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Thank you for standing by and welcome to the Berkshire Grey First Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised for today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to had a conference over to your speaker today. Ms. Sara Buda, Vice President Investor Relations. Thank you. Please go ahead.
Thank you. Good morning everybody, and thank you for joining Berkshire Grey's First Quarter 2022 Earnings Conference Call. Earlier today, we issued a press release announcing our financial results. The release is available on our Investor Relations website at ir.berkshiregrey.com. Leading today's discussion is Berkshire Grey's Founder & Chief Executive Officer, Tom Wagner. Steve Johnson, our President, and Mark Fidler, our Chief Financial Officer, are also here with us today. Following management's prepared remarks, we will open up the call to questions. Before we get started, we would like to inform you that certain statements made during this conference call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act.
Future operating performance and financial results of the business may differ materially from those expressed or implied in any forward-looking statements provided on this conference call due to various risks, uncertainties, and risk factors. Information concerning these uncertainties and risk factors is contained in our filings with the FCC. Forward-looking statements included in this call are based on information currently available to us and represent the company's current view as of the date these statements are made. We do not commit to update these statements.
As a reminder, we will be referring to some non-GAAP financial measures during today's call. A detailed reconciliation of GAAP and non-GAAP measures can be found in our earnings press release today, which will be furnished to the SEC and is available now on our IR website. These non-GAAP financial measures are in addition and not substitute for or superior to measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to any performance measure derived in accordance with GAAP. With that, I will now turn the call over to Tom Wagner, CEO.
Thank you Sarah and good morning, everyone. Welcome to our First Quarter 2022 Earnings Call. It's been six weeks since our last call. Today I'm going to focus on a few topics that underscore our growth opportunity, our unique position in the robotic automation market, and how we continue to build on the successes we realized in 2021. Along those lines in the first quarter, we secured a new logo with an industry-leading retailer, launched new products which addressed critical market needs and broaden our unique product portfolio that rapidly built a $100 million pipeline for a new product that we launched only a few months ago.
Mark and I will spend some time discussing these items in more detail. Today, we also have Steve Johnson, our President, joining the call to talk more about our go-to-market activities and customer traction. As we get started, let me remind you of our mission here at Berkshire Grey. We make industry-leading, AI-enabled robotic systems that fill e-commerce and retail orders and handle e-commerce packages as they make their way to your door. Our mission is to help customers succeed with intelligent robotic automation that gets the right goods to the right places and the right quantities at the right times.
We automate difficult and labor-intensive tasks within fulfillment operations, including picking, sorting, packing, moving, and organizing. These are core functions that are found in almost every logistics operation and lead to a $280 billion addressable market for our products. Our technology is proven in production in driving tangible ROI for Fortune 100 customers. We secured repeat orders from every one of our anchor customers and are growing our new business pipeline as well. We have the right strategy, the right technology, and the right team in place today to capitalize on the tremendous market opportunity before us.
Now, let me talk about the quarter, our pipeline and our technology advancements. In the first quarter, we delivered revenue of approximately $5.5 million ahead the analyst expectations. Total orders to date are $203 million and we have a backlog of $103 million as of the end of Q1. As Mark will discussed, we're reducing product costs to drive future gross margin improvements, and we continue to invest in our technology to position us for long-term growth. Most importantly, we remain confident in our plan of becoming a billion-dollar company and achieving our target long-term operating model of approximately 50% gross margin and 25% adjusted EBITDA margin.
Moving onto customers. Our pipeline is robust. We remain actively engaged at multiple levels with all of our anchor customers. Our technology is proven and in deployment. And we believe we are an important part of their long-term automation strategy. Regarding new customers, in the past few months, we secured an initial order with a major retail brand and a follow-on order from a new customer we landed in late 2021. This means order and follow-on order in rapid succession and is yet another positive indicator. Our current pipeline includes hundreds of identify opportunities as unique perspective customers. Steve will provide some more color on that shortly.
