Earnings Call Transcript - SYM Q4 2025

Operator, Operator

Good day, and thank you for standing by. Welcome to the Symbotic Fourth Quarter 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Charlie Anderson. Please go ahead.

Charlie Anderson, Vice President of Investor Relations

Hello. Welcome to Symbotic's fourth quarter and Fiscal Year 2025 financial results webcast. I'm Charlie Anderson, Symbotic's Vice President of Investor Relations. Some of the statements that we make today regarding our business operations and financial performance may be considered forward-looking. Such statements are based on current expectations and assumptions, which are subject to a number of risks and uncertainties. Actual results could differ materially. Please refer to our Form 10, including the risk factors. We undertake no obligation to update any forward-looking statements. In addition, during this call, we will present both GAAP and non-GAAP financial measures. Reconciliation of GAAP to non-GAAP financial measures is included in today's earnings press release, which is distributed and available to the public through our Investor Relations website located at ir.symbolic.com. On today's call, we're joined by Rick Cohen, Symbotic's Founder, Chairman, and Chief Executive Officer and Izzy Bartons, Symbotic's Chief Financial Officer. These executives will discuss our fourth quarter and fiscal year 2025 results and their outlook, followed by Q and A. With that, I'll turn it over to Rick to begin. Rick?

Rick Cohen, Founder, Chairman, and CEO

Thank you, Charlie. Good afternoon, and thank you for joining us to review our most recent results. We made strong progress in fiscal year 2025, finishing the year with good momentum. For the full year, we increased revenue by 26% year over year, while delivering significant margin expansion and free cash flow generation. The cash on our balance sheet now exceeds $1.2 billion. During the fiscal year, we also expanded and upgraded our product portfolio. We added micro fulfillment as a new category to address e-commerce and upgraded our storage structure to a proprietary next-generation design that offers leading density and rapid installation. When we combine our innovative bot technology, which can handle goods of many sizes, with this new highly dense storage structure and our proprietary software, we believe we can unlock more opportunities than ever before. This includes everything from smaller buildings to e-commerce facilities to perishable facilities where square footage is at a premium. We are seeing this play out with a growing sales pipeline as our solutions deliver space savings and installation efficiencies that result in higher value. Customers are already taking advantage of this breakthrough in installation efficiency. Notably, our largest customers opted to utilize our next-gen storage to combine what previously took two separate deployments or phases into one single phase for new sites. This means that a phase one system deployment, when we enter a distribution center for the first time, will be able to do twice as much work compared to when we began deployments previously. The overall time to install and achieve acceptance for the same amount of case output will be cut by more than half, generating significant savings, reducing disruption, and producing a larger and faster return on investment for customers. Customers are also taking advantage of the modular build qualities of our next-gen storage with several deployments that began in the fiscal fourth quarter connecting next-gen storage to prior-gen storage at the same site. GreenBox is moving forward with next-gen storage, signing up to utilize it at new sites near Dallas and Chicago, both of which were signed in the fiscal fourth quarter. Notably, with these sites, GreenBox coverage will extend from California to the Midwest to the Southeast. We also finished the fiscal year by signing a new customer, Medline, the largest provider of medical surgical products and supply chain solutions serving all points of care. This marks our first customer in the healthcare vertical, where we believe the case for automation is very strong given the importance of accuracy, speed, and cost. This is also one of the largest potential new verticals available to us. There are over 500 healthcare distribution centers in the US alone, with a combined 76 million square feet of warehouse space according to the Health Industry Distributors Association. With our scale rapidly improving project execution and growing set of capabilities across the supply chain, we are in a better place than ever to bring our new customers covering multiple verticals, geographies, and use cases. Our focus in this has never been greater. In summary, we delivered on the commitment made at the start of the year to achieve strong top-line growth and a significant rise in operational systems, thanks to improvements in our deployment process. This also enabled us to deliver strong margin expansion. Looking ahead, our key objectives for fiscal year 2026 are: number one, harness our growing product portfolio and capabilities to broaden our opportunities with customers, particularly in e-commerce with our micro fulfillment solution. Number two, unlock higher margins by driving additional value along with operational improvements. Number three, continue to invest in our innovation engine to expand our capabilities and support future growth. I want to end by thanking our team for their efforts, and our customers and investors for their support. I'll now turn it over to Izzy, who will discuss our financial results and outlook. Izzy?

