Symbotic Inc. (SYM) Earnings Call Transcript & Summary

Please welcome to the stage Jeff Evanson, Vice President, Investor Relations for Symbotic.

Thank you, everyone. Welcome now to the management Panels presentation portion of our 2024 Investor Day. And welcome to our online audience. Thank you for joining us all today. We've just had a fantastic tour in the lovely Central Florida heat. We had a tour of Walmart's Brooksville distribution center, a fantastic facility that Walmart has run with excellence for many years, and now is a key place for automation, that's really going to transform the supply chain in very dramatic ways. I hope you all saw that today. I heard from some of you, you were amazed at the amount of progress we've made in the past year, in terms of expanding our facility our operations there. And I heard from many of you, your excitement about BreakPack. That is the first extensive tour. We've provided our BreakPack system, something we're very proud of. And I think many of you saw how powerfully transformative BreakPack will be for our customers. You hear us talk a lot about having a nearly $23 billion contracted committed backlog. That is such a big number, it's hard to get your arms around. So we thought we would try to take a moment and show you what, $23 billion of contracted committed backlog actually looks like. So here we were in 2027, with seven operational systems. And then you just dialed in for our March quarter that we reported Monday night, and we told you about our now 18 operational systems that are up and running, across the United States. We also talked about our 37 systems that are in the process of deployment, and now 38 with the implementation we're starting this quarter for Green Box. And then next, let's talk about our non-Green box backlog. Each one of these dots represents a site that we will begin to deploy in the next several years. And many of those points are actually multiple spots of systems that are going to be deployed at single locations. And then finally, you've heard about our BreakPack backlog. There's a little bit about what break pack looks like. Now don't hold me to these sites. These are potential sites. But what I want you to capture is, the number of dots reflected here is representative of both the number of systems that we will deploy under our existing Green box contract, and also our global ambitions that we share with Green box. So this is quite representative of how we will grow our footprint. Okay. So that's with 9 customers. 9. That's it. And we're still going to add one to two new customers per year, but this is just our existing 9 customers today. But you always hear Rick talk about how important braggingly happy customers are. Let me share with you why that is so important. If we build out all of the opportunities we have today with these 9 customers. Well, I would have to put up another 4 to 5x the number of spots on this map, with those existing 9 customers. So that brings me to summarizing what this whole day is about, this whole session of presentation is all going to be about how we have this unbelievably huge opportunity, and we are building scale in our innovation, in our messaging, in our operations and in our people to be able to meet this opportunity. That's what we want you to take away from today. That's the message. Which you're going to hear from every single panel, okay? So now who is the man that had this vision from the very beginning? I'm thrilled to be able to introduce our Chairman, Founder and Chief Executive Officer, Rick Cohen. Rick has the unique distinction of having run warehouses his entire life. But before I introduce Rick, I'll very quickly just hit the outline here. We're going to talk about the invention of the supply chain, the sharing of it, delivering it and empowering our people to make that all happen. All right. Sorry about that, back to Rick. So Rick founded Symbotic in 2016. He invested over $700 million of his own money to fund the company. And he built Symbotic to where we are today. The building continues. So Rick, would you please kick off our presentation for Investor Day.