Now I'd like to talk about some of our recent product news, which broadens our product portfolio and expands our growth opportunities. Last week, we announced the next-generation of our mobile solution, BG FLEX. Our mobile solution consists of autonomous mobile robots that sort, sequence, and move items for e-commerce orders and store replenishment, and we have large installations in operation today. With BG FLEX, we combine a high density buffer with our mobile robots, robotic picking stations, operator picking stations, and our orchestration software, which manages the flow of goods and work through the system.
These new features lead to increased density and decreased footprint. Expanding the applicability of our solution beyond large distribution centers to back of store and standalone micro fulfillment centers. This is important as our customers increasingly rely on automation to address the unprecedented consumer demand for near real-time order fulfillment, such as buy online, pickup in store and curbside delivery. Our new BG FLEX mobile solution is yet another example of our ability to build on our standard product modules, to deliver the automation our customers need to compete in today's on-demand economy.
Along similar lines, we also recently announced our robotic pick and pack with identification or RPPI solution. This system is built on our existing core picking technology and adds new features for touchless e-commerce, auto bagging. This allows retailers to increase fulfillment throughput while using sustainable approaches, for instance, having the robots pack into recyclable mailers. Current processes require human labor to place items into e-commerce shipping bags, which is labor-intensive, slow, and can be prone to error. RPPI provides both automation and support for sustainability programs, which is important to our customers and important to us.
At Berkshire Grey our technology is our competitive advantage. For customers, our technology is their competitive advantage as they compete in a rapidly transforming digital economy. That's why some of the world's largest retailers, e-commerce providers, and logistics companies choose Berkshire Grey, and why every one of our anchor customers has expanded their deployments with us with new orders. Repeat orders are strong affirmation of our technology. Other affirmations include our strategic partnerships, like our partnership with Swisslog and other experts like Frost & Sullivan, who recently named us to 2022 enabling technology leader for intelligent robotic automation.
In summary, we are well-positioned for continued growth. Our technology and our team are industry-leading, evidenced by repeat orders from customers. We have a strong pipeline that Steve Johnson will discuss further in a moment. There are material long-term macro tailwinds like changes in consumer shopping behaviors, for example, app-based ordering, as well as escalating labor costs and labor scarcity that are driving our customers to automate their operations. We have unique and differentiated products that are proven and in operation with Fortune 100 customers. We have even more conviction now about the growth opportunity we have in front of us today as we build a profitable billion-dollar company. Now let me turn it over to Steve to talk about our commercial momentum and our pipeline for growth.
Thanks, Tom, and good morning everyone one. Since this is my first earnings call with BG, let me provide a brief background. I joined Berkshire Grey in late 2019 to establish our go-to-market teams, build on the success of our initial anchor customers, and to expand our go-to-market strategy. It is clear to me then, and even more clear today, that Berkshire Grey is uniquely positioned for substantial and rapid growth. Macro forces provides strong tailwinds for our business. Changes in consumer expectations due to the Amazon effect put significant pressure on retailers, e-commerce providers, 3PLs.
The volume and pace of e-commerce orders is intense and growing, and labor challenges add to this pressure. When I joined the company, we knew that the market was there for us to grab, and that's exactly what we've been doing, as evidenced by the 203 million in orders that we've received to date. To help us win this environment, we implemented a strategy for selling into verticals and adding partnerships for scale. To execute on this strategy, we have a three-pronged sales approach: 1. Expansion of anchor customers, which we've done. 2. Direct sales to land new customers, which we're also doing. 3. Partnering with leading systems integrator in technology partners.
Let me provide some more detail on each of these. First, I'll touch on our anchor customers. As you know, our anchor customers include Walmart, FedEx, Target, and another Fortune 100 retailer. All of them have placed follow-on orders and we have potential opportunities for multiyear strategic agreements with them. As we stay, their current pipeline with anchor customers totals over $2.5 billion and the longer opportunities is even greater. So our anchor customers have been and will continue to be an important part of our growth strategy.