Izilda Martins, CFO

Thanks, Rick. Fiscal fourth quarter revenue grew 10% year over year to $618 million, exceeding our expectations. Year-over-year revenue growth in the quarter was driven by the expansion of the number of systems in operation, fueling higher recurring revenue along with continued progress on our paid development program. Due to higher stock-based compensation, our commitment to attracting and retaining top talent, and restructuring expenses primarily associated with acquisition integration activities, our net loss for the fiscal fourth quarter was $19 million versus net income of $16 million in 2024. Adjusted EBITDA in the fiscal fourth quarter of $49 million was at the high end of our forecast due to revenue and gross margin upside, up from $42 million in 2024. Our backlog of $22.5 billion remained in a strong position. The increase from $22.4 billion last quarter was due to final pricing on projects started and the addition of backlog associated with Medline offsetting revenue recognized in the quarter. In our fiscal fourth quarter, we began 10 new system deployments. As Rick highlighted, this included two deployments for GreenBox and one for Medline. We also had six systems go operational in the quarter, bringing our total to 48 operational systems, nearly double the level at the end of fiscal year 2024. For the systems that went operational for our largest customer in the fiscal fourth quarter, we observed nearly three months of improvement in the time between start of installation and customer acceptance compared to our historical average with this same customer, which is the portion that is most within our control and is when we recognize the highest level of revenue and profit. With the continued growth in operational systems, we saw our software revenue grow 57% year over year to $9.3 million in the fiscal fourth quarter. Operating services revenue grew 21% year over year to $26.9 million. Turning to margins in the fiscal fourth quarter, systems gross margin continued its trend of significant year-over-year improvement, driven by disciplined cost management, solid project execution, and strong supply chain partnerships as we roll out our next-gen structure and deliver increasing value to our customers. We expect to see additional expansion in systems gross margin. Software maintenance and support also saw substantial year-over-year gross margin gains, benefiting from continued scale and exceeding 70% for the full year. In operation services, we posted a loss as we increased investment in additional resources to support certain sites and ensure their long-term success. Operating expenses on a GAAP basis in the fiscal fourth quarter were $149 million. Adjusted operating expenses in the quarter were $87 million, up sequentially primarily due to strategic R&D investments supporting our expanding product portfolio and cloud-based software tools. These investments are in areas where we see the greatest potential to increase value and long-term impact. We finished the quarter with cash and cash equivalents of $1.2 billion, up from $778 million in the fiscal third quarter due to the timing of cash receipts tied to project milestones and the signing of new projects. Now turning to the forecast. As I’ve settled into the CFO role, I want to share some context for how I think about guidance. We will continue to guide one quarter ahead, with a focus on transparency and consistency. My approach will be to set a guidance range reflecting where we expect to land, based on our best view of the deployment schedules and a balanced assessment of both risks and opportunities. With that in mind, for 2026, we expect revenue between $610 million to $630 million, representing year-over-year growth between 25-29%. Adjusted EBITDA is expected between $49 million and $53 million. I want to reiterate what we highlighted during last quarter's earnings call. The introduction of our proprietary next-gen storage structure has resulted in a realignment of deployment. While this has no impact on our $22.5 billion of backlog, it does affect how our revenue is phased throughout the fiscal year, with the quarters in 2026 showing less pronounced sequential growth. We believe this new technology, combined with the unique capability of our proprietary bots and software, is resonating with customers as they recognize our competitive differentiation and the significant value our solution creates. It also unlocks new opportunities across the supply chain, as well as the potential for more efficient deployment, which we expect will contribute to higher margins over time for Symbotic. With that, we now welcome your questions. Operator? Please begin the Q and A.

Operator, Operator

Thank you. To ask a question, please press 11 on your telephone. You'll hear an automated message advising your hand is raised. We also ask that you limit yourself to one question and one follow-up. Additionally, please wait for your name and company to be announced before proceeding with your question. One moment while we compile the Q and A roster. Our first question today will be coming from the line of Nicole DeBlase of Deutsche Bank. Your line is open.

Nicole DeBlase, Analyst

Yes. Thanks, guys. Good afternoon. Maybe just starting with Medline, is it possible for you to provide a bit more color on the relationship, what they've committed to? And then, you know, it seems like healthcare could be a pretty big opportunity with respect to new customers. Anything on how aggressively the sales force is pursuing that right now?