Thanks, everybody. Thanks for making the trip today, and thanks for letting us show off our really cool toys. Somebody asked me what I was most excited about -- and I was speechless because I'm excited about everything. I love the BreakPack. Every time I'm in the site, I'm kind of like when you see it for the first time, so I still very vividly remember 5 years ago, the original Walmart system that we had in Brooksville was two outbound cells. It didn't work very well. We convince Walmart that we could do a better job. And today, you saw 13 outbound cells, 5 or 6 flips, 4 or 5 inbound cells and a BreakPack system. And that system may be the biggest automated warehouse system ever designed for retail stores. So it's pretty amazing. But what I'm most excited about is that when I walk around with the Symbotic team, it's like, oh, we could do this better. We could do that better. And then this team typically goes back in a week or two later, say, here's a drawing. We we're thinking about this, we're thinking about that. The way you should think about Symbotic is -- analogy I use is we're just Amazon, selling books right now. And where Sam Walton is 5 and 10? And did anybody know how big these things were going to be? I don't think so. But do they have a vision about if you do great things and you have Braggingly Happy customers, how big they could be. That's where we are. We are driving the cost of running a warehouse lower and lower and lower. And the cost of our systems is coming down as we do it. And with the team that we've assembled and we have a lot of new people, you're going to see half of this team has been here less than 2 years. But what's happening is that the tech community, even more so than the retail community or the people that would buy our systems is quite a buzz about what we're doing because we are combining AI, we are commanding vision. We're combining machine learning. We're combining very cool technology in one place and it's practical. And you can actually build it and use it. And we're not doing military stuff. We're doing stuff that you can publish about, talk about and write about and the pace at which we are accelerating. So what you saw today was the [ Brooksville ] system. In the next year, we're going to have 10 of those systems, up and running. Each one of those systems is hundreds and hundreds of millions of dollars. That's how fast we're accelerating. From 3 years ago, 4 years or 3 years ago, I guess, we were $250 million in sales. So the pace of acceleration, what I'm excited about and also kind of holding on to my seat, is the pace of technological acceleration, the pace of adoption from Symbotic is accelerating. The pace of growth in sales for us is accelerating. The talent base is accelerating. And that's what I'm most excited about. And what I want to say is that this will be the slowest sales year that this company has for the next 50 years. There is just so much demand for what we're doing. And we're actually very patient. A lot of times, people said, well, what have you done with the first systems. In some cases, I give people their money back. I said I can't support the system. It didn't work. We upgraded the bots. And so we now have all bots going forward, or are on the same platform. We made some announcements on Monday about [indiscernible], so we're cleaning up, so we don't know have to support bad technology. And that allows us to go faster on the new technology, our ability to scale systems and grow faster and faster, faster as critical. And what's critical for us is we actually have to keep up with the technology, at a lightning pace in order to support the build out. So without further ado, I'd like to spend some time for you all getting to know the team that we've assembled here at Symbotic how proud I am of them. And this is a rock star team of technologists, mixed in with a good sampling of geniuses and doing stuff that, quite frankly, there's a moat around what we're doing. People say, well, who else is doing what you're doing? And the answer is, no one. What we did, I used to say to the early team in the first couple of years when I was putting in a couple of hundred million dollars and say, is this going to work? And I would also say, are you guys just really slow? Do you not know what you're doing? Or is this really hard? It's one of the three. What I found out is it's really expensive and it's really hard, but they did know what they were doing. And as a result, we have this unbelievable platform. And I said last year, I think at this meeting, we intend, we think there's no goal that we should have less than moving every box in the world. And what you saw in BreakPack is mini bots. And what I told the group -- a couple of groups I was with is, what we've created is the iOS, the platform for integrating new technology into all forms of robots. So we have the big Symbot, which is a 250-pound 20-mile an hour bot. We have a mini bot, which is about 50 pounds, but we could make a bot the size of an iPhone. I mean we have the technology and the skill set to do that, if we wanted to move medical devices, or we wanted to move stuff. So the future of what I say is we're just selling books is, we don't know what we're going to sell. We don't know how big the market is. But we do know that we are so much lower cost at moving boxes than any other person-based or automation-based system anywhere in the world. And as we get the price of these systems down lower, and we get them more reliable, which is the journey we're run, there's no reason for anybody to want to buy any other system. And I think we can go in places where temperature or labor or a million other things will affect us. And so that's what I wanted to show you today. The journey is just beginning. We've doubled every year for the last 3 years. I think we're just going to keep growing at that rate for quite a while. And we've assembled a team that can actually do that. So without further ado, I'll turn it back to Jeff. Thank you.

All right. Thank you, Rick. I really am excited for you to get to know even better, more of our management team here at Symbotic. So let me begin by introducing our Chief Strategy Officer, Bill Boyd. As Symbotic's Chief Strategy Officer, Bill is responsible for planning and directing various operational, financial and administrative activities for Symbotic. He has more than 12 years of extensive experience in distribution and logistics, in part of CNS and at Symbotic. And Rick -- Bill was involved in the original investments that led to the formation of Symbotic. So he has been with us since day 1. Bill?