Second, our teams have been successful in securing new customers. Recently, we had a new logo and secured follow-on orders with another customer before we've even installed the first systems with that customer. All of our products solutions are gaining traction in the market. One example is our robotic put-wall or RPW. This is a new solution that helps e-commerce providers automate order fulfillment, a process that is mostly manual today. Since the introduction of our RPW, we've had several new customer orders and we've have hadn't dozens of active discussions, representing about $100 million in potential business, a positive start for product we just announced a few months ago. Across all our solutions, our new customer pipeline includes over 200 identified opportunities with 175 unique prospect of customers representing about a billion in pipeline.
This combined with our expansion opportunities with anchor accounts, brings our total pipeline to 3.5 billion. The third piece of our sales strategy is partnerships. We now have 13 partners, including Swisslog, which we announced in Q1 and [Indiscernible], a UK based integrator that we announced last week. We're already working on joint prospects with several of these partners and have -- hope to have more news soon about some shared product solutions and shared wins.
Partnerships gives us a formidable competitive advantage as we work together to provide customer solutions that cannot be found in anywhere else. Of course, having customers advocate for BG and share their experience with other prospects has the highest impact. We are fortunate that our customers value our technology. As a result, our existing customer base has been and will continue to be our greatest source of validation. In summary, we're in a very strong position from a go-to-market perspective. Now Mark over to you.
Thanks Steve, and good morning, everyone. I'd like to start off by discussing the results of our first quarter, and I will then provide some updates regarding some of our key initiatives for 2022. Revenue for the first quarter was $5.5 million, slightly higher than consensus and 39% higher in the same period in 2021. We secured new orders of $3.5 million in the first quarter, which is about the amount that we expected. All the new orders were from non-anchor customers. As of the end of Q1, we had backlog or $103 million which we define as contracts signed with systems yet to be delivered and installed. More importantly, we continue to execute on deliveries with our customers.
Our activities have started to ramp up in recent weeks, so we expect revenues to increase significantly in Q2. Both order-flow and revenue are expected to increase substantially in the second half of this year. A similar pattern compared to 2021, where the majority of our orders and more than 85% of our revenue occurred in the second half. With our strong backlog and large pipeline, we continue to be very well positioned for growth. Now I'd like to discuss some progress that we've made with operational initiatives we have for 2022. On our last call, we talked a bit about our path to achieving positive gross margins in 2023. Let me provide some additional context.
Since we started the company, we have spent all of our engineering resources focusing on one thing, developing the capabilities and performance of our technology to where it is today. This has been the right strategy allowing us to realize the success we've had with our customers and has allowed us to build a robust pipeline. With our technology proven and our go-to-market strategy in place, we can now focus more on cost improvement and we believe there is a lot of low-hanging fruit here. It's important to note that our more mature products are already generating positive margins.
However, one of our newer products has significant room for improvement and we've already implemented specific engineering design changes, with others that will be completed this year, which will result in lowering this product's costs by 25%. We have also raised prices for this product as well. We have cost reduction programs in place for all of our products, which provides us with a clear path to achieve overall positive gross margin in 2023 and beyond. Most importantly, we remain confident in our ability to achieve our run rate operating metrics of approximately 50% gross margins in the long term. Moving to operating expenses, total OpEx for the first quarter was $29.5 billion on GAAP basis and $31.7 million excluding stock-based compensation.
Due to mark-to-market adjustments relating to certain stock awards, our total stock-based comp expense was negative for the quarter, resulting in a P&L benefit. As expected, total operating expenses, excluding stock comp for the quarter, was roughly flat compared to the fourth quarter of FY21. We believe we have a good organizational base to support the growth of our business, and for the remainder of this year, we expect total operating expenses, excluding stock-based compensation, will be fairly consistent quarter-to-quarter. Adjusted EBITDA, which is defined as loss from operations adjusted primarily for depreciation, stock comp expense, and changes in fair value warrants, was -$29.4 million for the first quarter of FY22, compared to -$19.5 million for the same period in FY21, and -$34 million for the prior quarter.
