Yahoo Finance

Carol Hibbard

Thank you, Rick. Second quarter revenue grew 40% year-over-year to $550 million, with revenue growth driven by solid progress across our 46 systems and deployments, and we more than doubled the number of operational systems from a year ago. We also benefited from 2 months of contribution from the acquired Walmart Advanced Systems and Robotics. Higher revenues and forecast, combined with improving gross margins drove a reduction in our net loss to $21 million in the second quarter versus $55 million in the second quarter of fiscal 2024. Adjusted EBITDA in the quarter of $35 million was also above our forecast and more than tripled year-over-year from $9 million in the year ago quarter.
In our second quarter, we began a record 10 new system deployments, which included 1 new GreenBox site in Southern California intended for multiple tenants, along with multiple brake pack deployments. We also completed 8 systems in the quarter, doubling our previous record of 4, bringing us to a total of 37 operational systems. As Rick mentioned, we are improving our installation performance. You have heard us talk in the past about total deployment time lines of roughly 24 months, defined as time between the signing of the state and the work for system to customer acceptance of (inaudible). However, the portion of the deployment most in our control time between the start of its installation and its acceptance by a customer.
This also happens to be where we see most of the cost revenue recognition, which impacts our margin performance. The largest sample size we have for comparison are the Phase 1 deployments for our largest customer. In the second quarter, our installation to acceptance time lines were roughly 2 months shorter for Phase 1 systems than our historical average. And notably, these systems were 15% larger in size than our historical average for Phase 1 systems. Normalizing for size, which also equates to revenue, our improvement level is more than 30% better than our historical average.
With the increase in operational systems, we saw our software revenue grow by over 160% year-over-year to $6.7 million. and operations services revenue grew 47% year-over-year to $29.6 million. In terms of the backlog, our backlog was $22.7 billion grew sequentially from $22.4 billion last quarter. This increase was primarily due to the addition of our development contract with Walmart associated with accelerated pickup and delivery or APD systems, offset by the revenue revenues. Turning to margins.
System gross margin improved significantly on a sequential basis as we gain the expected improvement from completing lower-margin systems while also improving our overall project execution as both Rick and I highlighted. Revenue from Walmart ASR was also accretive to our system margins. Gross margin on software maintenance and support again exceeded 65% trending toward typical industry software margins as we gain scale. And in operation services, we swung back to a gross profit, thanks to a more favorable mix due to training revenue associated with the large number of new systems that went live. We also saw modest benefits in the Walmart ASR acquisition, where we are now providing services for the existing APD sites in operations.
Operating expenses were up sequentially due to acquisitions and the investments we are making to support our growth. We finished the quarter with cash and equivalents of $955 million, which increased from $903 million in the first quarter, primarily due from cash from operations of $270 million in the quarter, offset by the $200 million paid for Walmart ASR and $21 million of capital expenditures. Now turning to our outlook. For the third quarter of fiscal 2025, we expect revenue between $520 million to $540 million and adjusted EBITDA between $26 million and $30 million. In summary, our execution has improved, resulting in improved gross margin performance, and we are investing to drive future growth and product innovation.
With that, we now welcome your questions. Operator, please begin the Q&A.

Question and Answer Session

Operator

(Operator Instructions)
Andy Kaplowitz, Citi.

Andrew Kaplowitz

Rick and Carol, I know one of the big focal points this year was scaling for growth. So does Q2 foreshadow where you want to be in terms of, I think you said 10 system starts and completions. And if it does, how do we think about system starts and completions given the ramp-up in Q2. Carol, I know you've said in the past it's lumpy, but should we assume that you've turned the corner, you continue to ramp up from here? And is the improvement really a function of getting your arms around EPC and sourcing?

Carol Hibbard

So thanks for the question, Andy. Our system starts will continue to be lumpy. So I do think the number that we start is a combination of ourselves as well as our customers, being ready to go ahead and launch and demo in a new building or a new face. And so it's a mutual decision between the 2 of us to go ahead and start. But that being said, we do see the trajectory with the backlog ahead of us that we will continue to see the number of system starts improve as we go through the coming quarters and the coming years.

Andrew Kaplowitz

Got it. And you're forecasting EBITDA margin down a bit sequentially in Q3 versus Q2 at the midpoint. Is there anything in the forecast for tariff-related impact? Maybe it's mix? Can you talk about the puts and takes on margin going into the second half?
And do you have an estimate for tariff-related expense? Or how are you thinking about it moving forward in terms of price versus cost?