Rick Cohen, Founder, Chairman, and CEO

You broke up a little bit, but the Medline relationship is something that we worked on for about a year, maybe a little bit longer. It was a combination of understanding what they wanted to accomplish with the hospitals and the critical care units that they deliver to. Then for them to understand how our system can handle a large variety of items, and also the incredible accuracy with which we ship products. Additionally, we have the ability to sequence products because oftentimes to hospitals you're delivering to a specific section or floor. We worked with them to give them a good understanding of the unique capabilities of our system. That's why we won the award, and they are a great customer, so we're very excited about that. In terms of future growth, we've added about five or six new salespeople in the past six months. We're much more in an aggressive marketing role than we were before. About a year ago, we were still ensuring everything was working and testing it out. As I tell the organization, you can't scale chaos. Over the last year, as we began hitting our timelines for builds, price points for execution, and the quality of the way we measure it, we have improved by almost 300%. We're feeling very bullish about being able to handle a much broader base of customers and deploy systems that'll work on day one.

Nicole DeBlase, Analyst

Thanks, Rick. That's really helpful. And you kind of alluded to this, Izzy, when you were talking about the cadence of 2026. But is the expectation that you guys start to really ramp next-gen systems still kind of around the middle of the year? I think that's what we shared on the last earnings call. And does that mean we're going to have stable revenue through the first half and then the next step up kind of comes in 2026? Thank you.

Izilda Martins, CFO

Nicole, that's exactly the way we're thinking of it. As you know, we unveiled it last quarter. We had some signings then. Then this quarter's signings are all about the next-gen system. So what that does is exactly what you said. You’ll see less pronounced increases in revenue in the first quarter and second quarter, and then more of an increase towards the tail end. So, Nicole, I would say you got that right. Thank you.

Operator, Operator

Thank you. One moment for the next question. And our next question is coming from the line of Joe Giordano of TD Cowen. Your line is open.

Joe Giordano, Analyst

Hey. Thanks, guys. On Medline, can you talk about what's contemplated there? How many sites are we talking about? What types of technology is this encompassing? Is there break pack in this? Is there room for the micro fulfillment strategy in there as well? What's effectively added to the backlog from them right now?

Rick Cohen, Founder, Chairman, and CEO

Yeah. So, Joe, it's one site. It's a proof of concept. This is how we look at it. If we do a good job, they have many warehouses. Initially, we contemplated a pretty straightforward moving case system, but we also think we can upsell or extend our offerings to include micro fulfillment, which could either be in a receiving room in a hospital for them or very specific selection in a warehouse. Break pack is also an opportunity for us to sell. Essentially, we can sell them three different products. But right now, we are starting out with the first original product.

Joe Giordano, Analyst

And then do we need to, like, just wanna make sure I understand this. The comments about Walmart where the two phases are being incorporated into one now. We need to, like, change the way we describe these things? I guess, I just wanna make sure I understand the definition. So if you say, like, 10 new systems were started, can some of those effectively be like, two that you would have said last time? And then we have to talk in dollar terms instead of number of sites now?

Rick Cohen, Founder, Chairman, and CEO

I'll turn that over to Izzy because I'll get in trouble.

Izilda Martins, CFO

I think the way you said it, you have it right in the sense that not all systems are created equal. But going forward, the size of the system is going to be slightly larger. That's how I would think about it. They could be slightly larger, or we also have the ability to do some smaller systems. In terms of smaller space in a warehouse, it gives us a lot of flexibility. What's happening is that the size of the systems is going to be different than what we previously discussed. They're capable of doing more because we can do more work in the same space.

Operator, Operator

Thank you. One moment while we prepare for the next question. And our next question is coming from the line of Andrew Kaplowitz of Citigroup. Your line is open.

Andrew Kaplowitz, Analyst

So systems gross margin was, I think, a high watermark close to 22%, that's despite all the changes you're making to your systems. I think you had spoken about more flattish gross margin for Q4. So is Q4 a function of ASR mix maybe a little being a little higher? Is it safe to say you're on a better glide path? Given improved operating leverage, better execution? Any more color on whether you think your system gross margin continues to sort of just kind of go up from here?

