Rick Cohen: Yes. I think it’s probably a year out is my guess. And I think those milestones are going to be pretty easy to achieve. But the value of our system for our customers is incredible reliability. So we’re actually testing bots running in a structure in a perishable facility. Now, it’s just a test site, but have a customer that’s interested in doing that and so we’re running. And basically what you do is you create disaster scenarios. You look for edge scenarios and you make sure that a 32 degree temperature. We’re not really talking about frozen yet, but between 32 and 55, a lot of humidity, our bots will work fine and we expect them to but we’re doing the testing. So I think sometime within the next year, we probably will announce that we have a perishable site somewhere.
And I have to be – I can’t be too forward-looking, but I would say, but that’s actually always been in our project because it’s not in the TAM we’ve talked about. I mean, the whole perishable world is a big world. And we think there’s very special applications for Symbotic because an ambient building is $100, $125 a foot and perishable is probably $250 and frozen might be $350. So the fact that we can store product as densely as we can, we think there’s a different algebra for why people will use perishable. But we want to make sure before we sell a system that we tested all the edge cases. So long answer. The short answer to your question is about a year from now you should look for something from us.
Matt Summerville: Great. Thanks, Rick.
Operator: Thank you. [Operator Instructions] Our next question will be coming from Mark Delaney of Goldman Sachs. Your line is open.
Mark Delaney: Yes. Good afternoon. Thanks very much for taking the questions. First one was trying to better understand the revenue per system and installation. It went up a fair amount relative to last quarter. And Carol, you mentioned the progress you’ve made as a company in accelerating some of the installation times. I’m hoping to better understand how we should think about that ratio going forward. And is there opportunities to sustain or even build off of this level of revenue compared to the number of systems you have given all the initiatives you have underway?
Carol Hibbard: Yes. Thanks for the question, Mark. So I think the number one thing driving what you’re seeing on that ratio is where we’re at in terms of that deployment life cycle. So if you think about, we’ve talked about our revenue curve being the most revenue coming from those systems that are in the middle of install. And so we’ll have a varying degree of that every single quarter. And so it’s hard to predict the specific ratio, because the other thing that’s driving that is each system is not the same size or the same complexity. And so you’ll continue to see that vary. But as we move forward, our revenue curve will continue to grow, continue to see growth in that revenue, and that will – so that ratio, in terms of what it contributes from a system, will continue to have more than those 37 in deployment at any given time.
Mark Delaney: That’s helpful. Yes, tied into my next question. Would it better understand what completing the restructuring in your shift to an outsourced model may mean, not only in terms of some of the financial implications, like profit margins? But could you also talk about what it might mean for your capacity, in terms of how many systems the company could have in place relative to the number of systems it could be working on any one time relative to the 37 that you currently have in installation? Thanks.
Carol Hibbard: Yes. So this quarter, we focused on completing the outsourcing that we began last year. And it was focused on the complete restructure and focusing to move to our SymBot platform. And so I don’t necessarily see the connection of how that necessarily drives to the scaling, other than we now have a standardized SymBot. We’re going to be able to continue to deploy innovations along that SymBot. But what we did in terms of restructure really shut down any additional inventory costs associated with all our obsolete bonds.
Mark Delaney: Understood. Thank you.
Operator: Thank you for your question. [Operator Instructions] Our next question is coming from Nicole DeBlase of Deutsche Bank. Your line is open.
Nicole DeBlase: Yes, thanks. Good afternoon, guys.
Carol Hibbard: Hi, Nicole.
Nicole DeBlase: Hello. I wanted to ask a couple on the financials. So the first is the systems gross margin fell to low double digits. I think you guys talked about in the opening remarks how that was driven by of this innovation that you’re working on. I guess, how quickly can that gross margin step up to a high teens or better level? Is that something you expect in the second half or will these innovation headwinds continue?
Carol Hibbard: So thanks for the question. We did better than expected on gross margin, but as you indicated, we were stable quarter-over-quarter. And so a couple of items that weigh on our gross margin. So I’ll talk about the things that are weighing on those gross margins now and then what we see for the future. So a couple of the things are the innovations that we have in work. We talked last quarter about focusing on additional resources to ensure quality deployments for some of those sizable projects we have in flow. We have the benefit on many of our contracts that we have pass through costs. So why we’re able to pass that through with a profit that remains stable that weighs on our gross margin. And then lastly, what’s weighing on our gross margin is we have several lower margin projects in flow, and I would expect to see those start completing in the second half of this year.
And so our 3Q guide reflect stable gross margins. So as I said, we’ve got several significant milestones coming out in the second half of the year on some of these big projects. And gross margin won’t improve every quarter, but we expect improvement in the coming years and that that will step up year-over-year. And as I mentioned earlier, just in terms of the unlock for gross margin, the single biggest one being the time it takes to deploy our system, and we continue to see steps in the right direction with each one that we’re rolling out.
Nicole DeBlase: Got it. Thanks, Carol. That’s clear. And then I guess on the operations services business, we saw a really big step change, like, revenue almost doubled sequentially there this quarter. I guess what drove that? And is this new level of revenue in operation services sustainable? Thank you.