Carol Hibbard

Okay. Yes, you've got a lot wrapped up in that question. I'll start with the overall gross margin performance. So this quarter's gross margin performance was driven by 3 key things. It was project mix.
So we had 8 projects that we completed, many of those were our lower-margin projects. And so those will be moving off. Overall, project execution improved, we also had contribution, as I mentioned, from our ASR business, which is bringing accretive margins to our overall systems revenue. As I think about the -- our EBITDA guide for 3Q would imply roughly 100 basis points down from what we just posted this quarter. Primarily, the difference there is the ASR business for this quarter was higher than what we expect to see in the next quarter.
And so some of that business as we work through overall design. We'll see that ramp back up in the coming quarters when we start building prototypes. But you're seeing the impact of that, which is why we're at roughly 21% for the coming quarter. In terms of tariffs, our guide, both for top line and for bottom line does not include the impact of tariffs. If I think about tariff impact for us, with most of our contracts allowing tariffs being passed through, you'll actually see increases in revenue associated with that, but it will be a drag on gross margin because it's pass-through revenue.

Andrew Kaplowitz

Got it. So just being dollar for dollar [faster].

Carol Hibbard

Yes.

Operator

Nicole DeBlase, Deutsche Bank.

Nicole DeBlase

Just a follow-on from Andy, is you guys are also kind of modeling revenue down sequentially in the third quarter, which is unusual from a seasonal perspective. Is that also to do with the timing of acquisition impacting the P&L? Or is there something else going on there?

Carol Hibbard

So thanks for the question, Nicole. There is a little bit of impact because we did have modest revenue this quarter associated with ASR. We'll see that drop a little bit in the next quarter. But the primary driver for our third quarter revenue is really a function of the number of starts that we had a year ago. So if you remember, 2Q and 3Q last year were our lowest system starts and we're now a year into where they would be really heavy in system implementation.
And so that's the primary driver in terms of what you're seeing for our guide for the third quarter.

Nicole DeBlase

Okay. Understood. And then with respect to the OpEx, so R&D and SG&A stepped up pretty significantly sequentially. Are we now kind of at a good R&D and SG&A run rate? Or should we expect further step-ups in the second half?

Carol Hibbard

For our R&D run rate, I'd say that's a good run rate going forward. The SG&A run rate was higher this quarter, primarily related to acquisitions. So our acquisition costs were higher in SG&A. You're going to see that step back down in the next quarter and see that flat.

Nicole DeBlase

Okay. And any quantification of how much we should expect that to step down.

Carol Hibbard

Yes. I would expect somewhere between $4 million and $5 million of a step down in the SG&A OpEx.

Operator

Jim Ricchiuti, Needham Company.

James Ricchiuti

I wasn't sure if you gave this in your script, did you say what ASR contributed in the quarter to revenue?

Carol Hibbard

No, we did not. Thanks for the question, Jim. So we are a single-digit percent of revenue associated with ASR. We'll see that -- so as we build out the development program over the coming 8 to 12 quarters, you'll see our revenue for ASR in back half of this year, early next year start ramping up as we start building prototypes.

James Ricchiuti

Got it. That's helpful. And I'm not -- are you able to tell us what the installation time looks like for your large customer mean you clearly are making progress there. But -- and I know some of these are different. But is there any -- in rough terms, can you tell us what the installation to acceptance time looks like right now?

Carol Hibbard

So we quantify from start or signature of a project when we hit project acceptance of about 24 months. the install to acceptance, which is what we indicated where we have the most ability to impact is about half of that time. So what we saw this quarter is a couple of month improvement. So we think we were at 12 months from install to accept on the -- a couple of the projects that we had this quarter, we saw 2 months shaved off of that.

Operator

Matt Summerville, D.A. Davidson.

Matt Summerville

I was hoping maybe you could talk a little bit more about your technology and innovation road map, Rick. You've obviously touched on the development in perishable in the past. So maybe an update there and maybe some of the other projects you're able to talk about that you're working on, maybe some milestones you may be achieving along the way there with some of those things. And then I have a follow-up.