Izilda Martins, CFO

So let me tackle what you said in the beginning of your question. In terms of ASR in the quarter, it's mid to high digits in terms of a percentage of total revenue in the fourth quarter. I would expect that to be about the same as we progress. The bigger part of your question is how you think about unpacking the margins. We feel really bullish about our system margins, not only where they are but where we're headed. If you see the last several quarters, there's been a bit of lumpiness. But I think it’s about the exit trend where we landed in the fourth quarter. While we don't guide to margins, we expect a slight uptick in the first quarter. It's more about how we're recognizing revenue in that twelve to eighteen-month period, especially when we roll out the next-generation storage system. We expect those margins to expand in the coming quarters, which is the key takeaway. I would reiterate, if there's one thing you should walk away with today, it’s that we are very bullish about our margins, both where they are and where they're going.

Andrew Kaplowitz, Analyst

It's helpful, Izzy. And then Rick, backlog, as you know, has been somewhat flat for Symbotic. I know your burn rates are going up. But do you think you could grow Symbotic's backlog in FY 2026? And we know you're ramping on GreenBox. Can you give us an update on whether FY 2026 is a big year for Symbotic with new customers, GreenBox? Can you start booking backlog for ASR? Any thoughts around all that?

Izilda Martins, CFO

You're trying to trap me a little bit. We don't guide on backlog. But I would say that given the guidance we provided for the first quarter, I would expect our backlog in the first quarter to really be no different from where we are now. The 10-Ks reflect our banding, but what comes through in the next twelve months isn't something we discuss in detail. It's too soon to tell where backlog will be. I think you have to take two takeaways: we built up our sales team, which means more opportunities. Also, think about the backlog strictly in terms of gap, not what could happen since most customers typically do one system at a time. Lastly, we have more than $5 billion of backlog to unlock with the mini micro fulfillment systems. So I'm not troubled by the backlog at all; I think it's indicative of our long-term strategy. I believe 2026 will be solid for backlog.

Operator, Operator

Thank you. One moment for the next question. Our next question will be coming from the line of Mark Delaney of Goldman Sachs. Your line is open.

Mark Delaney, Analyst

Yes, good afternoon. Thank you very much for taking the questions. First one was on GreenBox. Given you have a CEO of GreenBox, also with the new store structure you spoke to around building out sites, I was hoping you could speak more on the progress at GreenBox in terms of finding new customers who will use the GreenBox sites?

Rick Cohen, Founder, Chairman, and CEO

Yeah. Our first site that will come online will be Atlanta. Some of these sites are still under construction. Some will be a year away, while some may take a little longer. But Atlanta will go live soon. We have a lot of interest in Atlanta. No customers to announce yet, but we expect hopefully within the next ninety to one hundred eighty days to make some announcements about who our first will be. We're continuing to get interest, and since we now have facilities, we are in discussions with customers about how much space they want and when, but nothing to announce yet.

Mark Delaney, Analyst

Okay. Anything in particular, Rick, you think new customers would want to see in order to get across the line?

Rick Cohen, Founder, Chairman, and CEO

No. I think what’s happened is that on the real estate front, there was a downturn after COVID, and some of the big players have taken up a lot of space, leading to a shortage. We are very well positioned. We're discussing with people about different solutions. Some might be versions of GreenBox, while others might involve conventional storage or very proactive warehouse handling services. We're in a good spot because we're ahead of the market and discussing various options with different customers. Our agreement with SoftBank is solid. They are responsible for providing the funding, and we have plenty of cash to do our part. Funding will not be an issue for GreenBox.

Operator, Operator

Thank you. One moment for the next question. Our next question will be coming from the line of Colin Rusch of Oppenheimer. Your line is open.

Colin Rusch, Analyst

Thanks so much, guys. As you engage with these customer conversations in more detail, can you talk about the potential for adjustments to bot design or even system design more broadly? How are we thinking about the cadence of that evolution?

Rick Cohen, Founder, Chairman, and CEO

That's a great question. The market is appreciating that we're not selling the same system we did ten years ago. Many of our competitors have not innovated; they're just scaling. For instance, we introduced a stretch bot that can handle a 36-inch case. Our bots have more flexibility now with vision and LIDAR technologies that provide collision avoidance. Customers are recognizing the pace of change we've undergone. It's differentiating us from the rest of the world. Additionally, we’ve moved to cloud-based systems and are investing in AI resources for sorting, slicing, and pallet building. Our customers report that nobody else is doing what we are in terms of efficiency and accuracy.

