Pivots to Artificial Intelligence, Machine Learning Software Business
SALT LAKE CITY – November 14, 2023 – Sarcos Technology and Robotics Corporation (“Sarcos”) (NASDAQ: STRC and STRCW, a leader in advanced robotic technology designed to increase the intelligence, efficiency, capability and productivity of advanced robotic systems through applied autonomy, today announced financial results for the quarter ended September 30, 2023.
- Laura Peterson appointed as President and CEO; Ben Wolff, co-founder and Board member named Executive Vice Chairman
- Sarcos artificial intelligence (AI) and machine learning (ML) software business bolstered by $13.8 million contract from the U.S. Air Force to advance its AI/ML software
- Pivoting business to focus on robotic AI/ML software platform; aligning cost structure with business priorities
“Since I assumed the role of CEO in May, our leadership team has conducted an ongoing rigorous, data-driven analysis and review of our business, market opportunities, products and development programs,” said Laura Peterson, President and Chief Executive Officer of Sarcos.
“With the consideration of our cash position, as well as third party dependencies, customer decision timing, and the cost and time to achieve a significant and steady revenue stream from our hardware products, it was clear that we should adjust course rapidly to right size the company and get our cash usage down to a level that we believe will provide the best opportunity for success with our available resources. We made the decisions to suspend our hardware commercialization efforts, implement a significant reduction in force and focus our resources on our AI/ML platform.
“By de-coupling our advanced AI/ML software from our own robotic systems, we believe we have the opportunity to reach a much broader market more quickly by targeting existing deployed robotic systems and new sales of third-party systems. We can provide customers with the solutions they need through the intellectual capital that Sarcos brings to the table, but without requiring significant investment in hardware development and production.
“In addition, as previously announced, we already have AI software-related contracts with various U.S. government agencies, including a $13.8 million, four-year development contract with the U.S. Airforce to advance artificial intelligence and machine learning software. The contract supports the development, integration and validation of our AI and ML software framework for success-based learning, which will allow robots to perceive their environment, determine reasonable behavior in unforeseen situations, and quickly change their actions.
“In connection with our plans to focus on robotic AI/ML software, we are realigning our resources, including taking steps to reduce our headcount and operating expenses, which we expect to result in a significant reduction in our monthly cash usage after the restructuring is completed.”
Q3 Financial Results
Third quarter 2023 total revenue was $1.8 million, compared to $4.7 million during the third quarter of 2022. Revenues decreased on a year-over-year basis as a result of fewer product development contracts being worked during the current year, offset slightly by an increase in product revenue.
Total operating expenses for the third quarter of 2023 were $32.6 million, compared to operating expenses of $31.9 million during the third quarter of 2022. In connection with the July 12, 2023, announced restructuring, the Company incurred charges of $5.5 million in the third quarter of 2023, including $1.1 million in severance and benefit payments and $4.4 million due to the acceleration of stock-based compensation expense resulting from the early termination of the Company’s redemption right over certain shares held by the Company’s former Chief Operating Officer in connection with the termination of his employment. Further, reflecting the restructuring actions announced today, the Company incurred $5.7 million of restructuring costs in the third quarter 2023, including a write-down of inventory of $5.2 million and $0.5 million related to the write-down of certain assets. Cost of revenue decreased to $1.2 million in the third quarter 2023 as compared to $3.6 million in the third quarter 2022, mainly due to decreased labor and material expenses charged to product development contracts. Third quarter 2023 gross margin was 33%, compared to 23% in the third quarter of 2022.
Research and development expenses decreased to $10.0 million in the third quarter 2023 as compared to $10.5 million in the third quarter of 2022, due mainly to reduced third party professional service expenses connected with our prioritization of efforts. General and administrative expenses decreased to $7.6 million in Q3 2023 as compared to $14.6 million in the third quarter 2022, primarily due to decreased stock-based compensation expenses.
Third quarter 2023 net loss was $29.0 million or $1.13 per share, compared to a net loss of $22.5 million or $0.89 per share in the third quarter of the prior year.
Third quarter 2023 non-GAAP net loss was $17.0 million or $0.66 per diluted share. Reconciliation of net loss to non-GAAP net loss is included at the end of this release.
Sarcos ended the quarter with $55.1 million in unrestricted cash, cash equivalents, and marketable securities.
Due to the many variables associated with the organizational and business changes announced today, we will not provide revenue guidance for the fourth quarter. We expect to end the year with approximately $39 million of cash, cash equivalents and marketable securities. Further, we expect net cash usage should average approximately $1.6 million per month in 2024, which could be reduced further by revenue realized from customer purchases of the service.
We anticipate incurring additional restructuring expenses, related to the restructuring actions taken during 2023, in the range of $22 million to $24 million during the fourth quarter of 2023 and the first quarter of 2024. These expenses include approximately $4 million dollars in personnel expenses such as salaries, wages, benefits and severance related to the eliminated headcount. The remainder will be non-cash expenses related to expected accelerated amortization of intangible and other assets due to the strategic shift initiated during the fourth quarter.
Conference Call and Webcast
A conference call and audio webcast with analysts and investors will be held today at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time to discuss the results and answer questions.
- To access the conference call, please pre-register using this link. Registrants will receive confirmation with dial-in details.
- Live and archived webcast will be available on Sarcos investor relations website at sarcos.com.
About Sarcos Technology and Robotics Corporation
Sarcos Technology and Robotics Corporation (NASDAQ: STRC and STRCW) is a leader in advanced robotic technology designed to increase the intelligence, efficiency, capability and productivity of advanced robotic systems. Sarcos robotic artificial intelligence and machine learning software enables generalizable autonomy to address challenging, dynamic, environments for industries that require a high degree of adaptability and efficiency. For more information, please visit www.sarcos.com and connect with us on LinkedIn at www.linkedin.com/company/sarcos.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the timing and amount of revenues and revenue growth, products to be commercialized, the creation of long-term value, product capabilities and functionality including reductions in robotic training times achieved by Sarcos’ software platform, future cash usage and balances and future restructuring costs. Forward-looking statements are inherently subject to risks, uncertainties, and assumptions. Generally, statements that are not historical facts, including statements concerning possible, intended, or assumed future actions, business strategies, events, business conditions or results of operations, are forward-looking statements. These statements may be preceded by, followed by, or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “aim,” “should,” “seeks,” “plans,” “scheduled,” “anticipates,” “intends” or “continue” or similar expressions. Such forward-looking statements involve risks and uncertainties that may cause actual events, results, or performance to differ materially from those indicated by such statements. These forward-looking statements are based on Sarcos’ management’s current expectations and beliefs, as well as a number of assumptions concerning future events. However, there can be no assurance that the events, results, or trends identified in these forward-looking statements will occur or be achieved. Forward-looking statements speak only as of the date they are made, and Sarcos is not under any obligation and expressly disclaims any obligation, to update, alter or otherwise revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.
Readers should carefully review the statements set forth in the reports which Sarcos has filed or will file from time to time with the Securities and Exchange Commission (the “SEC”), in particular the risks and uncertainties set forth in the sections of those reports entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements,” for a description of risks facing Sarcos and that could cause actual events, results or performance to differ from those indicated in the forward-looking statements contained herein. The documents filed by Sarcos with the SEC may be obtained free of charge at the SEC’s website at www.sec.gov.