Thanks very much, Jeff. Thank you all for coming. Thanks for everybody who's online with us today. I recognize that we promised you panels and now we've had three individual people standing up here. We're really going to get there. I promise. But we're going to spend about two more minutes just talking about the way we frame innovation before we get there. We look at innovation on three axis. We look at creativity and innovation, how we invest in it and then focusing always through a lens of our customers. And if we go to the next slide, as we talk about -- actually, I want to go -- yes, this one. Thank you. As we talk about innovation here, one of our engineers actually gave me the slide, which I'm sure he shamelessly stole somewhere else. So we'll come back to that. And I'm sure there will be a copyright somebody want to talk to us about. But what we look at is creativity enough, creativity is not enough to actually fuel true innovation. We try to foster creativity throughout our organization, but there also has to be a purpose for that creativity. We look at that through a customer lens. How are we solving the problems of our customers. How are we actually solving something that in the real world will make a difference. And we focus our energy there and trying to get that nexus between a creative idea, and a purposeful idea, and really make innovation that works. We do this primarily in three categories. We look at this as investing in our core technology, AI and the machine learning that we're going to talk about very shortly here. Looking at it, as we've said, through making our customers' products, the systems that are out there better for our customers, and in making our systems more efficient to install, to use and driving costs down. As we -- one of the markers that folks like to talk about when looking at your ability to innovate, often is your ability to patent your innovations. This is one measure for us. But clearly, we -- as we've looked at solving problems, we've been able to solve problems in a way that has allowed us to get patent coverage for some very important innovation, and we continue to drive forward in all of our thinking about how do we make our systems better, how can we actually protect what we're creating and the moat that Jeff talked about earlier. And with that, rather than having you listen to me talk more about it, I'm going to bring up some of my friends. So if you all could join me on stage. Thanks very much, gentlemen. By the way, very quick introduction, I'm going to start on this end. Ted MacDonald is our Symbotic fellow. Ted directs several Symbotic advanced technology teams, overseeing feature design and system engineering, as well as control and software architecture. In the 10-plus years, Ted has been at Symbotic. He helped design and implement the core architecture of the company's mobile robot system. Next to him, Cristian Mori, Cristian's our Senior Vice President, Hardware. Cristian is responsible for developing technologies and products that provide breakthrough solutions for Symbotic's customers. Prior to joining Symbotic, Cristian led deployment and system standardization at [ Rivian ] as a Director of Industrial Automation and Control advanced development. Next, Teddy Ort. Teddy is a Senior Director of robot Perception artificial intelligence. Teddy leads the Symbot Software Group and is responsible for the seamless execution of thousands of pick-and-place tasks per hour across the Symbotic fleet. Symbot fleet, excuse me, as you saw today, prior to joining Symbotic. Teddy worked with a Toyota research industry where he worked on localization and mapping techniques for autonomous vehicles. And we've got a special guest who didn't -- we didn't put on the screen because we dragged him up here late today. So thank you Aftaab. Aftaab Khan joined Symbotic back in November of last year. He's SVP of core hardware engineering. He brings 20-plus years of experience with automotive powertrains to our team. His last role was as Delantis Head of powertrain, electrical and electrical components. So let's actually get to you guys speaking rather than me.

We talked in our conference call on Monday about TSR, Teddy, if maybe you could lead off by taking a little bit of a deeper dive into what TSR is and why it's important to our system.

Absolutely, Bill. So in the Symbotic system, the router is responsible for coordinating the movement of all the Symbots in the fleet. In our previous version of the router, it was called the Beltway router because it pretty much operated like a beltway. So the robots would plan for a short distance ahead, and they would essentially have to merge onto the beltway, just like a human driver would by waiting for a gap. Now this is a simple solution. It worked pretty well, but it wasn't optimal. Recently, the team has been able to deploy the TSR or time-space reservation router. And for those of you in the room, this is the router that we saw running in the deployment center that we saw today. This actually works by planning the entire trajectory from where the bot is, to its destination, in both time and space. It allows the router to interleave these trajectories much more efficiently, and that improves both the throughput and the reliability of the overall system. Now one other point that I think the TSR really illustrates well is how extensible the system is. So with some automation solutions, once you install it, they essentially stay stagnant. On the other hand, with autonomous robots, we're able to install a software update like TSR over the air, the bots wake up the next morning and they have a performance boost, which is a huge benefit for our customers.

That's great. And one of the other pieces we talk a lot about is not just software, but AI and how that actually works. Could you talk a little bit about how we leverage into AI and how this fits in what we do?

Sure. So Rick had mentioned that we've been improving the hardware of the bots recently, to make sure that all of our bots will one day include vision capabilities and not just the cameras and the 3D sensors, but even the GPUs that are required for us to be able to run onboard perception algorithms, on the bot themselves. This enables us to do things like estimate the pose or position of the case in the structure. And it also allows us to identify a case. And this works similar to the way a facial recognition algorithm would look at a picture of a person, and then tag that picture with the name of the person. So similarly, the robots can actually look at a picture of a case, and then identify its SKU and associate that with the database. So these types of algorithms are quite a bit different than, for example, a routing algorithm, which is optimization based. And those types of problems are very structured, and so they're much more suitable for optimization types of algorithms. When you're looking at 1 million different cases in a chaotic warehouse environment, and the SKU mix that you're looking at, it could change every day. You would need a team of engineers to be constantly maintaining and updating the algorithms to be able to handle that. On the other hand, when we move more towards these data-driven and AI-powered algorithms, they actually improve as they get more data, and they adapt on their own as they learn, and they get better. And so they're much more suitable for dealing with these very high-volume chaotic problems that we're facing in the warehouse setting.

Great. You mentioned Vision in there. And obviously, being vision able, we've talked for a while about what that could mean for us. Could you spend a little bit of time talking about what it has enabled us to do in terms of [ teleops ] and being able to operate remotely.

Yes. So that's another capability that having vision on the bots has enabled. So as you could see here in the video, this is an example of what a tele-operation looks like. So in those rare scenarios where a bot approaches a case and has an issue picking it. Previously, we might require some human intervention, where a person working in the warehouse has to go over and help fix the case. We now have a remote operation center, where teleoperators can take control of the bots. Use the vision on the bot to see what the bot sees and fix that problem scenario.