Richard Cohen

Yes. Thanks, Matt. So with the ASR projects, which we're developing, we will have bots that can do both perishables and frozen. So -- and that will -- eventually, we're now beginning to talk to people about actually building perishable warehouses for them. So -- that's on our road map and say exactly when that will happen, but it's a lot sooner than it was 2 months ago.
So there's demand for it. and people are very interested in that. And we have to do it for the back of the store. And so that's moving right along. The other -- and we're doing a couple of other things to make the structure smaller, which is giving us opportunities to talk to customers that want smaller systems.
And also, it actually will accelerate the installation of some of the bigger systems because we can actually put more in a smaller space and get it built faster. So technology is as moving right along, we're starting our second design of our BreakPack system. The first one is working well. The second one is -- will be better. So we're now really able to offer 3 products.
One is the big system, and that can come in anywhere from very, very large to a couple of inbound and outbound calls on the smaller side. break pack system can be large or small. And now we're talking about a third module, which will be the really a 15,000-foot system in the back of a store or even -- we've had some people now come and say, "could you do a 30,000-foot system for us for special needs. So as our product offering is expanding -- we're generating a lot of interest. And so we'll be going -- the development will be continuing to speed up.

Matt Summerville

And as a follow-up, Carol, I just want to be clear. The Walmart ASR revenue was a single-digit millions or single-digit percentage because if it's a single-digit percentage that could be anywhere from like $5 million to $50 million. So can you maybe help us triangulate on that a little bit. And then also, if you guys can give an update on when you think you'll be able to make some announcements regarding potential green box tenants.

Carol Hibbard

So yes, to clarify, ASR was single-digit percentage I'd say that's mid- to high single-digit percentage of revenue GreenBox question.

Richard Cohen

Yes. The GreenBox -- and we now have a CEO, and so we're accelerating our sales efforts, looking at a number of strategic opportunities and now talking to early customers about involvement in green box. Our first customer will be the later up site, and that will be [C&S] will be the very first customer, plus we may be able to add some other customers onto that site compared to incorporating all the capacity that's available. second sites in Atlanta, the third site will be in California. So any more interest because we're on both coasts now.

Operator

Joe Giordano, TD Cowen.

Joseph Giordano

Just curious on the tariffs. Is there any like -- how hard is the language on this stuff with passengers? I know we had some in the past, like some of the stuff that was thought to be reimbursable was not. So like I'm guessing these contracts when they are written or then contemplating something like this necessarily like from a policy standpoint. So how much debate or like ambiguity is there around is this kind of except like is something from Eurozone?
Like how do we think about this? Is there -- how certain are you on that?

Carol Hibbard

We are certain. So in general, these costs will be passed through for us. And we've gone through and announced of all of our contracts over the last quarter or so. And I'll take this opportunity, Joe, to highlight a bit on tariffs because I really just answered the portion related to guide. So if I think about the current environment we have now, our overall exposure is a single-digit percent of a typical system.
We have coverage for USMCA for our box production in Mexico. So our primary exposure comes from Europe. And as I indicated, the costs are passed through. We recognize that this equates to higher system cost, though. And so we're in the process of identifying with our supply chain.
What else can we go do to work offsets so that we're not passing all those costs on to our customers. But from a contractual perspective, we're protected.

Joseph Giordano

Got it. That's clear. And then, Rick, I know it's early days with ASR, but like -- any updated thoughts on how you might be able to leverage kind of technology and best practices to take the best parts of each of the 3 types of modules you have to make like the 3 best things you can build?

Richard Cohen

Well, it -- yes, sure. I think we're talking to some people about putting all 3 in the same building. And then we're also talking to some people about just putting them in the back of the store. Essentially, ASR is -- and this is a potential big plus for GreenBox. It is a modified e-commerce solution because we're actually -- the goal of the system is to pick in each, put it in the bag, in the back of a store customer picks it up or you deliver.
But you can put it in a box and ship it to a customer. So -- and of course, e-commerce, the top 300,000, 400,000, 500,000 items that sell in e-commerce are the same top 400,000, 500,000 items that sell in the store. So where we've had a lot of incomings because micro fulfillment, which is what other people call it, was really only looking at doing 5,000 or 6,000 items in the back of a store. And we think we can do in 15,000 or 20,000 feet. We think we can do 50,000 or 60,000 items, so in 100,000 square feet, we might be able to do 1 million items.
And so the opportunity -- and it uses the same basic software platform. There's some changes we would make to the bot. But the reason that people are interested in because this is an existing technology that's modified -- the example I keep using this is just another app on the iPhone using the same iOS. And that's the way we position the technology, but it solves different problems for different customers. And there's shipping cases, they're shipping interpacks and they're shipping each is.
So we think we're the only ones that actually offer with the same software and the same supplier all 3 levels of integration. So people are interested in that.

