Sarcos plans to layoff around 75 workers as part of optimization plan

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Sarcos Technology and Robotics Corporation, a company that designs, develops, and manufactures a range of robotic systems, announced a number of changes to the company that aim to grow revenue and leverage strategic opportunities that show the greatest market traction and meet customer demand. 

These changes include: 

• Focusing on targeted robotic systems for the subsea, aviation, and solar end market. 
• Forming a new Advanced Technologies software business division to drive emerging software as a service (SaaS) and AI revenue opportunities. 
• Realigning cost structure and reducing cash use by reorganizing its workforce and rationalizing spending across the business. 
• Optimizing manufacturing facilities by consolidating its Pittsburgh manufacturing facility into its Salt Lake City location.

These changes also come with a reduction in Sarcos’ headcount. The company said it plans to lay off around a fourth of its 300 employees, around 75 workers, across the company at all levels of the organization. The layoffs alone will be expected to save the company $14.1 million annually. 

“We have initiated a more focused business plan, concentrating on solutions that we believe have the greatest alignment with customer demand and speed to market. These solutions consist of our Guardian Sea Class, aviation and solar solutions, as well as advancing our AI software,” Laura Peterson, Interim President and Chief Executive Officer of Sarcos, said in a release. “We are realigning our operations to capitalize on the most promising revenue opportunities and end markets. We are also reducing expenses and headcount and consolidating our manufacturing footprint.

“These decisions are always difficult because they involve our colleagues, but we must be pragmatic about where we are as a company, the level of revenue we are producing and our cash usage. These business optimization efforts are expected to result in a marked decrease in cash spend and more streamlined operations.”

Altogether, the new company structure is expected to save Sarcos’ monthly average cash usage from around $6.5 million in Q2 of 2023 to just $3 million in the first quarter of 2024. 

Diversifying Sarcos’ robotic offerings

When Sarcos went public via a special purpose acquisition company (SPAC) deal in 2021, it specialized in robotic exoskeletons and mobile robots. Since then, it has acquired RE2 Robotics, a developer of autonomous and teleoperated underwater mobile robotic systems, tested a robotic baggage handling system, and completed a solar panel installation demonstration, among other projects. 

Sarcos’ first quarter as a public company, Q3 of 2021, ended with a net loss of $37 million for the company and $1.1 million in revenue. At the time, the company said increases in expenses and losses are due to the one-time expenses associated with the SPAC deal. In Q4 however, the company suffered $34.1 million in net losses and only brought in $1 million in revenue. 

The company’s financial woes continued into 2022 when it brought in $14.5 million in revenue, which was boosted by strong Q4 sales, and had a net loss of $157 million. In the first quarter of 2023, Sarcos brought in $2.3 million in revenue, an increase from its quarterly revenues at the end of 2021, likely because of the increased diversification among its product offerings. However, it still reported a net loss of $21.5 million, leaving a large gap for the company to close. 

Earlier this year, in May, Sarcos replaced its previous president and CEO, Kiva Allgood, with its new interim president and CEO Laura Peterson. Peterson served on the Sarcos Board of Directors and brings expertise in understanding the strategic considerations and challenges associated with complex, technology-intensive industries. 

A month later, in June, Sarcos announced it would put into effect a reverse stock split of its issued common stock at a ratio of 1-for-6. The stock split, which became effective at the beginning of July, was intended to increase the price per share of Sarcos’ common stock to allow it to stay in compliance with the $1.00 minimum bid price requirement for listing on the Nasdaq. At the time of publication, Sarcos’ stock was trading at $1.53 per share. 

It seems now the company is looking to cut costs and focus on the new additions to its portfolio that have helped boost its revenue in recent years to further drive its stock up.