Fantastic. Again, about -- I think that builds off of your extensibility point of earlier. Thank you. You don't get to go far. We're going to come back to you, I'm sure. But Ted, maybe you could take us through a little bit on Carpool. We talked about it a lot while we were in the building today, pick faces and multiple cases in multiple directions. Why is carpool important to us? And can you help us understand what's going on?

Yes. So one of the key metrics that we look at is how many cases can each robot move every hour. And it's a huge driver of system cost and throughput capacity. And one way we can do that is make the robots to drive faster and more efficiently. And Teddy covered that with the routing algorithms that we work on. Another lever that we have to pull is to move more than one case at a time, and that we call that car pooling. Now we've been doing inbound car pooling for quite some time. It's a lot easier to do when you're under loading a uniform pallet. And -- but only recently have we been able to deliver cases carpooled to outbound, which is a much harder problem because we need to deliver cases in particular sequences to meet the outbound demand on these mixed SKU pallets. And so just now we're beginning the production deployment of our first outbound car pooling enabled software. And so starting with the percentage of our transactions today, we hope to grow that over time, and that's a huge just efficiency multiplier for the bots.

Yes. And now I want to go a different direction. So we talked about multiple cases. We've talked about getting bigger and being able to do more transactions with more items. You are also one of the original architects of BreakPack. Can you talk to us about how we're getting smaller? Why BreakPack is so important here?

Everyone in the room got to see the brake pack system here in Brooksville, this is our proof-of-concept system that we're basically able to demonstrate the whole system coming together and functioning, and hitting good throughput rates. Through that process, we've learned a ton. And over the past year, we've been working on the next iteration of the BreakPack system design, and this would be the version that we will be rolling out across multiple customers in the future, with the first deployment that we've announced happening next year. And just to hit on a few of the highlights and the design changes. One is we -- as Rick mentioned, we're redesigning a whole new mini bot and that new mini bot design enables higher throughput, reduced number of bots in the system by about 40%, and a lot of additional vision and AI capabilities like, looking into totes to see how items are falling and distributing so we can plan how to drop the next items to maximize the fill rate and things like that, among other benefits. Another thing that those mini bots enable is we've redesigned the whole operator mini bot workflow. And by doing this, we are doubling the number of picks per hour that an operator is able to achieve, that helps really reduce the system operating cost. And lastly, by reconfiguring the system, we've been able to pack about 50% more empty totes to use in sortation, as part of that system that allows even more granular and efficient sortation of the product. So really excited about this next version of BreakPack, and that's a big focus for the team this year.

Fantastic. Thank you. And Aftaab, now that I dragged you up on stage, thank you very much for being here. We've seen that now with the large BreakPack fleet we have with our Symbotic fleet growing, as Rick said, with our systems getting bigger and bigger, we obviously need to be focused on how to keep our bots active. Can you talk a little bit about what your team is doing?

Sure, Bill. To put things in perspective, the system you saw today, the 600 bots there collectively travel about 20,000 miles every day. This adds up to nearly 7 million miles per year, for just one site. It's a lot of miles and hence, the push for higher reliability. And that's where I am bringing automotive practices and rigor to robots. We are building a culture of quality, by adopting Six Sigma methodology, to identify and eliminate defects. We are also shifting our focus from detecting the defects after they occur to preventing them before they even take place. We are also using advanced product quality planning methodology to systematically plan, develop and validate products and processes ensuring that the quality is built in the start. So in summary, by coordinating, incorporating automotive methodologies and processes. We are well on our way to improve the value proposition for our customers.

Perfect. Thank you very much. And even before we get into production, we're actually using other processes to make sure we can actually bring our systems up faster. Cristian, this BreakPack system, I think I heard a dozen times as we were walking around today, it's incredible how quickly you brought it up. Can you talk a little bit about the simulations we did to help speed that along?

Yes, absolutely, Bill. What you saw today is the result. What you don't see is the thousands of hours and competition of cycle and iteration that we have to perform to, make it successful at the beginning. So we've been working very, very intensively on building a digital twin for every part of the system. We designed BreakPack with digital twin. We modeled all the car pooling interaction that Ted was talking about, in simulation to see what the throughput is, and we have different granularity of digital twin. The mission is twofold. One, enable faster design. We can draw design and simulation, run it, see if it performs, either ways. And we do that at different granularity, from an individual cell and individual bot to the entire system. We can run our entire connected system and see what the true growth of the system is, and in real time and faster than real time. And we have the goal to have a full digital twin of the entire system. Because the more we have this capability, the easier it is to leverage the creativity to bring innovation on small features. And you've seen how many deployments we will have, when we want to deploy new improvements, we need to be sure that we'll have no negative effect that we'll have the exact KPIs that we want to obtain, before we deploy the entire fleet. And that can be very bad or can be extremely good. We want to be an extremely good side. That's why we're investing very heavily on having a full digital twin, where we can do as close as hardware regression tests that we can, to then do the deployment on a pilot site and then apply everywhere in [indiscernible].