Operator

Mark Delaney, Goldman Sachs.

Mark Delaney

(inaudible) is to better understand what you're seeing for the potential to bring in additional customers, not only with GreenBox, but with Symbotic. You talk a little bit around the momentum and having a GreenBox CEO, but maybe you could elaborate a bit more on potential incoming demand? And have you seen it change at all with the tariff landscape and some of the supply chain challenges that may be creating for some of potential new customers?

Richard Cohen

We've seen 2 things. We've seen some people just -- the world is so unknown. We've had a lot of incoming. We've had people probably said we want to study this. We want to understand it.
Not sure we want to go forward to some -- and then the flip side is in places that have a lot of visas are foreign labor that was coming into the U.S. We've seen a significant uptick in places where large customers are doing well are very concerned about labor shortages. And so on balance, I would say we're seeing more incoming plus we've also increased our sales force. So we probably made twice as many sales calls in the second quarter as we did in the prior one. But in general, we're -- I think the amount of incoming is increasing.
We're not -- the first thing we get is -- how effective are you by tariffs, what's the pricing. Most of our stuff comes from the U.S. We make a lot of stuff in a trade free zone in Mexico. So I think there's like, okay, and then I think people think inflation is coming. I think they think labor is going up.
And so a lot of incoming for that -- for those reasons. So on balance, I would say, we're not seeing -- we're seeing more incoming than we are seeing people holding off.

Mark Delaney

This is very helpful on a follow-up on that. I mean, what's the likelihood in your opinion of material new customers being announced this year, either for GreenBox or core Symbiotic, you recognize you would want to be selective and take the right kinds of projects on, but do you expect to be able to announce (inaudible)

Richard Cohen

We do.

Mark Delaney

Okay. Helpful. We'll stay tuned. My other question was for you, Carol, on free cash flow, very strong in the quarter, I think $249 million against EBITDA of $35 million. So maybe elaborate a bit more on what drove the degree of free cash flow strength and how to think about free cash flow from here.

Carol Hibbard

Yes. 2Q, similar to where we were in 1Q, benefited by timing of receipts. And as we've talked about, when we have a quarter where we're high in terms of the number of signatures, so we had 10 new starts this quarter. Our contracts are pretty much set up as we get cash flow early on. And so that's what you're seeing levered.
We also had the acquisitions take place this quarter. So both the incoming cash and the outgoing cash, which was a net benefit for Symbiotic. I would expect our free cash flow position between now and the end of the year to be stable as we head into the end of the year.

Operator

Colin Rusch, Oppenheimer & Company.

Colin Rusch

As some of the perception technology begins to evolve at a little bit faster rate. How quickly can you start to integrate some of that improvement into your systems? And how should we think about that impacting the productivity of the overall system.

Richard Cohen

Yes. I mean, great question. So we are -- because we're in 20, 30 warehouses now, but we can also each level of a warehouse. So let's say, there's 10 levels in the warehouse. There might be 300 or 400 levels where we'll have 100 bots on each level.
So we now have bots in warehouses with LiDAR. We have bots and warehouses with Vision. We have bots and warehouses that we can run remotely. So the level of technology and the incoming -- I mean it's very interesting and the incoming talent is accelerating. So we would expect that the level of innovation will increase, not decrease.
I think we're just getting started with the learnings for what the bot can do. And so eventually, our fleet will be pretty much -- I don't know if it will be 100%, but pretty much a significant portion of our fleet will be -- will include LiDAR, we also have a new battery, which has 10x the energy. So I think what's going to happen and what we've been working on as we scale is much more reliable machines and therefore, fewer operators, therefore, lower operating costs and therefore, higher returns for our customers and for us and easier to sell the system. So I think when we started the technology, there was always a concern about where are you with Walmart, where are we the first systems. And the word of mouth that we're getting back is why I think our incoming is increasing.
There's just nobody doing that nobody has LiDAR that we know on a bot that runs in a warehouse of this scale nor can (inaudible) nor do you have vision. So all of those things are things that we're accelerating.

Colin Rusch

That's super helpful. And then just in terms of the scalability as you get into the back half of the decade, early next decade. I'm curious about your the work that you're doing with finance partners in terms of underwriting these things with that or underwriting these assets with that and helping kind of see some of the education at this point? I guess, how mature is that is that process? And is it anything that you really need to invest a fair amount of time on at this point?

