BERKSHIRE GREY, INC. You should read the following discussion and analysis of our financial condition
and results of operations together with our unaudited condensed consolidated
financial statements and notes thereto included elsewhere in this Quarterly
Report, and the consolidated financial statements and accompanying notes, as
well as Management's Discussion and Analysis of Financial Condition and Results
of Operations contained in our Annual Report on Form 10-K for the year ended
Unless otherwise indicated or the context otherwise requires, references in this
report to "
Cautionary Note Regarding Forward-Looking Statements
In addition to historical financial information, this Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical fact contained herein, including statements regarding our future results of operations and financial position, our business strategy, plans and prospects, existing and prospective products, research and development costs, timing and likelihood of success, and plans, market growth, trends, events and our objectives of management for future operations and results, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expect," "plan," "anticipate," "could," "intend," "target," "project," "contemplate," "believe," "estimate," "predict," "potential" or "continue" or the negative of these terms or other similar expressions. The forward-looking statements are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including the risks, uncertainties and assumptions described under "Risk Factors." These forward-looking statements are subject to numerous risks, including, without limitation, the following:
•
the expected benefits from the Business Combination;
•
our plans to develop and commercialize our product candidates;
•
our ability to continue to develop new innovations to meet constantly evolving customer demands;
•
our expectations regarding the impact of the ongoing COVID-19 pandemic on our business, industry and the economy;
•
our estimates regarding future expenses, revenue, earnings, margins, capital requirements and needs for additional financing after the Business Combination;
•
our expectations regarding the growth of our business, including the potential size of the total addressable market;
•
our ability to maintain and establish collaborations;
•
our ability to obtain funding for our future operations and working capital requirements and expectations regarding the sufficiency of our capital resources;
•
the implementation of our business model and strategic plans for our business following the Business Combination;
•
our intellectual property position and the duration of our patent rights;
•
developments or disputes concerning our intellectual property or other proprietary rights;
•
our dependence on suppliers and suppliers to our third-party contract manufacturers who fabricate our equipment to fulfill orders placed by us;
•
our ability to compete in the markets we serve;
•
our expectations regarding our entry into new markets;
•
competition in our industry, the advantages of our solutions and technology over competing products and technology existing in the market and competitive factors including with respect to technological capabilities, cost and scalability;
•
the impact of government laws and regulations and liabilities thereunder;
•
our need to hire additional personnel and our ability to attract and retain such personnel;
21
--------------------------------------------------------------------------------
•
our ability to raise financing in the future; and
•
the anticipated use of our cash and cash equivalents.
Investors should also refer to our most recent Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q for future periods and Current Reports on Form
8-K as we file them with the
You should read this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements
Business Overview
We are an Intelligent Enterprise Robotics ("IER") company pioneering and delivering transformative AI-enabled robotic solutions that automate filling ecommerce orders for consumers or businesses, filling orders to resupply retail and grocery stores, and handling packages shipped to fill those orders. Our solutions transform supply chain operations and enable our customers to meet and exceed the demands of today's connected consumers and businesses.
Our IER capabilities are grounded in patented and proprietary technologies for robotic picking (each picking or unit handling), robotic movement and mobility (movement and storage of orders and goods), and system orchestration (which enables various intelligent subsystems to work together so that the right work is being done at the right time to meet our customer's needs). We are a technology leader in robotics and AI automation with an intellectual property position buttressed by trade secrets supporting our technologies and over 285 patent filings with 120 U.S. and international patents issued to date in technologies including robotic picking, mobility, gripping, sensing and perception, general robot control, and differentiated supporting mechanisms. Our proprietary technologies enable us to offer holistic solutions that automate supply chain operations. Our solutions include moving goods to robots that then pick and pack ecommerce or retail orders, robotically moving and organizing inventory and orders within a warehouse or logistics facility, and robotically sorting packages and shipments.
We are not a component technology company nor are we a conventional systems integrator. Instead, we create products from the technologies we pioneer and develop, and then incorporate the products (product modules) into solutions - solutions that incorporate said modules and are designed by us to meet customer performance metrics like throughput and accuracy rates. We believe that this technology plus performant, whole-enterprise solution view, enables customers to focus on the core of their business and creates attractive returns for them. Following the whole-enterprise solution view, we not only make, install, test, and commission the solutions, but we also offer customers continued support in the form of software updates as well as professional services including maintenance, system operation, and cloud-based monitoring and analytics. Because of our modular approach to solutions and the role of our software, we offer customers the ability to incrementally add to or change solutions, and we can incorporate outside technologies with our product modules if desired. The same modular attributes mean we can offer small and large solutions and can design for brownfield and greenfield installations. We offer customers a range of purchase options including a robotics-as-a-service ("RaaS") program that minimizes the up-front capital required when compared to conventional equipment purchase models.