Sorry to jump in, you excited me when you said deploying new things. And I want to make sure we give the folks here, at least one new thing that they haven't seen before. So we can talk a little bit about [ Masless ] [indiscernible], where we use the same process to bring another product to market that may not be as clear when you just walk by the systems.

Absolutely, Will. Our system is designed in a very modular way. And we want to be able to look at every module, be able to iterate on it without affecting the rest of the system. The second most numerous items that we have in the system after the bot is the lift. Every cell has 10 to 20 lift. And those in the current iteration that you see on the left, they are a pinpoint during installation. We have the mass, that's the first thing that goes and then we build everything around it. So we challenged the team to remove that limitation, make it lighter, faster and cheaper. And when we came out with the design was the massless list that you see on the right, where we leverage the structure as the running guide, we were able to reduce the weight about 50%. It can deliver on the center instead of on the back. So we have last [indiscernible], can go 20% faster and brings huge cost savings into the supply chain.

Fantastic. Thank you very much. And so we obviously -- we could keep going down the innovation tree here, but we wanted to -- we can only do it in 20 minutes a few things. So we wanted to at least show you a little bit of this. Now I'd like to end, Ted, if you're willing, we were -- we toured the system again today, hear folks talking about it and trying to figure out how it fits together, what -- how they should be thinking about it. And I think you recently -- we're talking about it in a way that I think we should probably share with this group. So would you mind talking about [indiscernible]?

So when describing our system, we often like to use the analogy of a hard drive. And it makes a lot of sense if you think about the cases as pieces of information, like a hard drive, we can put them away in a massive storage matrix. And then on-demand retrieve any bit of information that you want. And it's pretty good, but our system differs from a hard drive in a couple of ways. One, hard drives tend to like to store related information in chunks in their storage medium, whereas we like to take similar cases and distribute them throughout the storage structure. Also hard drives read and write in sort of single streams of information, whereas our system is massively parallel, you have simultaneously many inbound streets with cases flowing in, many outbound streams flowing out. And then hundreds of robots all working in parallel at the same time servicing those streams and moving information one to another. And in that way, there's another biological analogy that makes a little bit more sense and that's a brain. And it's a little bit of a stretch. But to us, the system often seems like a living thing, because with so many layers of optimization and complex algorithms system often surprises us in the way that it behaves and adapts to different conditions. Sometimes in really good ways, and sometimes in lesser good ways. As a engineer that's really kept engaged in all the years that I've been here, is the ability to analyze and work on such an interesting and complex system that really is unlike anything else that exists in the world. And over the last few years, we've seen huge advances in the field of AI and deep neural networks. But meanwhile, we've been working on these really hard problems now for over a decade. And by studying and working on these problems for so long, we really have a deep understanding of what it is that we need to solve, ties back into your culture of innovation. And so that gives us a really good head start to be able to take advantage of these advances in computational power, sensing and AI. And so while we've done so much to get the system to where it is today, we're constantly realizing how much more there is that we can do, by leveraging these new technologies, and that's really exciting for us.

Yes. Well, thank you all very much. This is one of the -- my favorite parts of the year. Thank you, share a stage with you here. We will step away and we'll move to our next panel and turn it back over to Jeff.

Okay. That for me is very exciting. I love that stuff. Great discussion, gentlemen. Thank you. Next up, I want to talk a little bit about the environment outside of Symbotic. Interactions with customers, the competitive landscape to the extent it exists. And just kind of the external ecosystem we live within. If you think about it, disruptive tech companies really are about making what is considered impossible, actually possible. And this is what makes for an exciting investment. The gentleman in the car, his grandparents rode horses, never envisioned he would be able to drive. And that gentleman in that car never envisioned woman on the right in an autonomous vehicle, and that is obviously where we're going. So that is the vision and challenge that we have to share with our customers. And it's a difficult task, but we have a team that is certainly up to that challenge. Another exciting thing is this slide. And this slide, we have been presenting since our IPO, how many companies do you know that on their IPO gave a 5-pronged growth strategy. And over the course of 2 years, could check four of those five boxes, and we will check the fifth box just a matter of time. So this is a very impressive track record of delivering on what we say we're going to do, and we're going to keep doing that. So with that, I'd like to just briefly talk a little bit about the next section of our panels, sharing the better supply chain, where we talk about this imperative to automate. Automation is a requirement for this industry. The opportunity is very large and that we are increasing the number of solutions that we have to offer to the marketplace. So with that, I'd like to welcome to the stage our Global Sales Team. Thank you, gentlemen. Starting out with Shibu Sasidharan. Shibu is responsible for developing growth strategies at Symbotic. He's recently joined us, but he has over 20 years of experience in supply chain automation. Prior to Symbotic, Shibu was Executive Vice President and Group strategy, [indiscernible] is one of the largest forklift companies. in the world and the owner of Dematic, where at Dematic, Shibu was Chief Commercial and Strategy Officer, where he led Corporate Strategy and Business Development. Next up, we have Jason Denmon. Jason has spent his entire career in supply chain. Since 2017, Jason has led Symbotic's customer relations teams, and prior to Symbotic, Jason was at [indiscernible], and prior to that to that he was an executive at Manhattan Associates. And finally, we're joined by Brendan Blennerhassett. Brendan is responsible for Symbotic's strategic global expansion plans. He has more than 30 years experiencing -- experience growing large organizations. For example, Brendan, held executive leadership roles at Comau, one of the largest automation companies in the world, well known in the automotive and aerospace industries. And he was a CEO -- held CEO positions at Comau in both North America and the United Kingdom. So thank you, gentlemen. Appreciate you joining us. Brendan, we'll start with you. We talk a lot about how this industry must automate. Tell us about what you're hearing from customers, what's their sense of urgency, their fear about how they're going to deliver goods to their customers over the next 5, 10, 20 years?

