SoftBank Group is one of the most successful investment holding companies in the world, with its latest success rooted in British chipmaker Arm Holdings' stellar initial public offering (IPO).
As the race to disrupt tech by leveraging artificial intelligence (AI) heats up, SoftBank is betting on AI-powered robotic warehouse management systems to be the next significant innovation.
Walmart Inc.
Symbotic Inc.
GreenBox has the potential to extend AI-powered warehousing and logistics services to companies that would otherwise be unable to afford multimillion-dollar investments. Symbotic, which has made immense strides with its AI-driven robotic warehouse management solutions, is well-positioned to serve as a prime illustration of the transformative impact AI can have on the broader economy through this joint venture.
"I've seen a lot of robotics tech, and I've never seen anything like it in my life," TD Cowen analyst Joseph Giordano said. "Compared to what it replaces, it's like day and night."
SoftBank holds an ownership stake of over 8% in Symbotic and has a 65% ownership share in the GreenBox venture. GreenBox was initiated with a joint investment of $100 million by SoftBank and Symbotic.
According to a proxy statement from the robotics firm, Walmart is another key player in Symbotic, holding an 11% ownership share. Symbotic automates Walmart's 42 regional distribution centers for packaged fast-moving consumer goods across the U.S. Revenue generated from Walmart accounts for 90% of Symbotic's total revenue.
Under the terms of the joint venture, GreenBox is designed to purchase software from Symbotic and subsequently offer a bundled package to tenants, including warehouse space, equipment and associated services for sale.
"We share the same vision of going big and going fast," Symbotic CEO Rick Cohen said. "We believe this market is massive."
How Does It Work?
Symbotic's system integrates multiple autonomous robots that navigate warehouses and are responsible for handling various tasks, such as moving and unloading boxes from pallets as well as selecting orders using AI software.
The software optimizes the placement of individual goods cases in the warehouse, allowing for efficiently packing boxes up to the warehouse's ceiling. This approach minimizes wasted space in the building.
GreenBox Systems is expected to provide AI-powered logistics management to smaller companies, which should result in shared warehouses and bring down overhead costs significantly.
"Contract warehousing exists today - but those operations are mostly manual," Robert W. Baird & Co. analyst Rob Mason said.
Symbotic's vision for GreenBox aims to automate the process by seamlessly integrating AI, which can, in turn, optimize the arrangement of items on outgoing pallets to match the specific store layout, expediting unloading and shelf restocking.
The accuracy of the AI paves the way for multiple companies sharing a warehouse space, enabling the efficient shipment of their products without any mix-up.
"Through sharing infrastructure, you can get out of the infrastructure business and focus on what's important to you," Gartner research analyst Dwight Klappich stated.
Booming Business
Symbotic has been a popular name in the logistics and warehouse management space. Its sales in the most recent quarter witnessed 77% growth, and orders for its existing warehouse-management systems have surged to $12 billion.
This backlog is projected to take the company several years to fulfill. When factoring in the $11 billion commitment from GreenBox for Symbotic software and follow-on services over six years starting in July, the backlog escalates to $23 billion.
Symbotic aims to achieve the billion-dollar revenue milestone for the first time in fiscal 2023. The company also predicts it will generate its first-ever earnings before interest, taxes, depreciation and amortization (EBITDA)-positive quarter as a publicly traded entity in the fourth quarter.
Symbotic's market stands at approximately $432 billion, according to Chief Strategy Officer Bill Boyd. The successful growth of GreenBox is set to multiply Symbotic's potential market size, nearly doubling its current backlog. Research firm Gartner estimates GreenBox's market will rise by another $500 billion if smaller companies expected to buy warehouse automation systems are taken into consideration.
Early adopters of GreenBox's disruptive tech are expected to come from sectors such as grocery and packaged goods, with Symbotic's expansion plans encompassing pharmaceuticals and electronics in the future.
