Executive Summary / Key Takeaways

• ChargePoint is executing a strategic pivot, shifting focus from aggressive expansion to operational efficiency and profitability, targeting positive non-GAAP adjusted EBITDA in a quarter during fiscal year 2026.
• Recent financial results for Q1 FY26 show revenue softness (-8.8% YoY) but significant improvements in gross margin (28.7% GAAP, 31% non-GAAP) driven by subscription growth and cost optimization, alongside controlled operating expenses.
• The company is leveraging its established market position, extensive network (over 352k managed ports, 1.25M roaming), and differentiated technology, including a new lower-cost AC hardware architecture and strategic partnerships like the end-to-end solution with Eaton (ETN), to drive future growth and margin expansion.
• Key growth drivers for FY26 are expected to include the materialization of previously delayed fleet deals, contributions from new product introductions, improved performance in Europe, and incremental revenue from the Eaton partnership.
• While macroeconomic headwinds, competitive intensity, and the NYSE listing compliance remain notable risks, management expresses confidence in their operational improvements and strategic initiatives to capitalize on the long-term trend of EV adoption and increasing charger utilization.

Setting the Scene: ChargePoint's Evolution in the EV Charging Ecosystem

ChargePoint Holdings, Inc. stands as a foundational player in the electric vehicle (EV) charging landscape, tracing its origins back to 2007. From its inception, the company has been dedicated to building the networked infrastructure essential for widespread EV adoption. Its core business model revolves around providing not just the physical charging hardware – Networked Charging Systems – but also a sophisticated cloud-based platform that connects these systems, enabling seamless management for site owners and a user-friendly experience for drivers. This integrated approach, encompassing hardware, software subscriptions, and related services, positions ChargePoint as a comprehensive solution provider across commercial, fleet, and residential verticals.

The journey has been characterized by significant investment in building out this ecosystem, resulting in a history of net operating losses and negative cash flows, typical of companies scaling in a nascent, capital-intensive market. However, recent periods signal a strategic evolution. Recognizing the need to translate market leadership into sustainable financial performance, ChargePoint embarked on a multi-year strategic plan in fiscal year 2025. The initial phase focused intensely on operational excellence, including significant cost reductions through multiple workforce reorganizations and streamlining operations. This groundwork is intended to pave the way for Year 2 (fiscal year 2026), which prioritizes driving growth and innovation, with the explicit goal of achieving quarterly adjusted EBITDA profitability.

A Differentiated Technological Foundation

At the heart of ChargePoint's strategy lies its technology platform and hardware innovation. The ChargePoint Platform is designed as an open, intelligent network that integrates hardware from ChargePoint and other manufacturers. This open architecture is a key differentiator, providing flexibility for customers who may wish to disaggregate hardware and software sourcing. The platform offers real-time information, control, support, and management tools for charging system owners, while enabling drivers to easily locate, reserve, authenticate, and pay for charging sessions. The subscription-based nature of the platform and Assure warranty services provides a crucial recurring revenue stream with significantly higher margins than hardware sales.

ChargePoint continues to invest in hardware innovation to enhance performance, reduce costs, and address market needs. A notable recent development is the new AC hardware architecture, designed to be lower-cost and higher-margin, underpinning a range of upcoming products for various use cases. This architecture is expected to offer competitive pricing while improving the company's profitability profile on hardware sales. Another innovation, Omniport, addresses connector confusion by providing a single solution compatible with both NACS and CCS ports, enhancing user experience and potentially driving adoption. The company is also developing anti-vandalism solutions, like a cut-resistant cable, to tackle common operational challenges faced by station owners.

Beyond hardware, software innovation is improving operational efficiency and driver experience. The deployment of an AI-powered "picture to resolution" tool for diagnosing station issues is a prime example, enabling faster repairs and improved network uptime, a critical factor for customer satisfaction and network reliability. These technological advancements, particularly the open platform and ongoing hardware cost optimization, are intended to build a competitive moat by offering a flexible, reliable, and increasingly cost-effective charging solution.