Thank you, Jeff. What we're getting is there's probably two common pain points we're seeing human resources being a continued problem, particularly around wage inflation, retention, recruitment. That's been a major concern, the turnover and they have a lot of quality issues, a lot of downstream losses. And obviously, it's a variable they want to control. So we're seeing that coming through from pretty much all of our customers across all the different countries we've been talking. So it seems common in that space. The second problem we're seeing is around capital, and what they perceive the cost of capital they need to automate. They think they need new facilities, new infrastructure, on top of the cost of the automation. And what we're trying to show them is our solution solves both of them problems. So that's now given us a great platform. We're getting a lot of interest. We've got customers every day now. We're talking to all around the world. So very exciting.

And Jeff, if I may add, right, today, somebody asked this question saying, if this is so attractive, then why is that customers are not jumping for it, right? The way I tend to think about it is this way, you talked about horses and cars. The demand for horses driven carriage as you think about it, grew 40 years after Henry Ford invented automotive, right, 40 years. And then the flipping point happened. And then it changed and it boomed, right? I tend to think about automation to be that right now. And this is the crossing the custom. This is the time when you really see a massive adoption coming through.

Thank you for jumping in on that, Shibu. I want to open this up to all of you. What do you hear from customers when you describe our technology, describe the level of automation, the power of artificial intelligence, what do they say?

Well, look, the understanding is still quite low and what it can actually do. I mean our job now is, inform them what the capabilities of our systems are, how we can -- and remember, we're not actually receiving RFQs because in most cases, they don't even know that they can ask for this. So we are soliciting. We're shortlisting customers. We're taking it to them in terms of a very high-level presentation and the response levels back is really exciting.

Yes. I think two things. One is often in those conversations, the clients will share. I didn't know that was possible. Because the design I had and the design we put together, did not contemplate that this was possible. And then I had several questions as we were going through the tour. And I think as we take potential clients through a tour like today, we've talked about it. We've shared videos. We've explained it. But often until they stand in front of a production system of that size and scale, they don't have the aha moment. And they need to have that aha moment to know this is truly possible.

And especially the downstream benefits as well outside the DCs, as we saw in the second part of today's visit.

So nearly $23 billion in backlog, we must be doing something right. I'll start with you, Shibu, but Jason and Bren jump in as well. You guys have seen the entire spectrum of solution sets in the marketplace. Shibu, why don't you talk about -- a bit about how you look at the organization of the industry, what different strengths or weaknesses other players might have and where Symbotic fits in?

Yes, sure. Thanks, Jeff. I tend to think about sort of business models, right? And if you really think about the industry as such, I believe there is three different business models that exist within the industry today. First and foremost, primarily what I call us point solution providers. These are bringing together, let's say, a product, a technology solution might be an AMR, a crane as software to the market. Then there is a second set of players, right, who are primarily focused on what we call delivering operational excellence. These are primarily system integrators, which are bringing together existing solution sets. But they are very focused on driving cost and efficiency in that process. That's what they're focused on. And third, our recent set of providers who are really focused on delivering a total solution, a total solution that tightly integrates hardware, software and services. And that's the key, right? And I believe Symbotic is a total solution provider. Again, if you think about it over a period of time, pure product players will get commoditized. We have seen that in AMR. Recently, we have seen that with pre-speaking robots, right? And then when you think about sort of the people who are focused on operational excellence, they struggle for differentiation because they're bringing together existing pieces of technology, right? And that's where I really believe Symbotic is unique. It's because not just it's a solution, but it's also a purpose-built solution. Purpose-built in a way it is actually modular and custom. Like think about it as a LEGO block, right? Each LEGO block actually unlocks a value chain or a value chain across a customer's ecosystem. So as someone responsible to drive growth and strategy, what really excites me is as you drive more and more innovation, you bring in more and more of those LEGO blocks. So think about it as a hub and spoke model, where if you really think about the current Symbotic solution as the hub, you're adding more and more spokes to it. Each spoke unlocks a completely new value chain for the customer. That opens up a new segment and market for us, right? And that's what is exciting. BreakPack is a clear example of that. Green Box is a clear example of that. And that's truly exciting to be able to kind of bring in all these LEGO blocks, and kind of orchestrate them together. And that's why I feel it's highly differentiated.

