ChargePoint Holdings, Inc. (NYSE:CHPT) Q2 2024 Earnings Call Transcript - Page 2 of 5 - InvestingChannel

ChargePoint Holdings, Inc. (NYSE:CHPT) Q2 2024 Earnings Call Transcript

And then what you’re also seeing frankly is variable take up with respect to the models introduced based on consumer preference. So, not all cars are winners regardless of the drivetrain technology, so some things will sit in an oversupply state. What you have is — I believe the number is, in my prepared remarks, 48% Q2 to Q2 the prior year increase in electric vehicle sales, and that’s I think the more indicative number, it’s overall up. There are some hotspots and cold spots, but it’s overall up. And I just think that’s just the normal development of what is a very — like, the vehicle market is not satisfied by two or three models. It’s a very large model base that’s required to cover everything. And again not everything is going to win and also not everything is going to be aligned to the economic — the macroeconomic conditions out there for consumers.

Alexander Vrabel: Got it. Super helpful. Just a quick clarification on the cash that you guys mentioned sufficient cash position to reach that EBITDA inflection later in ’24. I’m just curious you guys now have the revolver on top of the ATM. Any thoughts about why you would use one over the other timing around sort of your capital sourcing strategy from now until, that would be helpful? Thanks.

Rex Jackson: Yeah. I think it’s sort of an either or thing, it’s not preference for A or B. So, I think what we’ve said previously is the ATM, we’d like to do that on a consistent low level basis to match very loosely in our adjusted EBITDA loss as we progress into next year. That’s not a fixed formula, but it is something that’s aspirational. And then as far as the revolving credit facility, as you would draw that down when we need to, we have numbers in mind that we’d like to maintain on the balance sheet, and if we need to pull it down, but it does depend on how the ATM shakes out.

Alexander Vrabel: Got it. Thanks, guys. Take the rest offline

Operator: We’ll next go now to Bill Peterson, JPMorgan.

William Peterson: Yeah. Thanks for taking the questions. So, if we think about your second half demand outlook, can you help us understand how the trends should look across residential, commercial, including workplace and fleet? I mean we saw here in the second quarter that commercials had some nice growth, while fleet and residential kind of took a step back. But how should we think about the trends amongst the segments in the second half?

Pasquale Romano: Yeah. I mean the perfect kind of copy of the way to answer the previous question is backwards, start with the fleet one. On the fleet side of our business is, the fleet customers are inherently, quote-unquote, lumpy (ph) with respect to revenue. And so — and that has a lot to do with not only vehicle availability, but their own construction plans for their depots et cetera. So, I would look at our fleet business on a more than one quarter trended basis, given the fact that you could get some quarter-to-quarter variance, but overall is an indicative of any specific market change in condition. The commercial side, with respect to growth, while you said there was nice growth there, which there was, the growth was not where utilization would say it should be.

So, you’ve got a little bit of a dislocation between where commercial buyers, general businesses effectively when we refer to commercial, are viewing the priority of investing in EV charging right now, given where their own businesses are and the difficult decisions that all businesses are making in general in the current environment. So, while the growth that you commented on is good in commercial, it should have been better if it weren’t for the overhang that exists, but the utilization pressure is there. So, the response will come, because the response has to come to that utilization pressure. And on home, it’s going to go largely with vehicle sales. There is a bit of seasonality. We’ll probably see some increase take-up in the back half of this year due to normal seasonal trends.

William R. Peterson: Okay. Thanks for that. And recently, the seven OEMs announced that they’d like to build their own charging network, 30,000 chargers maybe around the summer of ’24 starting. You also mentioned that you started your, I guess, Mercedes-Benz build-out. And they are one of the OEMs that’s part of this. I guess, are there any particular implications of this charging network? Is this an opportunity for ChargePoint? I mean how would your relationship with Mercedes-Benz potentially benefit this program? Is this something that you’re actively pursuing?

Pasquale Romano: So, what I can say being fairly close to all the OEMs that are involved in the broader set in general is that, they’re sorting out amongst themselves how they want to organize and progress that business. To answer your question specifically regarding on opportunity, we view it is absolutely an opportunity for us. We’re very proud of what we’ve done on the Mercedes-Benz project to date. You’ll see that, as I said in the fall, Mercedes made an announcement with respect to when they expect sites to go live in the fall. And we’ll be eager to hear customer perception of that project. We’ve been working very hard at it. We hope that bodes well for us with respect to any opportunities that the auto consortium would bring to market.

And frankly, I’ll remind you that we’ve also done a lot more with auto OEMs historically. We’ve done a lot with state programs historically. We’ve done an awful lot of VW Appendix D statewide programs, we rebuilt our corridors. I mentioned in my remarks that we did a project with Volvo and Starbucks, 1,300-mile corridor from Seattle to Denver. So, we’ve got a lot of experience building these things out. And related to that, you saw us make some announcements relative to double down on our investment with respect to uptime performance, bullet-proof availability, et cetera. We think that’s just critical. It’s critical for this phase of expansion for consumers. It’s got to be reliable. It’s got to be easy to find. It’s got to be easy to use. And we’re making actually quite large investments relative to where most of these corridor builds-out especially in those areas.

So, we hope to be well ahead of the curve.

William R. Peterson: Okay. Thanks for the color.

Operator: Thank you. We’ll go next now to Joseph Osha at Guggenheim.

Joseph Osha: Thank you. Hello, and I apologize, I’m in a car. Two questions. First, obviously, some of the intermediate term challenges you’re seeing presumably exist elsewhere in the business also. Is there any thought around opportunities for inorganic growth or consolidation? Or is that just not something you would ever think about? And then I do have a follow-up.

Pasquale Romano: Well, frankly, if I told you we would ever enter a period where we wouldn’t think about that, you’d probably question me, because obviously, if we were to come across something that were to meet not only the financial parameters that we would outline — guardrail deal, but also the customer acquisition parameters and the talent acquisition parameters. We would certainly do it. It’s just that right now, managing the business, we have a very high bar with respect to achieving our profitability goals by the end of next year. We’ve doubled down on that, on multiple earnings calls and we are hell bent to make that happen. So, as a test with respect to any inorganic growth that would make sense potential on a go-forward basis, it would have to not derail that.

Joseph Osha: Okay. That makes sense. And then my second question. Speaking to the NACS issue, obviously, you anticipated this. But, yeah, I mean the competitive landscape in NACS and wire extension DC fast has evolved. So, I’m just wondering, since the beginning of the year, has your thought around the sort of the optimum mix for ChargePoint in terms of L2 versus DC fast changed or evolved at all, or is it still just completely what it was?

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