Financial Performance: Navigating Headwinds, Improving Efficiency

ChargePoint's recent financial performance reflects the dual forces of macroeconomic headwinds impacting demand and the positive effects of its operational efficiency initiatives. For the first quarter of fiscal year 2026 (ended April 30, 2025), total revenue was $97.64 million, an 8.8% decrease compared to $107.04 million in the same period last year. This decline was primarily driven by a 20.4% year-over-year decrease in Networked Charging Systems revenue to $52.06 million, attributed to lower volume. Other revenue also saw an 8.1% decrease to $7.56 million, mainly due to lower one-time project revenue.

However, the Subscription segment continued its consistent growth trajectory, increasing 13.7% year-over-year to $38.02 million. This growth in recurring revenue, coupled with significant improvements in subscription margins (reaching a record 60% on a GAAP basis), was a key driver behind the overall gross margin expansion. Total GAAP gross profit increased to $27.99 million in Q1 FY26 from $23.61 million in Q1 FY25, resulting in a GAAP gross margin of 28.7%, up from 22.1%. On a non-GAAP basis, gross margin reached a new high of 31%.

Operating expenses showed the impact of prior restructuring efforts. Total operating expenses decreased to $81.83 million in Q1 FY26 from $90.75 million in Q1 FY25. While sequential non-GAAP OpEx saw a modest increase due to annual raises and targeted investments, the year-over-year reduction reflects the impact of workforce reductions and cost management. The adjusted EBITDA loss for Q1 FY26 was $23 million, an improvement from the $36 million loss in Q1 FY25, although slightly higher than the $17 million loss in the preceding Q4 FY25, which benefited from seasonal factors and the full impact of earlier cost reductions.

Liquidity remains a critical focus. As of April 30, 2025, ChargePoint held $196.3 million in cash and cash equivalents. Cash used in operating activities improved significantly, totaling $33 million in Q1 FY26 compared to $62.5 million in Q1 FY25, reflecting better operational efficiency and working capital management. The company also has access to an undrawn $150 million revolving credit facility and remaining capacity on its ATM facility, providing flexibility. Inventory levels saw a slight increase in balance in Q1 FY26 due to foreign exchange impacts, but units decreased, and management anticipates gradual inventory reduction throughout FY26, which should further free up cash.

Competitive Landscape and Strategic Positioning

ChargePoint operates in a highly competitive and rapidly evolving market. Its primary competitors include other charging network providers like Blink Charging (BLNK) and EVgo (EVGO), integrated EV manufacturers like Tesla (TSLA) with its Supercharger network, and hardware providers like Wallbox (WBX). The competitive landscape is characterized by varying business models (network operators vs. hardware/software providers vs. integrated ecosystems) and technological approaches.

ChargePoint positions itself as a leading provider of networked charging solutions with a diversified business across commercial, fleet, and residential segments in both North America and Europe. Its open platform strategy contrasts with the more closed ecosystem of Tesla's Supercharger network, which, while dominant for Tesla vehicles, is only recently opening up to other EVs. This openness is a key strategic choice, aiming to capture market share across all vehicle brands and hardware types.

While competitors like EVgo focus heavily on DC fast charging and network ownership, and Wallbox emphasizes residential solutions, ChargePoint offers a broader portfolio spanning AC and DC charging across all key verticals. This diversification, coupled with its extensive network of managed ports (over 352,000) and roaming agreements (access to over 1.25 million ports), provides scale and reach.

Recent market attrition and the exit of some players are seen by management as opportunities to gain market share. ChargePoint's investments in support infrastructure and AI-powered diagnostics are cited as competitive differentiators, helping win deals based on network reliability and customer service. The trend of customers seeking to disaggregate hardware and software is also seen as an opportunity for ChargePoint's platform business, which can manage third-party hardware.

Strategic partnerships are crucial to ChargePoint's competitive strategy. The collaboration with Eaton to provide integrated EV charging and electrical infrastructure solutions is particularly significant, aiming to address the complexity and cost of grid upgrades required for many deployments and leveraging Eaton's extensive go-to-market channels. Partnerships with auto OEMs like GM (GM), Porsche (POAHY), Hyundai (HYMTF), and Daimler Bus (DTRUY) further solidify ChargePoint's position as a platform of choice within the broader EV ecosystem.