To date, most of our deployments have been with large, Fortune 50 companies,
where our technology and solutions in production have achieved targeted metrics
including throughput, accuracy, equipment effectiveness, and others. Our
customers include Wal-Mart Stores, Inc. ("Wal-Mart"), Target Corporation
("Target"), FedEx Corporation ("FedEx"), TJX Companies, Inc. ("TJX"), and
For the three months ended
While we have more than a dozen product module offerings incorporating AI and other advanced technologies, we continue to develop new technologies and product modules. The strength of our team enables this continuous development - of our
22
--------------------------------------------------------------------------------
approximately 400 employees as of
Recent Developments Merger Agreement
On
COVID-19
The full impact of the COVID-19 pandemic on our business, financial condition and results of operations remains unpredictable due to the evolving nature of the COVID-19 pandemic and the extent of its impact across industries and geographies and numerous other uncertainties. For example, we cannot predict the duration and spread of the outbreak of new variants of the virus, additional actions that may be taken by governmental entities, or the impact the pandemic may have on the ability of us, our customers, our suppliers, our manufacturers, and our other business partners to conduct business. Governments in affected regions have implemented, and may continue to implement, safety precautions which include quarantines, travel restrictions, business closures, cancellations of public gatherings, and other measures as they deem necessary. Many organizations and individuals, including our Company and employees, are taking additional steps to avoid or reduce infections, including limiting travel and working from home. These measures are disrupting normal business operations and have had significant negative impacts on businesses and financial markets worldwide. We continue to monitor our operations and government recommendations and have made modifications to our normal operations because of the COVID-19 pandemic, including utilizing heightened cleaning and sanitization procedures, implementing new health and safety protocols and reducing non-essential travel.
To date, travel restrictions and capacity limits at customer locations imposed in response to the COVID-19 pandemic have caused delays in the deployment of two customer contracts; however, the pandemic has not significantly impacted our financial condition and operations. The impact of the COVID-19 pandemic on our financial performance will depend on future developments, including the duration and spread of the outbreak and related governmental advisories and restrictions. These developments and the impact of the COVID-19 pandemic on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, our results may be materially adversely affected.
Critical Accounting Policies and Significant Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles in
Summary of Recent Financial Performance
Revenue was approximately
Gross loss was
Combined general and administrative, selling and marketing, and research and
development expenses for the three months ended
23
--------------------------------------------------------------------------------
million decrease in stock-based compensation, partially offset by a
The decrease in stock-based compensation between the three months ended
Net losses were
Results of Operations
The following is a description of significant components of our operations, including significant trends and uncertainties that we believe are important to an understanding of our business and results of operations.
Comparison of the three months ended
Revenue
For the Three Months
Ended March 31,
(Dollars in thousands) 2022 2021 Change
Revenue $ 5,492 $ 3,965 $ 1,527 39 %
Total revenue for the three months ended
In three months ended
Cost of Revenue
The following table presents cost of revenue as well as the change from the
prior period.
For the Three Months
Ended March 31,
(Dollars in thousands) 2022 2021 Change
Cost of Revenue $ 6,696 $ 4,698 $ 1,998 43 %
Total cost of revenue for the three months ended
Gross Loss and Gross Margin
The following table presents gross loss and margin as well as the change from
the prior period.
For the Three Months
Ended March 31,
(Dollars in thousands) 2022 2021 Change
Gross Loss $ (1,204 ) $ (733 ) $ (471 ) 64 %
Gross Margin (22 )% (18 )% (3 )%
24--------------------------------------------------------------------------------
Total gross loss during the three months ended
General and Administrative
The following table presents general and administrative expenses as well as the change from the prior period.
For the Three Months
Ended March 31,
(Dollars in thousands) 2022 2021 Change
General and Administrative $ 7,662 $ 4,143 $ 3,519 85 %
% of Operating Expenses 26 % 9 %
General and administrative expenses during the three months ended
Sales and Marketing
The following table presents sales and marketing expenses as well as the change
from the prior period.
For the Three Months
Ended March 31,
(Dollars in thousands) 2022 2021 Change
Sales and Marketing $ 1,489 $ 27,483 $ (25,994 ) (95 )%
% of Operating Expenses 5 % 63 %
Sales and marketing expenses during the three months ended
Research and Development
The following table presents research and development expenses as well as the change from the prior period.