Colin Rusch, Analyst

That's incredibly helpful on our side. From a human capital perspective, with the competition for talent heating up, can you talk about your ability to attract and retain individuals in this market?

Izilda Martins, CFO

The reason we went public is to create a compensation system that allows us to attract people used to stock compensation. While we may not offer billion-dollar packages in Palo Alto, we're competitive in the Boston market and the East. We have opened an office on the West Coast and in Vietnam since one of our healthcare start-ups was founded by Vietnamese founders. We're capturing more than our fair share of talent at a quick pace. Interestingly, as the EV space has cooled, we’re attracting talent from that sector who are disillusioned with some developments. We're solving complex problems that attract talent. Our compensation is as strong as needed; while we won't compete with AI firms, there are plenty of individuals who won't work for them either.

Operator, Operator

Thank you. One moment for the next question. Our next question will be coming from the line of Guy Hardwick of Barclays Capital. Your line is open.

Guy Hardwick, Analyst

Hi. Good evening. It looks like based on the change in the RPO, there was very strong bookings in the quarter, something like $600-$700 million, Izzy. Could you just split that out between the Medline new win and pricing?

Izilda Martins, CFO

To clarify, Medline was signed at the tail end of the quarter, so it won't influence our fourth-quarter results. Essentially, Medline is about getting recognition over nearly a two-year period. I wouldn’t link a lot of pre-analytical influence on our fourth-quarter outcomes with the addition of a new vertical. The success of the fourth quarter is based on the momentum we've built over several months through installations and moving six more sites operational.

Guy Hardwick, Analyst

So Medline was not a significant factor in the increase in the RPO. The $22.5 billion RPO at the end of the quarter.

Izilda Martins, CFO

Correct, it's in the RPO, but it doesn't have significant contribution to revenue generated in the quarter. The main driver for the increase in RPO is primarily the pricing inflation.

Operator, Operator

Thank you. One moment while we prepare for the next question. Our next question will be coming from the line of Derek Soderberg of Cantor Fitzgerald. Your line is open.

Derek Soderberg, Analyst

Yeah. Thanks for taking my questions. On the recurring software fees, I'm wondering if you can share what new customers are signing up for in terms of an annual software fee on a percentage basis?

Izilda Martins, CFO

Unfortunately, that's not an area we provide more detail on. In general, it's how we map operational timelines and when we trigger that software fee. But if you take the exit trend, that's what we would expect in the near term.

Derek Soderberg, Analyst

Okay, got it. And then, Rick, you mentioned there's about 76 million square feet of distribution centers in the healthcare vertical. Have you done the math internally about how many modules this equates to, or what's the dollar opportunity? Just wondering if you can help us size the healthcare vertical in the U.S. Thanks.

Rick Cohen, Founder, Chairman, and CEO

I haven’t quantified that, but you can ask Izzy after this call. Will do.

Operator, Operator

Thank you. One moment. Our next question will be coming from the line of Jim Ricchiuti of Needham and Company. Your line is open.

Jim Ricchiuti, Analyst

Thanks. Late in the quarter, there was an announcement regarding Symbotic working with a small battery technology company, Niobolta, in the UK. Can you discuss its significance? How should we think of potential deployments? Is this going to be on new projects, or is there a plan to move forward with retrofits as maintenance schedules dictate?

Rick Cohen, Founder, Chairman, and CEO

Yep. All our new batteries starting in February will have niobate batteries. For fifteen years we've used ultracapacitors, capable of a million charges, but they only last about eight minutes. Deniable is a battery that charges similarly to an ultracap, but lasts about forty minutes. Although that may not seem like much, the erratic nature of the American grid, especially in places like Florida and Texas, makes this important. The ability to last forty minutes is significant for our reliability. In the event of a power flicker, we want our bots to get back to a home station, which is on a charge plate. Previously, eight minutes wasn't always sufficient. This advancement in battery technology, of which we have a stake in the company, is vital. It enhances our systems greatly and can allow us to offer more reliable service in life sciences and various sectors. Overall, the reliability of our systems has made tremendous progress over the last two years.

Jim Ricchiuti, Analyst

Thank you. As we think about your fiscal twenty-six goals, how does geographic expansion factor into that? Obviously, you're working on a site in Mexico. Is there an opportunity to expand to Europe in fiscal twenty-six?

