Executive Summary / Key Takeaways

• ChargePoint is executing a strategic shift towards profitable growth, leveraging its comprehensive software platform and new hardware innovations to drive long-term value.
• The company reported strong Q2 FY2026 results, with revenue at the top of guidance, record non-GAAP gross margin of 33%, and significantly reduced cash usage of less than $2 million.
• Strategic partnerships, notably with Eaton (ETN) and General Motors (GM), are accelerating product development, expanding market reach, and integrating advanced energy management solutions like bidirectional charging.
• Despite macroeconomic headwinds and project delays, ChargePoint is investing in innovation, pushing its adjusted EBITDA breakeven target beyond FY2026 to ensure durable revenue growth.
• ChargePoint's diversified portfolio, open software platform, and focus on customer support position it strongly in a consolidating EV charging market, aiming for market share gains and improved profitability.

The Electrification Imperative and ChargePoint's Foundational Role

ChargePoint Holdings, Inc. stands as a pivotal player in the rapidly evolving electric vehicle (EV) charging ecosystem, designing, developing, and marketing networked EV charging system infrastructure and cloud-based software services. Founded in 2007, the company has consistently invested in growth and market development, establishing itself as a leader in North America's commercial Level 2 AC charging segment. This long-term investment has, by design, led to a history of net operating losses and negative cash flows, reflecting a strategic focus on building out a foundational network and technology platform.

The broader EV market continues its upward trajectory, despite recent narratives of slowdowns. North American EV sales were up 16% year-over-year in Q1 FY2026, with European EV sales surging 22% in the same period. In the first half of FY2026, European EV sales increased by 26% year-on-year, signaling robust future charging demand that current infrastructure is struggling to support. Data from Perin Data indicates that many U.S. cities are nearing maximum charge utilization during peak hours, with five major markets approaching or exceeding a staggering 40% utilization rate. This growing strain underscores an urgent need for expanded charging infrastructure, transforming it from a "want" to a "need" for both consumers and commercial entities.

ChargePoint's core technology revolves around its networked charging systems, connected through the ChargePoint Platform. This cloud-based software enables charging system owners (hosts) to manage their infrastructure and drivers to locate, reserve, authenticate, and transact charging sessions. The platform also integrates with system hardware from ChargePoint and over 85 other manufacturers, managing more than 700 charger models. This open platform approach is a significant technological differentiator, allowing ChargePoint to offer a comprehensive, flexible solution that is not tied to proprietary hardware.

The company's commitment to innovation is evident in its recent product developments. ChargePoint has introduced a new AC hardware architecture, designed for lower manufacturing costs and improved margins, which will underpin upcoming models for home, commercial, and fleet use cases across North America and Europe. The first Flex Plus charger, part of this new architecture, is expected to begin production in July 2025, specifically targeting European company car fleets. Furthermore, ChargePoint and Eaton are co-developing an "express line of DC charging solutions" that promises more power in less space, massive scalability, and easier, faster installation, featuring Eaton hardware for grid connectivity and bidirectional charging (B2G) capabilities. These innovations are expected to substantially lower CapEx and operating costs for customers, significantly improving the economics of DC fast charging.

Another key technological advancement is the Omni Port solution, which makes the charging connector on an EV irrelevant, allowing any new EV to charge in any parking space. Conversion kits for older stations are now available, and customers are anticipated to upgrade to this solution. ChargePoint has also deployed an AI solution to enable drivers to report problem stations, leading to the resolution of nearly half of all reported issues across thousands of stations within 10 weeks. These technological advancements collectively enhance ChargePoint's competitive moat by improving user experience, driving operational efficiency, expanding market reach, and directly contributing to higher baseline margin profiles for new products.

Strategic Evolution and Partnerships: Fueling the Next Growth Phase

ChargePoint is in the midst of a three-year strategic plan, having completed its first year ahead of schedule. This initial phase focused on restructuring, refining the product roadmap, establishing a new leadership team, and instilling operational excellence. The company's second year prioritizes growth and innovation, with the rollout of next-generation software and hardware products.

A cornerstone of this growth strategy is the significant partnership with Eaton, an intelligent power management company, announced in May 2025. This collaboration aims to accelerate and simplify EV charging infrastructure deployment across North America and Europe. By integrating EV charging with electrical infrastructure, energy management, and engineering services, ChargePoint and Eaton are creating an end-to-end solution. This partnership provides ChargePoint with access to Eaton's formidable go-to-market engine, which boasts nearly $25 billion in annual sales across more than 160 countries, and is expected to drive incremental revenue growth for ChargePoint. The first innovations from this co-development effort, including advanced bidirectional power flow technology (V2X capabilities), are set to be announced in September 2025.

Beyond Eaton, ChargePoint's collaboration with General Motors' GM Energy division is progressing, with nearly a dozen sites and over 50 new fast charging ports launched, and many more scheduled for deployment in the current fiscal year. This program, intended to offset upfront investment with an owner-operator subsidy, helps customers reduce their ROI threshold and accelerates network growth. ChargePoint's diversified manufacturing footprint, with facilities in multiple countries including the U.S., also provides strategic flexibility in managing supply chains and potential tariff impacts.

Financial Performance: A Path to Profitability Amidst Headwinds

ChargePoint's recent financial performance reflects a concerted effort towards operational efficiency and margin improvement, even as the company navigates a challenging macroeconomic environment. For the second quarter of fiscal year 2026 (ended July 31, 2025), ChargePoint reported revenue of $99 million, landing at the top of its guidance range. This was sequentially higher than the prior quarter but down 9% year-on-year. Consequently, the non-GAAP adjusted EBITDA loss narrowed to $22 million in Q2 FY2026, a substantial improvement from $34 million in the same quarter last year.