A reconciliation of our net loss to adjusted EBITDA is included in our press release. On the balance sheet, we ended the quarter in solid cash position with over a $140 million and no debt. As mentioned, we ended the quarter with a $103 million in backlog, providing good visibility for revenue for this year. We continue to expect revenue of approximately $90 million for 2022, which is consistent with the guidance we gave in our last call, and we expect to build on our [Indiscernible] and backlog to support future revenue. Finally, to reiterate some key points we've talked about, we continue to be in strong position to execute our business plan.
Tailwinds driving the need for automation continued to be as prevalent as ever. Our customers love our technology driven by the follow-on orders we've received, particularly from anchor customers, and they want more. We're making rapid, tangible progress on our product-cost reduction initiatives, and our strong backlog combined with our large pipeline provides us with even greater conviction about our long-term growth prospects. And now, Operator will turn it over for Q&A.
[Operator Instructions]. Please standby while we compile the Q&A roster. Our first question comes from the line of Greg Palm at Craig-Hallum Capital. Your line is now open.
Good morning, everyone. Thanks for taking the questions, and congrats on the continued progress.
Thanks, Greg.
So I wanted to start with the reiteration of the full-year guide. Just curious what your visibility is like now versus several months ago. Any worry or concern that some of these projects could get pushed, not because of anything you're doing, but just broader supply challenges? What are you seeing out there?
Yes, our view is pretty much the same as it was six weeks ago. We have $103 million in backlog based on the deployment schedules that we have, the best estimate that we have right now for our revenue for this year. Obviously, the risks that we talked about last time are still out there are now which are supply chain issues. The global supply chain issues, to the extent that it impacts our customers deployment schedules, or even our schedules, that risk is still there. But based on where we sit today and the schedule that we have right now, that's our best estimate right now.
Okay. Good. And you talked about the potential for more meaningful order growth activity in the second half. I know you don't guide for orders, but how should we think about order growth for this year? Is it something in the ballpark of consistent with revenue growth? Is it higher? Is it lower? What should we be thinking about?
I think what we'll see is, as we mentioned, and we don't really don't guide to order numbers, but like what we experienced last year, we expect to see a significant increase in order activity from all of our customers in the second half, both from our anchor customers and from new prospects as well.
Okay. And then last one, any update on progress of large-scale commercial arrangements? I know there's no official news to report today, but how many customers do you think might be looking at doing something like this? Are all of your anchor customers engaged in this opportunity or is it just one or two at this point?
Yeah. Hey, Greg. Thank you for asking. Currently, we have follow-on orders with all of our anchors that continues to be great validation. I did mention the long term arrangements in our last call and I would suggest that's still work in process, we'll share updates as we're able.
Okay. Fair enough. Alright, I'll hop back in the queue. Thanks and good luck.
Thank you, Greg.
Thanks Greg.
Our next question comes from the line of John Walsh with Credit Suisse. Your line is now open.
Hi, good morning and thanks for taking the questions and a good start to the year.
Thanks, John.
Maybe just a first question. And obviously, this earnings season, we heard a very large online retailer talk about scaling back a little bit. Some other suppliers saying -- that are a little more leverage to the larger deployments talking about automated warehouse being a watch item. Obviously, what do you kind of see from your customers and some of the other verticals you touch that might not be that kind of deployment?
John, can you just add a few more words to your question, please?
Yeah. So I think maybe I'll just -- I'll use some names and say it another way. But after Amazon reported there were some tempering of expectations for their automated warehousing spend, Honeywell, for Intelligrated, they had automated warehouse be a watch item. Obviously, your product right, is broader than just one individual verticals, so just curious what you're seeing as you talk to your customers across different verticals or even within automated warehouse where those customers might not have as high of the penetration rate. Just trying to hear what you guys are saying, given that a couple of folks have have thrown a little bit of cold water there.