Great. Thank you. Jason, Well, Monday night, we announced our first Greenbox or our first order from Greenbox, I guess, Greenbox's customer. Tell us a little bit about how you view this new offering as another arrow in the quiver of Symbotic, to serve customers' needs. And don't these markets cannibalize each other.

Yes, I think it's a great question and one we've gotten from a number of folks. So as I think about it, it doesn't cannibalize. It creates optionality for our clients and how they want to engage with Symbotic and/or Green Box to have the fulfillment capabilities and the automation that we have. And so as I'm out talking with customers, many of our customers, large, well-funded, strong balance sheet, very strong credit rating. And they view the distribution and the automation as a very core competence for them. And so they want to buy that from Symbotic in a traditional transaction. But even some of those customers in an emerging market, where they don't have enough volume, with a new offering that they may have there are going to be those segments and those intersection points where they're not ready to go build a warehouse on their own and to put the automation investment in that. And so I think even those large strong balance sheet customers, are still in certain environments going to choose to engage with us through Green box, and to go buy available capacity on a variable basis. And then I think there's a whole sector of the market as we're kind of showing with the slide that is net new today. That's small and medium businesses or other organizations that are just not in a position to invest the level of capital and have their own facilities doing this. And so I think that creates an incredibly new TAM for us of available market. But I don't see it as cannibalizing I see it as providing options for our customers, of in a given market, in a given segment, how do they want to engage with us and do they want to consume that on a variable basis? Or is that something that they want to make an investment on their own balance sheet. And for many of them, there's also just the alternative uses of capital. And I think with this first customer that was the scenario, they have many potential strategic alternatives that are evaluating and how do they want to apply the capital they have. And in this environment, it made sense for them to do that on a variable basis versus doing that in an upfront capital basis.

And maybe, Jeff, if I may jump in, right? So if you think about sort of the supply chain 20 years ago, it was a linear supply chain. So you all the way went from a manufacturer to a distributor to a retailer to a store, and you and I walked into a store and got it, right? Today, if you really think about it, it's an ecosystem of an ecosystem, right? You should be able to ship from a DC, you should be able to ship from a store, you should be able to return to a store or return to a DC. I mean the customer cannot all overnight change that ecosystem. It has to build. So that's why they need -- I mean the operator word that Jason mentioned is the functionality and the way to actually diversify their bets on it. That's why Green box becomes very interesting because now they can say, look, for this ecosystem of ecosystem. I'm going to own a certain piece, and I'm going to dive it myself. There is an ecosystem that I will actually work on Green Box and have Greenbox deliver it. So that's where it becomes very interesting.

Great. Thank you. Well, we spent the day touring the case handling system up at -- in Brooksville, I thought it might just be hopeful for a moment, Jason, for you to talk about how that system will be different or maybe not different in a multi-tenant environment, that we might sell through Green box?

Yes. So as I think about the multi-tenant warehouses that exist in the marketplace, day. Those are buildings that have multiple tenants and then with someone operating that building. But the only real leverage they're achieving there is by subdividing the lease. And when you think of a building that has two or three tenants in it today and you walk through that building to tour it, there's a fence in between Client A and Client B and Client C. Sometimes a wall. But they are completely separate processing areas, inventory, material handling equipment, resources, everything. And so again, when I think about the value being driven, it's really only the lease that is being shared versus with a Symbotic system, we have the ability to put multiple clients in that structure that you saw today and boxes for, call it, A, B and C are all on the same shelf because we have perfect inventory. When client A needs those cartons, we can provide them out in whatever format they want. And so we see just an amazing opportunity to collapse that multi-tenant building in terms of size. And to have shared investment in automation and the resources doing it as well as the lease and to just create a very different value proposition there by being able to share all of those assets and have the fungibility of that storage to swell up for one customer at a point that another customer swell down because we haven't separated them by fence. They're all co-mingled there.