Outlook and Path to Profitability

ChargePoint's outlook for fiscal year 2026 centers on achieving its stated goal of positive non-GAAP adjusted EBITDA in a quarter. For the second quarter of fiscal year 2026, the company guided revenue to be between $90 million and $100 million. This cautious near-term guidance reflects ongoing macroeconomic uncertainty and the focus on operationalizing key strategic initiatives like the Eaton partnership.

However, management anticipates revenue upside later in the year, driven by several factors:

• Materialization of Delayed Deals: Deals, particularly in the fleet segment, that were pushed out in FY25 due to external factors are expected to close and contribute to revenue in FY26.
• New Product Introductions: The rollout of the new, lower-cost AC hardware architecture and other innovations are expected to drive volume and improve margins.
• Eaton Partnership: The collaboration with Eaton is anticipated to generate incremental revenue growth as the integrated solutions become more widely available and leverage Eaton's sales channels.
• Improved Europe Performance: While Europe has been challenging, management is focusing efforts on the region and expects better performance.

The path to adjusted EBITDA profitability is expected to be a combination of revenue growth, continued gross margin expansion (driven by lower manufacturing costs from Asia and subscription scale), and disciplined cost management. Management believes the significant OpEx reductions achieved in FY25 provide a more efficient cost structure going forward.

Underpinning this outlook is the continued growth in EV adoption and increasing charger utilization rates. Management highlights strong EV sales growth in North America and Europe in early 2025 and data suggesting many U.S. cities are approaching peak utilization, indicating a growing need for more charging infrastructure.

Risks and Challenges

Despite the strategic focus and anticipated improvements, ChargePoint faces significant risks. The company has a history of losses and negative cash flows and expects this to continue in the near term. Achieving profitability is not guaranteed and depends on successful execution and favorable market conditions.

Macroeconomic headwinds, including inflation, high interest rates, and potential recessionary pressures, could continue to dampen customer spending on discretionary infrastructure projects. Policy uncertainty, particularly regarding government incentives and tariffs, also poses a risk, although ChargePoint states its direct reliance on federal funding like NEVI has been minimal.

Competition remains intense, with the potential for pricing pressure and market share shifts. The trend of customers seeking disaggregated solutions could impact hardware sales if ChargePoint's platform does not capture the associated software revenue. Supply chain disruptions and reliance on a limited number of suppliers are ongoing concerns that could affect costs and delivery times.

The company also faces risks related to its international expansion, particularly in the challenging European market, and the ability to attract and retain key personnel. The NYSE notice of non-compliance with the minimum bid price requirement presents a potential risk of delisting if the stock price does not recover, which could adversely affect liquidity and market perception. Furthermore, the company is subject to various litigations, including securities class action and derivative actions, which could result in substantial costs and divert management attention.

Conclusion

ChargePoint is at a critical juncture, transitioning from a phase of aggressive market capture to one focused on operational efficiency and sustainable profitability. The company has demonstrated tangible progress in controlling costs and improving gross margins, particularly within its high-margin subscription segment. While near-term revenue faces headwinds from the macro environment and customer caution, ChargePoint is strategically positioned to capitalize on the long-term growth of the EV market and the increasing demand for charging infrastructure.

Leveraging its established network, differentiated open platform technology, and new product innovations like the lower-cost AC architecture and the strategic partnership with Eaton, ChargePoint aims to drive revenue growth and margin expansion in fiscal year 2026. The stated goal of achieving adjusted EBITDA positive in a quarter during this fiscal year is a key milestone to watch, signaling progress towards financial sustainability. Success hinges on effective execution of its strategic plan, successful integration of new partnerships, and the ability to navigate ongoing market volatility and competitive pressures. For investors, the story is one of a market leader working to translate its foundational position and technological strengths into profitable growth in an evolving industry.