Carol Hibbard

Yes. So we haven't encountered very many customers that have inquired about a financing arm. When you think about what Green box is designed to do, with Green box being warehouse as a system. That's one of the opportunities for customers who might have less CapEx capability, so they could come in and be able to utilize part of the warehouse. And so we've used GreenBox as that part of the leverage, but we have not seen a lot of incoming to date from our customers looking for financing.

Operator

Guy Hardwick, Freedom Capital Markets.

Guy Hardwick

Just wondering what the Q3 revenue guidance assumes in terms of systems and deployments. Because obviously, as pointed out earlier, it is a step down. So just wondering what you have in terms of deployments and progress as well as completions and starts in the quarter?

Carol Hibbard

So thanks for the question. We typically don't guide with specific numbers of systems that are in deployment. But if you think about 3 were signed a year ago were signed the quarter after that, it was a lot -- [12] months in, those are not -- there's not a large number contributing to the heavy install at that point. We've got 10 that we signed this quarter and associated with our revenue ramp. Typically, we see revenue first quarter where we signed and then we're pretty stagnant on that 10 for the next couple of quarters.
But we typically don't guide in terms of total number of systems deployment.

Guy Hardwick

Okay. And just a follow-up on GreenBox. Can you kind of update us on kind of the progress of building out the sales capability and what stage do you think the GreenBox as a company is a (inaudible) at this point?

Richard Cohen

I think pretty much, it's an early stage. We have 2 sites beyond the initial site that we're building out the sales force for and we're prospecting. And we've hired people from the 3PL space, 1 from Hub Group, 1 from CEVA. So -- and we have some time because the buildings are still being built out for the Symbiotic's system. So we have about a year, 1.5 years before we're really concerned about filling them up, but the prospecting is going well, and we're continuing to make a lot of sales calls.
So it just takes time.

Operator

Derek Soderberg, Cantor Fitzgerald.

Derek Soderberg

On the ASR business, can you provide some color as to what sort of revenue that is? I think you mentioned you're providing services Curious if you're paying based off of each unit that you're handling? And I might have missed it, but are we going to be seeing that ASR revenue in operation services? Or is there a systems component to that as well?

Carol Hibbard

The development associated with ASR is running through our systems line. And so that's where we saw the revenue for this quarter primarily. And we talked about that being mid- to high single-digit percentage of what we posted for the quarter. And so that's the development activity and the design activity. And for the next 3 years as we work through develop and build of our 3 prototypes, that's where you're going to see the primary revenue.
We do have some revenue running through recurring because associated with the acquisition, we are responsible for maintaining the existing APD systems. So we have a small amount of software running through software, and then we have parts and services similar to how we operate our core business that you're going to see in the op services, but it's a very small amount of revenue.

Derek Soderberg

Got it. That's helpful. And then, Rick, you mentioned your scale and capabilities and just sort of being at multiple layers in the supply chain -- it seems like you can find some pretty valuable insights with that data. Curious if you're exploring new avenues to monetize some of that data has there be an environment where you've kind of found certain insights and plug that back into the ROI of the system and that longer term can improve kind of the wallet share with your customers any ways to sort of monetize that data at this point?

Richard Cohen

Yes. So we're -- so -- we are doing that. We're actually the selling of the customers' data, the customer owns the data, so that's very tricky for us. And so we should just -- I get asked this question a lot. And so we can't sell their data.
It's their data. So -- but what we've learned is Surprisingly, we probably know more about the shape and size of boxes than anybody in the world at this point. And so it's actually helped us redesign our system to be smaller, and that allows the customer to store more, and we're actually taking advantage of that in our pricing.

Operator

Ken Newman, KeyBanc Capital Markets.

Kenneth Newman

Carol, maybe back on the tariff question. I know it sounds like the guide isn't reflecting any impact from pass-through pricing. But I am curious if you're already seeing some of your larger suppliers push price to you. And curious if you have a sense of just how much that pass-through could look given the early notifications you may or may not be getting from your suppliers?

Carol Hibbard

Yes. So our primary impact is from Europe. Their tariffs went into effect in April. And so 3Q will be the first where we're actually seeing the impact of that. As I indicated, we're a full ticket digit percent of a typical system.
And so what we're in the process of doing right now is discussions with our supply chain because we also are interested in making sure we're focused on continuing to reduce the cost. So where we'll start seeing the impact is as the suppliers deliver equipment here in the third quarter. But we're in discussions to figure out other ways to offset.