Great. Well, thank you very much, gentlemen. I appreciate your time and your insights. Thank you. Okay. I think back to that slide we looked at, at the beginning, or that series of slides of the -- the dots on the map, all that opportunity we have. And by the way, I have to give our CFO, Carol Hibbard, credit for that slide sequence, that was her idea of presenting all those dots on the map. So the big question, how in the heck are we going to scale to build that supply chain? This is probably one of the most important panels we have next, where we talk about how our teams are working together to make that happen, how they will build capacity to deliver those systems and how we're going to continue to increase our efficiency as a builder of those systems. And really what we're doing is each project is like building a skyscraper, we have the steel structure, obviously, but there's an incredible level of automation that exists in any skyscraper, all the all the wiring, all the controls, the HVAC system, the building management system that operates this whole building. It's a very, very complex process. That's what each one of our systems is equivalent to. But with 38 systems now in the process of being deployed, we're not just building a skyscraper, we're building a city. And in fact, we're going to build city after city after city. And so that's the analogy to think about what has to go into the planning and the process and the innovation to make this happen. So with that, I'd like to welcome up Carol Hibbard, our CFO; and Walt Odisho, our Head of Manufacturing. Thank you, two. Carol has over 30 years of financial, operational and business experience. She joined Symbotic from Boeing where she served as Senior Vice President and Corporate Controller; and also served as Boeing's CFO for Defense, Space & Security. More than a CFO, Carol is at Symbotic because she knows how to build, deploy and manage world-class scale at a global level. Walter Odisho is our Chief of manufacturing and supply chain. Walt leads the teams that are responsible for strategic outsourcing, supply chain, manufacturing and project execution. Walt has over 30 years of experience in operations, engineering and manufacturing and prior to Symbotic held roles at Boeing and Amazon. But most impressively, Walt spent over 24 years in senior manufacturing roles and operations at Toyota Motors. So with that, I'll grab a seat here, and we have our map on the screen of all those dots you guys are going to build. And Carol, why don't you start out by telling us a little bit about the process of deploying a system.

Okay. Thanks, Jeff. Excited to be here and part of Symbotic's future. And actually, if you could go back one chart, not quite ready yet, since I love the dot chart. So the future here is very bright and I think that's evidenced by several things. So as Jeff talked about, this chart is just our backlog. So as I look at that, and I envision what will happen when you hear -- when we deploy lots of the things with the customers that the previous panel just talked about. When we go deploy all of the innovation that our tech team talked about, the future is extremely bright. The demand is there for automation and efficiency. And I think that's one of the biggest pieces that excites me about being here. So now on to the easy part, which is now we have to go deploy it and go build it. So in -- when we think about the life cycle of a deployment, what I've done most of my career as a finance person has focused on an operational finance role where we've partnered with our business partners. And that's what Walt and I have done here. And we're establishing cross-functional teams where we're focused on the entire life cycle. So think about a build process for us includes build, installation, commissioning and then we go live. We've talked about in the past, our early systems were about a 2.5-year process to get through this life cycle. And over the last couple of quarters, we've had several proof points where we have that down to 20 months. And our goal is to continue to find ideas to be able to reduce that. And so during this process, we want to start right. And so we look across functionally how do we bid right, how do we develop an executable plan from a cost and schedule perspective. And then we're deploying program management and project management tools throughout the installation phase. And then we're pulling together a closed loop process. So for the 18 systems that we have in deployment now, we want to take all of that data and use that to inform the beginning of the process.

Great. Let's talk a little bit about some of the values that we think about that have to go into how we build these systems and the value that we create in those systems. Do you want to both take that? Yes.

Well, let me start. As you said, I started my career in Toyota. And to me, for those who drive Toyotas, quality is paramount in everything that we do. So my focus has been on improving quality, eliminating the opportunity to create, to generate defects. Many companies, many firms will rely on repetitive inspection methodology to improve their quality. Our belief is that the best way to improve quality is not to create defects to begin with. So as you eliminate the opportunities and the reasons for why defects are generated, then we can clearly eliminate them and understand the root cause and eliminate them. So the division -- the vision that I -- that we have developed is achieve drive to 100% perfection. As impossible as that may sound, I think it's a noble goal. So we have put down 99% because we don't think 100% is within reach, but we'll always work towards that doing everything right the first time. And by doing so, we eliminate rework, inspection to pay someone to look for defects that are generated by someone else to me is wasteful. So by doing it right, we will also gain schedule efficiencies. In order to achieve that, we need obviously cross-functional organizational alignment, starting with absolutely great designs. And then our contracts, whether it's with our labor contract or with our outsourcing partners, brings in quality as an element of success, the criterion of success. Having platforms, tools to measure the success and improvement in quality and training of the staffing to recognize at abnormality recognition at its earliest stage will allow us to eliminate small problems or discomforts that could layer into huge issues for us. And obviously, as my colleagues talked about earlier, continuous improvement. We're always thinking about Here's what we have at hand. Here's how it performance. How can we do it better, faster at a lower cost, higher quality.

Great. And Carol, you and Walt have been working together with your teams and really the whole Symbotic team to really make some -- implement some tools and performance capability KPIs that we're tracking. Why don't you talk about how you're looking about how we build this process of efficiency as a team.