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Sarcos Technology and Robotics Corporation recently announced a strategic shift in its business focus, shifting focus from robotics to a more significant near-term opportunity provided by its robotic artificial intelligence (AI) and machine learning (ML) software platform.
Laura Peterson, president and CEO of Sarcos, emphasized the critical role of the software the company has developed over the years, saying, “Since I took on the role of CEO in May, our leadership team has continuously implemented rigorous, data-driven analytics and assessment of our activities, market opportunities, products and development programs.”
Peterson explains: “We believe that our AI software platform will enable dramatic reductions in robot training times for the majority of industrial robots sold around the world, while also making industrial robots much more agile, meaning they can perform more can perform tasks with greater variability, similar to how humans can perform a wide range of tasks.
The vision for Sarcos’ AI software platform began in 2017 and evolved into the first government proposal CYTAR (Cybernetic Training for Autonomous Robots) in 2019. Chief Technology Officer Dr. Denis Garagić joined the company in 2020 and started important design and development work. The company plans to engage existing customers in determining the next steps in each relationship. The majority of Sarcos’ government contracts relate to AI software development and are critical to its future strategy.
In 2022, Sarcos acquired RE2 Robotics, a Pittsburgh-based developer of autonomous and teleoperated mobile robotic systems, for $100 million. The company appeared to double down on this acquisition earlier this year when it announced a number of changes to the business aimed at growing revenue and pursuing strategic opportunities that demonstrate the greatest market traction and meet customer demand. These changes include a focus on robotic systems for subsea, aerospace and the solar end market.
Sarcos has secured AI software development contracts with the US Air Force, providing funding for platform development and real-world testing capabilities. Peterson expects a version of the AI software platform compatible with most industrial robots to be released in the first half of 2024, with additional features planned for late next year.
To align with this strategic shift, Sarcos has decided to suspend commercialization efforts for its subsea, aerospace and solar robotics hardware programs. Peterson commented: “Because we need to ensure we have sufficient financial resources to leverage our software capabilities, we have made the difficult decision to suspend commercialization of our subsea, aerospace and solar robotics hardware programs for the foreseeable future. aprons. However, we will continue to address these markets through our AI/ML software platform.”
The company also told The Robot Report that by suspending commercialization efforts for its subsea, aerospace and solar robotics hardware programs for the foreseeable future, it plans to target these markets through its AI/ML software platform. In addition, Sarcos’ robotic systems will be used for further development and testing of its AI/ML software. The company believes this to be the case software platform will enable a dramatic reduction in robot training times while making industrial robots much more agile.
The company believes this strategic decision will allow Sarcos to reach a broader market more quickly by separating its AI and ML software from its robotic systems. Peterson believes that “by decoupling our AI and ML software from our own robotic systems, we believe we can reach a much broader market more quickly.”
Lay off 150 employees
The shift in the product portfolio necessitates a reduction in Sarcos’ workforce by approximately 150 employees. Recognizing the difficulty of such decisions, Peterson stated, “While it is always a difficult decision to make workforce cuts, especially when it is such a significant one, it is important that Sarcos has the right resources and that we are good stewards are of our capital.”
It has been a tumultuous year for Sarcos, as this announcement follows the layoff of 75 individuals from the company in July 2023 and the hiring of Peterson in May 2023 to replace former CEO Kiva Allgood. Net loss in the third quarter of 2023 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. Revenues are down, as total revenues in the third quarter of 2023 were $1.8 million, compared to $4.7 million in the third quarter of 2022. According to the latest financial report, revenues declined year-over-year due to less product development. contracts executed during the current year, somewhat offset by an increase in product revenues.
In August, the company reported revenue of $1.3 million in the second quarter of 2023, versus a loss of $28.7 million. The company has struggled to become profitable since going public via SPAC in September 2021. Also in August, Sarcos also announced that it had signed an agreement with Blattner Company to further develop its autonomous robotics solar construction system. The company is ceasing this effort as part of its restructuring.
Closing the Pittsburgh office
To further align with its strategic pivot, Sarcos plans to close its Pittsburgh office (the original RE2 headquarters) and consolidate operations in Salt Lake City. Peterson emphasized: “We believe that the prioritization of our AI software platform meets our previously announced goal of pursuing significant near-term revenues associated with acute customer needs, will reduce our capital requirements and associated risks in line with the available resources, and will lead to long-term income. long-term value creation for shareholders.”