Kenneth Newman

Right. Okay. And then maybe as a follow-up there, just on that pass-through conversation, I get that pass-through protects gross profit dollars, but given all the talk that you had on improving the efficiencies and lowering the amount of time it takes to deploy a system. I would imagine you could also drive stronger SG&A leverage, even if -- on the higher revenue base, even if you keep price cost neutral on the gross profit line. I know there are a lot of moving pieces, but do you think it's possible to drive EBITDA margin expansion even if the gross margins are nominally weaker just from tariffs?

Carol Hibbard

Yes. We continue to focus on our SG&A leverage. And I think the step-up you saw this quarter was primarily related to our acquisitions as we get the synergies between the 2 companies better understood and work through that integration, we hopefully will be able to identify additional synergy going forward. And then as you indicated, as we continue to scale, we're seeing the benefit of that scale on overall program management on our -- just the performance of what we did for in-sourcing on our EPC contract. So we're starting to see the benefit as we continue to ramp.

Operator

(Operator Instructions)
Greg Palm, Craig-Hallum Capital Group.

Greg Palm

Specifically on gross margin, I think, Carol, you mentioned or alluded to maybe a little bit of a benefit in the quarter from ASR. But can you just talk about whether there were any other sort of onetime benefits? It sounds like a lot of it was just due to more efficiencies. And obviously, you had much better gross margin in software and operation services. But just kind of curious how you view that going forward?

Carol Hibbard

Yes. The other onetime benefit is mostly in the recurring. And so in a quarter where we had 8 systems hit acceptance. There's a significant amount of high-margin training revenue that goes along with that accepted. So that's what you're seeing in the app services revenue.
We had a bounce back this quarter from last quarter. So that's the 1 timer. But in terms of the system gross margin the project mix shifting, that will continue going forward. Our overall improvements that we're seeing from shorter install duration, benefits from bringing the in-sourcing in of EPC. That will continue.
And the ASR is a higher margin contribution. And so we saw the benefit of that in the quarter, we'll have less of that next quarter, but that will come back as revenue continues to grow.

Greg Palm

Okay. Perfect. And you mentioned the 3 GreenBox locations already. I think there are another 10 that you have already specifically targeted in terms of cities. Can you just help us out with revenue contribution from green box?
I mean, is there a time line associated with the startup of these additional 10?

Carol Hibbard

And so what we've talked about -- so we've launched 3. And in prior quarters, we had talked about 5 locations where we would typically be thinking through a potential multi-tenant warehouse. So 1 was the Atlanta region, 1 was Southern California. We've looked at Dallas, we looked at Chicago and we've looked at somewhere on the East Coast. So we've identified 5 of those which we have now launched to.
Our GreenBox is -- has been slower to ramp -- but now that we've got the CEO and they're in place identifying additional sales folks, I think we're going to see a lot more activity on GreenBox in the coming quarters.

Operator

Robert Mason, Baird.

Robert Mason

Carol, you may have run through this, but could you bridge the backlog again from Q1 to Q2? I know ASR was booked, but was there anything else?

Carol Hibbard

Yes. Thanks for the question. Backlog, the addition to the backlog was for the development associated with the ASR business -- that was the only addition and then what you saw was reductions associated with the revenue posted for the quarter. So those offsets. And then every quarter, as we talk about, we find a final statement of work, there's puts and takes in terms of final configuration, and that's what the delta is.

Robert Mason

Okay. Maybe related to that, I think earlier on, you mentioned around your deployment schedules compressing some of that Phase 1 -- some Phase 1s are now 15% larger than some of the earlier stage deployments. I'm just curious what's driving that? Or is that just the nature of the particular sites? Or the customer wants more installed upfront.
I'm just curious what's caused the expansion.

Carol Hibbard

Yes. It is purely the nature of those particular sites. I would not infer from that, that all future Phase 1s are getting bigger. It really is dependent on every single location and size and capability of that particular warehouse as we go in. And as we talked about, our largest customers, we typically end up with 3 phases.
And so there is a little bit of a mix of what they want to do in Phase 1, 2 or 3. But I would not infer that all of our Phase 1s are getting 15% larger.

Operator

I am showing no further questions at this time. I would now like to turn it back to Charlie Anderson for closing remarks.

Charlie Anderson

Yes. Thanks, everybody, for joining our call tonight. We really appreciate your interest in Symbotic and look forward to seeing many of you during the quarter at the (inaudible) Investor Day. Thanks, and have a nice day.

Operator

Thank you for your participation in today's conference. This concludes the program. You may now disconnect.