ChargePoint Holdings, Inc. (CHPT) is a leading provider of networked electric vehicle (EV) charging infrastructure and cloud-based services, enabling the widespread adoption of EVs. The company has experienced significant growth in recent years, with annual revenue reaching $506.6 million in the fiscal year ended January 31, 2024. However, the company has also incurred substantial net losses, reporting an annual net loss of $457.6 million for the same period.
Business Overview
ChargePoint designs, develops, and markets networked EV charging systems, which are connected through its cloud-based services. These services enable charging system owners, or hosts, to manage their networked charging systems, and drivers to locate, reserve, and authenticate networked charging systems, as well as transact EV charging sessions. ChargePoint's offerings provide an open platform that integrates with system hardware from ChargePoint and other manufacturers, connecting systems over an intelligent network that provides real-time information about charging sessions and full control, support, and management of the networked charging systems.ChargePoint targets three key verticals: commercial, fleet, and residential. Commercial customers have parking places largely within their workplaces and include retail, hospitality, healthcare, fueling and convenience, and parking lot operators. Fleet includes municipal buses, delivery and work vehicles, port/airport/warehouse and other industrial applications, and ridesharing services. Residential includes single-family homes and multifamily residences.
Financials
In the first quarter of fiscal year 2025, ChargePoint reported revenue of $107.0 million, a decrease of 18% compared to the same period in the prior year. This decline was primarily driven by a 34% decrease in networked charging systems revenue, which accounted for 61% of total revenue. Subscription revenue, which made up 31% of total revenue, increased by 27% year-over-year. The company's other revenue, which includes professional services and certain non-material revenue streams, grew by 54% during the quarter.Geographically, ChargePoint generated 81% of its first-quarter revenue from North America, with the remaining 19% coming from Europe. The company's revenue mix by vertical was 63% commercial, 20% fleet, 15% residential, and 3% other.
ChargePoint's non-GAAP gross margin for the first quarter of fiscal year 2025 was 24%, down 1 percentage point from the same period in the prior year. The sequential improvement from the fourth quarter of fiscal year 2024 was largely due to improved subscription margins and a larger mix of subscription revenue.
The company's non-GAAP operating expenses for the first quarter were $66.0 million, a decrease of 22% from the same period in the prior year and 11% from the fourth quarter of fiscal year 2024. This reduction was driven by the company's focus on cost management and the full-quarter impact of the January 2024 restructuring.
ChargePoint's non-GAAP adjusted EBITDA loss for the first quarter was $36.0 million, a significant improvement compared to a loss of $49.0 million in the same period of the prior year and a loss of $45.0 million in the fourth quarter of fiscal year 2024.
Liquidity
As of April 30, 2024, ChargePoint had $292.3 million in cash, cash equivalents, and restricted cash, down from $357.8 million at the end of the previous quarter. The decrease was primarily due to cash usage to cover the adjusted EBITDA loss, a semi-annual interest payment on the company's convertible bonds, and severance charges associated with the January 2024 restructuring.ChargePoint's deferred revenue, which represents payments for future revenue commitments from existing customers, grew to $235.0 million at the end of the first quarter, up from $231.4 million at the end of the fourth quarter of fiscal year 2024. The company's $150.0 million revolving credit facility remained undrawn as of the end of the first quarter.
Outlook
For the second quarter of fiscal year 2025, ChargePoint expects revenue to be between $108.0 million and $118.0 million, down 25% year-over-year at the midpoint. The company anticipates a larger portion of full-year revenue to be generated in the second half of the fiscal year due to normal seasonality, visibility into large orders booked across both commercial and fleet verticals, and signs of overall charging demand recovery.ChargePoint expects gradual improvement in gross margin as the year progresses, driven by continued cost-down efforts for hardware products and improvements in subscription margins due to operating efficiency and automation initiatives. The company also expects non-GAAP operating expenses to remain relatively flat in the second quarter but fall further in the second half of the fiscal year as it continues to focus on operational efficiency and other cost avoidance measures.
Importantly, ChargePoint is committed to being adjusted EBITDA positive in the fourth quarter of fiscal year 2025, which it plans to achieve through a combination of accelerated top-line growth, gross margin improvements, and operating expense reductions.
Risks and Challenges
ChargePoint operates in the early-stage market of EV adoption, which is characterized by rapidly changing technologies, intense competition, and evolving customer preferences. The company's future growth is highly dependent on the continued adoption of EVs by businesses and consumers, which may be impacted by factors such as perceptions about EV features, performance, and cost, as well as the availability and reliability of EV infrastructure.The company also faces risks related to supply chain disruptions, component shortages, and manufacturing interruptions or delays, which could adversely affect its ability to meet customer demand and impact its financial performance. Additionally, ChargePoint's business is subject to risks associated with natural disasters, climate change, and the regulatory environment, including changes in government incentives and policies related to EVs and EV charging infrastructure.