Rick Cohen, Founder, Chairman, and CEO

Yes, half our sales team is in Europe today. Many top automation companies originated in Europe due to tighter land spaces and restricted labor laws. Now, with our smaller, denser warehouses, there's increased interest in Europe. We've built enough reliability that it's no longer a concern, which makes me very optimistic about opportunities in Europe.

Operator, Operator

Thank you. One moment for the next question. Our next question will be coming from the line of Ken Newman of KeyBanc Capital Markets. Your line is open.

Ken Newman, Analyst

Hey, thanks. Good evening, guys. I want to revisit your comment about the revenue phasing. I know you said you expect less pronounced sequential revenue growth in the first half versus the back half. Just looking historically, sales have typically been down sequentially about high single to low double digits from Q4 to Q1. The midpoint of the guide seems to assume something a little better than flat. I'm just trying to clarify the growth comment for accelerating growth in the back half versus what already seems like a bit of a stronger start compared to typical seasonality?

Izilda Martins, CFO

That's fair. If you take the high end of the range we just provided for the first quarter, we would break the trend we've seen in the past two years. Clearly, that's our goal. If you take the bottom end of the range I mentioned, it's only about 1% less than where we landed in the fourth quarter. It depends whether you take the midpoint; we’re kind of flat to exactly where we achieved in the fourth. But internally, as you can imagine, we're trying to overcome lumpiness and focus on improving continuously. Though I guided slightly under our fourth quarter level, it’s because I'm focused on overcoming that lumpiness in the first quarter moving forward.

Ken Newman, Analyst

Okay. That's very helpful clarification; appreciate that. Regarding my follow-up, we hear comments from hardware-related manufacturers about higher DRAM pricing and memory shortages. Rick, can you remind us how memory-intensive the Symbot deployments are? What are you seeing concerning broad chip availability and pricing that relates to your margin stability? Could we risk seeing nominal margins step down?

Rick Cohen, Founder, Chairman, and CEO

No. Not for us. Our bots primarily transmit data back to us, which we process in the cloud using various proprietary algorithms. We are purchasing more cloud storage, but it's coming down in price. We aren't investing heavily in memory chips in the bots. The chips we are using are not significantly impacted, and we are not reliant on the expensive chips that others are using.

Operator, Operator

Thank you. One moment for the next question. And our final question will be coming from the line of Mike Latimore of Northland Capital Markets. Your line is open.

Mike Latimore, Analyst

Great. Building off that last answer, if you expect about 20,000 or so bots in a year, can you provide a baseline of where we are now?

Rick Cohen, Founder, Chairman, and CEO

We currently have about 15,000 bots right now.

Mike Latimore, Analyst

Okay.

Rick Cohen, Founder, Chairman, and CEO

We expect growth, and different versions of our bots are on the way. The back-of-store mini system will utilize a similar bot. So multiple versions will exist.

Mike Latimore, Analyst

That makes sense. On the new system starts in the quarter, I think you said there were ten. Were there any breakbacks in there? Last quarter, you guided to the mid-single to upper-single digits. Should we still see that as the run rate for a while?

Izilda Martins, CFO

There’s a mix in the ten new deployments we had in the fourth quarter. There were a couple of break packs. However, we don’t typically guide on specific system starts. It's less important to focus on numbers and more about the size and revenue coming through, so I would emphasize revenue forecasts in the upcoming quarters.

Operator, Operator

Thank you. One moment. Our next question is about systems gross margin, which was a highlight. Izzy, can you break out or bucket out some of the positive impacts happening this quarter versus the last twelve to eighteen months?

Izilda Martins, CFO

Certainly. We have seen improvements in systems gross margins over multiple quarters. So there are various contributing factors. We had disciplined cost management throughout the year without notable cost creep in how the supply chain team installed the systems, which is driving systems gross margin overall. Not to mention, deploying the more dense systems plays a big role. While the quarter results are good, I feel bullish about the direction of our system marginals.

Operator, Operator

Thank you. And that does conclude today's Q and A session. I would now like to turn the call back over to management for closing remarks. Please go ahead.

Rick Cohen, Founder, Chairman, and CEO

Symbotic, thank you, everybody, for joining our call tonight. We appreciate your interest and look forward to seeing some of you in the coming weeks at investor conferences that we'll attend. Goodbye.

Operator, Operator

Thank you all for joining today's conference call. You may all disconnect.