And so Andy, implicit your question, we do want to go out and win those one or two new customers per year that continue to give us that experience of bringing this technology and that fundamental problem solving to those new verticals just getting in the data from proving it out. So we’re excited about Southern Glazer’s. Our strategy for penetrating is those direct customers, they’re going to build captive systems by the ones are twos per years. And then GreenBox gives us the ability really to turbo charge that attack on the market and enable GreenBox to get out and service customers even more broadly and move down market as well to help us really more rapidly and more efficiently penetrate the whole TAM.
Andy Kaplowitz: And then, Tom, over the last few quarters, your quarterly revenue has been beating quarterly guidance by really an increasing I know you want to be conservative, but maybe talk about what has been getting better versus your own expectations? I think you said it’s the pace of deployments that’s accelerating. And then with the understanding that maybe there is some seasonality in the business, why would revenue be sequentially down in Q1, ’24 versus Q1 versus Q4 ’23?
Tom Ernst: Yes. Thanks for the question, Andy. So, I don’t think you should expect a seasonality in our business. If there’s any seasonal effects that’s really — you have to see it in the microscope. What we’ve experienced here, particularly as 2023 is transpired is that we’ve seen a combination of two things. We’ve seen very healthy improvement in our ability to deliver across the spectrum of our build phase and installation phase of our deployments, meaningful improvements in our speed to do so. And so, as we think about that and as we look forward, we continue to expect that we’re going to deliver systems fast; however, those that speed can come and stair step function. We don’t expect that we’ll see accelerations every quarter.
In fact, we anticipate some quarters, you can see challenges, you can see — and these can come not just from our own capabilities, but then it can come from customer issues. So, you never know when there’s going to be a tornado or a flood or a hurricane that slows us down. And so that’s the other half as while we get after — we just have not had those kinds of things that have really slowed us down or beyond our control as well, particularly here in the second half of 2023. So, I don’t think you should read in that you should expect Symbotic to be beating their numbers by greater amounts every quarter. It’s just that we’ve had a couple of very strong quarters here in a row. And as we think about our setting guidance forward, we try to kind of bring that all together.
One final effect too in this fiscal fourth quarter, we did have some minor timing things that helped us that maybe take a little bit of revenue out of Q1 into Q4 that are just timing considerations as well. So I feel like Q4 is an exceptionally strong quarter relative to some of them that we’ve had recently.
Operator: Our next question comes from the line of Nicole DeBlase from Deutsche Bank. Your line is open.
Nicole DeBlase: Maybe just starting with the recurring revenue profitability that you pointed out in the prepared remarks, is the expectation that now that those recurring revenues have turned positive from a profit perspective that, that is sustainable from here?
Rick Cohen: Thanks for the question, Nicole. We do think it’s sustainable. It was a pretty significant sequential wise improvement in those margins. So again, on a quarterly basis, you can see some minor retrench, but I think you should expect the general trend is expansion. So, I think as we — as perhaps Carol, to explain how we close out 2024, I would expect Symbotic see some meaningful expansion, not necessarily on a quarter-wise basis, though, Nicole. But yes, we’re very encouraged. The pieces that are going into this recurring revenue expansion are we’re beginning to get more of the revenues as we now have 10 systems up and running, generating recurring revenue. Meanwhile, we’re invested for 45 total systems we have, right?
The 35 were in various stages of deploying. And we have — little correct myself, we have 12 up and running now. So the total together is 47. So, we’re invested for 47 systems, but only getting recurring revenue on 12. So I think as we move forward with time, that ratio of recurring systems that are paying recurring revenue to the number we’re in investing in to begins to be more and more favorable, as does just the overall scale kind of the platform. So — and I guess I said in my prepared remarks, over the long run, we do think that this mix of recurring revenues begins to push us closer to and then eventually through a 60% gross margin.
Nicole DeBlase: Got it. That’s clear. And then just any thoughts on as you move to 2024, like the SG&A line or the R&D line, are we at a reasonable run rate to model moving forward or anything going out there?
Rick Cohen: Yes. Thanks for the question, Nicole. We do think we’re — we have a very strong level of investment in both operating expense lines, and we have the luxury of not needing to expand those. We continue to feel like we are investing more in research and development than anybody else in supply chain technology audition. Not only that, but we had our R&D is extensively pointed at new product innovation, whereas our competition has to invest heavily in tact debt and just maintaining what they have. Similarly, with our SG&A line, while there are certainly some parts of our SG&A that will need to scale as we grow, there are other parts of our SG&A that are redundant spend. So we’re in a luxury standpoint of where we don’t — we need to expand those.
