitholders an aggregate of 60,844,573 shares of Symbotic Class V-1 Common Stock and 416,933,025 shares of Symbotic Class V-3 Common Stock, each of which is exchangeable, together with a New Symbotic Holdings Common Unit, into an equal number of Class A Common Stock. Class V-1 and Class V-3 Common Stock are non-economic voting shares in Symbotic Inc. where Class V-1 Common Stock have one vote per share and Class V-3 Common Stock have three votes per share. Class V-3 Common Stock can convert into Class V-1 Common Stock in certain situations, including automatically, seven years following the Business Combination. Pursuant to the Merger Agreement, the Company issued an additional 20,000,000 New Symbotic Common Units and an equal number of shares of Symbotic Class V-1 Common Stock to Legacy Warehouse unitholders as earnout shares in July and August 2022 upon the achievement of triggering events specified in the Merger Agreement tied to the volume weighted average price of Class A Common Stock.

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The following table summarizes the ownership of Symbotic Inc. stock for the three months ended March 25, 2023.


	Class A Common Stock	Class V-1 and Class V-3 Common Stock	Total	Class A Common Stock		Class V-1 and Class V-3 Common Stock		Total
Beginning of period	58,584,690	495,322,059	553,906,749
Issuances	1,757,749	—	1,757,749
Exchanges	941,250	(941,250)	—
Cancellations	—	(367,694)	(367,694)
End of period	61,283,689	494,013,115	555,296,804	11.0	%	89.0	%	100	%

The following table summarizes the ownership of Symbotic Inc. stock for the six months ended March 25, 2023.


	Class A Common Stock	Class V-1 and Class V-3 Common Stock	Total	Class A Common Stock	Class V-1 and Class V-3 Common Stock	Total
Beginning of period	57,718,836	496,170,413	553,889,249
Issuances	1,775,249	—	1,775,249
Exchanges	1,789,604	(1,789,604)	—
Cancellations	—	(367,694)	(367,694)