No, we continue to see high energy for the need to automate tempo of customers in the door, tempo of conversations and so forth as all, the high and as it was, and continuing that trend. We haven't seen any pull back.
Okay. Thank you. And then what if we could just talk a little bit about this partner network. Now you have 13. What are some of the things that you're thinking about that makes that successful that we can monitor as outsiders looking in? I mean, are you planning to add more partners? How do we think about the opportunity there? Because that seems like it could be a pretty good opportunity.
Hey, John. This is Steve. Good question. So from a partner perspective, we're selectively adding partners for verticals. That's where we're focused at the moment. Partners have trusted advisors with their customers, and we're leveraging our joint go-to-market as well as fulfillment help from those partners as well. We'll be adding some. It's not going to be a lot, just we're leveraging the partners that we have. We've got some great partners now that we're will continue to work with and do more together. Did I answer your question?
Yeah. Yeah, that's good. And maybe just a last one here, and then I'll pass the baton. But as we just think about uses of cash for the year, any updates relative to the framework you laid out last quarter. Just wanted to get kind of mark-to-market update there on uses of cash for the year. Thank you.
Yeah, no update. This is still in the 10 million to 11 million per month burn rate, which is pretty much what we experienced in Q1. So we expect that to be pretty consistent through the rest of the year.
Great. Thank you very much.
Great. Thank you, John.
Thanks, John.
[Operator Instructions] Our next question is from Andrew Obin with Bank of America. Your line is open.
Hey guys, you have Sabrina Abrams on for Andrew Obin.
Hi, Sabrina.
Hi, Sabrina.
Do you guys think you can talk a little bit about your pricing power and ability to price backlog? Understanding it's a very high inflation environment and I know you talked a little bit about being able to reduce product costs and raise prices for particular projects -- products, so you guys think you can talk a little bit about your ability to do that?
Sure. So, what we do is, in terms of the backlog, all the components and items that we have to order from our vendors are -- were already on order. Our prices were already locked in with our vendors, so there's no inflation risks with respect to what's in backlog and what's on order. In the -- for us, it's a very managed process, we manage it very closely. We also tend to lock in prices with our vendors around the same time when we're agreeing to pricing with our customers, so there's a natural hedge there, if you would. Because we have along planning cycle, we can sometimes also order some key components well in advance if we know that there could be some inflationary or even supply chain issues for long lead time items that we can purchase items to have in stock so that we don't fall risk to those kinds of issues. So that's pretty much how we kind of developed our pricing and lock in our prices with our vendors.
Okay, thank you for the color. And just a follow-up sort of looking at orders and backlog. It looks like you were able to work down some of your backlog this quarter. Are you seeing any improvement in supply chain constraints, especially as they impact your customers? And if supply chain does improve in the back half, is there potential upside to the revenue guide?
There's no change to our revenue guide right now. I would say that this global supply chain risk is still there, so there's really no change from what our view is from just six weeks ago. It's something that we monitor very carefully and we manage very carefully with our customers, but it is still the risk nonetheless. Our customers have to sometimes do some construction and order items, that's not really part of our scope and not in our control. And if they're experiencing issues from a supply chain perspective that could impact schedules. And much like even if we have things on order with our vendors, Day 2 could see -- experience some risks as well. So we're -- there would be no, no change to our guidance based on where we sit today.
Got it. Thanks. And one last question. Six weeks ago, I guess you provided a guidance that you where maybe expecting to raise funds in the next 12 months. Is that still on track?
Yes. Yes. The still on-track.
Thanks, I'll pass it along.
Great. Thank you, Sabrina.
Thank you.
And there are no further questions. I'll now turn it back over to our presenters for closing comments.
Everybody thank you very much for spending the time with us today and we look forward to talking to you more in the future.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.