For the Three Months
Ended March 31,
(Dollars in thousands) 2022 2021 Change
Research and Development $ 20,343 $ 12,310 $ 8,033 65 %
% of Operating Expenses 69 % 28 %
Research and development expenses during the three months ended
25
--------------------------------------------------------------------------------
Other Income
The following table presents interest income as well as the change from the
prior period.
For the Three Months
Ended March 31,
(Dollars in thousands) 2022 2021 Change
Interest Income, Net $ 7 $ 11 $ (4 ) (36 )%
Interest income, net during the three months ended
Income Taxes
During the three months ended
We have provided a valuation allowance for all our net deferred tax assets as a result of our historical net losses in the jurisdictions in which we operate. We continue to assess our future taxable income by jurisdiction based on our recent historical operating results, the expected timing of reversal of temporary differences, various tax planning strategies that we may be able to enact in future periods, the impact of potential operating changes on our business and our forecast results from operations in future periods based on available information at the end of each reporting period. To the extent that we are able to reach the conclusion that deferred tax assets are realizable based on any combination of the above factors in a single, or multiple, taxing jurisdictions, a reversal of the related portion of our existing valuation allowances may occur.
Non-GAAP Financial Information
In addition to our results determined in accordance with GAAP, we believe that EBITDA and Adjusted EBITDA, each non-GAAP financial measures, are useful in evaluating our operational performance. We use this non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that this non-GAAP financial information, when taken collectively, may be helpful to investors in assessing our operating performance.
We define "EBITDA" as net loss plus interest income, income tax expense, depreciation and amortization expense.
We define "Adjusted EBITDA" as EBITDA adjusted for stock-based compensation, the change in fair value of warrant liabilities, and other expenses.
We believe that the use of EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends because it eliminates the effect of financing, capital expenditures, and non-cash expenses (such as stock-based compensation and changes of the warrant liabilities) and provides investors with a means to compare our financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. However, you should be aware that when evaluating EBITDA and Adjusted EBITDA we may incur future expenses similar to those excluded when calculating these measures. In addition, our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Our computation of these measures may not be comparable to other similarly titled measures computed by other companies because not all companies calculate these measures in the same fashion.
Because of these limitations, EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP
26
--------------------------------------------------------------------------------
results and using EBITDA and Adjusted EBITDA on a supplemental basis. You should review the reconciliation of net loss to EBITDA and Adjusted EBITDA below and not rely on any single financial measure to evaluate our business.
The following table reconciles net loss to EBITDA and Adjusted EBITDA during the
years presented.
For the Three Months
Ended March 31,
(Dollars in thousands) 2022 2021
Net loss $ (23,566 ) $ (44,683 )
Interest income, net (7 ) (11 )
Income tax expense 10 5
Depreciation and amortization 760 546
EBITDA (22,803 ) (44,143 )
Stock-based compensation (1,838 ) 24,179
Change in fair value of warrant liabilities (7,183 ) -
Other (expense), net 48 20
Adjusted EBITDA $ (31,776 ) $ (19,944 )
Backlog
Our order backlog as of
Liquidity and Capital Resources
Sources of Liquidity and Capital
We have incurred a net loss in each of our annual periods since our inception.
We incurred net losses of
We completed the Merger with RAAC on
Cash Flows
The following table summarizes our cash flows during the years presented.
For the Three Months
Ended March 31,
(Dollars in thousands) 2022 2021
Net cash used in operating activities $ (32,238 ) $ (11,216 )
Net cash used in investing activities (46 ) (1,194 )
Net cash provided by financing activities 822 278
Effect of exchange rate on cash (46 ) (15 )
Net increase (decrease) in cash, cash equivalents and restricted cash
$ (31,508 ) $ (12,147 )
Cash Flows for the three months ended
27
--------------------------------------------------------------------------------
Net cash used in operating activities during the three months ended
Investing Activities
Net cash used in investing activities was
Financing Activities
Net cash provided by financing activities during the three months ended
Contractual Obligations
Our lease portfolio includes leased offices and facilities. Refer to Note 15,
"Commitments and Contingencies" of our unaudited condensed consolidated
financial statements included elsewhere in this Form 10-Q for a summary of our
future minimum lease obligations. As of
Recent Accounting Pronouncements
See Note 2, "Significant Accounting Policies", in the Condensed Consolidated Financial Statements regarding recent accounting pronouncements.
© Edgar Online, source