A notable achievement was the non-GAAP gross margin, which reached 33% in Q2 FY2026—the highest reported since the company became public. This marks the seventh consecutive quarter of sequential non-GAAP gross margin improvement. This was primarily driven by higher hardware margins, despite tariff impacts, and continued growth in subscription margins. Subscription revenue, a key recurring stream, increased 10% year-on-year to $40 million in Q2 FY2026, representing 40% of total revenue, with a GAAP subscription margin reaching a record high of 61%. This improvement is attributed to economies of scale and optimization of support costs, further bolstered by ChargePoint's ability to negotiate cloud service costs and leverage a hybrid cloud environment.

Operating expenses have seen significant reductions as a result of the company's restructuring efforts. Non-GAAP operating expenses were $59 million in Q2 FY2026, down 12% year-on-year. While R&D spend saw a temporary sequential increase due to investments in new AC and DC charging product architectures, this is expected to gradually decrease in Q4 FY2026 and beyond. Sales and marketing expenses also decreased due to personnel reductions from the September 2024 reorganization and lower bad debt.

Liquidity management has been exceptional. ChargePoint ended Q2 FY2026 with $195 million in cash on hand, with cash usage of less than $2 million for the quarter. This represents a significant reduction from $49 million in Q2 FY2025 and $29 million in Q1 FY2026. The company's $150 million revolving credit facility remains undrawn, and it has no debt maturities until 2028. A new at-the-market (ATM) sales agreement for up to $150 million was also entered into on September 8, 2025, providing additional capital flexibility. Inventory, while flat sequentially at $212 million due to existing commitments, is expected to see gradual reductions in future quarters, further freeing up cash.

Competitive Landscape: Differentiating in a Consolidating Market

ChargePoint operates in a dynamic and intensely competitive EV charging market. Its primary direct competitors include Blink Charging (BLNK), EVgo (EVGO), and Tesla (TSLA), each with distinct strategies and market positioning. ChargePoint is a market leader in North America for commercial Level 2 AC charging, a segment where its integrated hardware-software ecosystem provides a significant advantage.

Against Blink Charging, ChargePoint's offerings emphasize a more robust software platform with superior interoperability, managing over 700 charger models from more than 85 different vendors. This open platform approach, coupled with advanced networking capabilities, enables seamless user experiences and comprehensive fleet management tools, giving ChargePoint an edge in ease of integration and service reliability. While Blink may offer agility in pricing for certain cost-sensitive segments, ChargePoint's network effects and customer-focused innovations often lead to stronger customer retention and revenue stability.

Compared to EVgo, which specializes in public fast-charging networks, ChargePoint's versatility across residential, commercial, and fleet segments, along with its deeper software analytics and integration capabilities, stands out. EVgo's focus on rapid deployment of high-speed charging stations provides quick access in high-demand areas, but ChargePoint's strategic adaptability and broader customer base, supported by its comprehensive solutions, enhance its market positioning.

Tesla's proprietary Supercharger network, while offering integrated hardware and software for its vehicles and often faster charging speeds, operates within a more closed ecosystem. ChargePoint's platform-agnostic design, including its upcoming Omni Port solution, allows it to support multiple EV brands and attract a wider range of partnerships and users, positioning it as a neutral enabler of the entire EV ecosystem. This open approach could lead to greater partnership opportunities and broader market adoption, potentially impacting cash flow generation positively.

ChargePoint's competitive advantages are further bolstered by its significant investments in its support organization. The company is winning deals based on its ability to support customers and ensure network reliability, as evidenced by its AI-driven solution for problem reporting. This focus on customer satisfaction and operational uptime is a key differentiator in a market where reliability is paramount. The company believes its scale, comprehensive product portfolio spanning AC to DC fast charge, and strong balance sheet position it favorably for industry consolidation, which is expected to occur as smaller, less economically viable players struggle in the current market.

Outlook and Risks: Powering Through Uncertainty Towards Long-Term Value

ChargePoint's outlook for fiscal year 2026 reflects a cautious yet determined approach amidst ongoing macroeconomic uncertainties. The company guides for Q2 FY2026 revenue between $90 million and $100 million. While the initial target was to achieve adjusted EBITDA positive in a quarter during fiscal 2026, management has decided to push this target out beyond the current fiscal year. This strategic adjustment is a deliberate choice to prioritize funding for product innovation and commercialization efforts, which are deemed essential for driving durable revenue growth and strengthening long-term market share.

Management anticipates revenue upside later in FY2026, driven by the introduction of new AC hardware, improved performance in Europe, and the incremental growth from the Eaton partnership. R&D expenses are expected to remain elevated in Q3 FY2026 due to new product development but should gradually decrease in Q4 FY2026 and beyond. Cash usage is projected to continue its declining trend, with the potential for cash generation in a quarter even before achieving EBITDA profitability, primarily due to anticipated inventory reductions. The impact of tariffs on cost of goods sold is expected to remain minimal due to ChargePoint's diversified manufacturing footprint.

However, significant risks persist. A slowdown in EV adoption, exacerbated by macroeconomic conditions, rising interest rates, and the expiration of U.S. consumer EV tax credits (30D and 30C), could adversely impact demand. Project delays due to permitting, grid upgrades, and construction timelines remain a consistent challenge, affecting revenue recognition. The company's reliance on third-party manufacturers, while diversified, still exposes it to supply chain disruptions and potential cost increases. Furthermore, the competitive landscape is dynamic, with new entrants and potential consolidation creating price pressure. ChargePoint's ability to effectively manage these risks, particularly by leveraging its technological leadership and strategic partnerships, will be crucial for realizing its long-term growth and profitability objectives.

Conclusion

ChargePoint Holdings, Inc. is at a critical juncture, strategically recalibrating its operations to capitalize on the inevitable global shift to electric vehicles. By prioritizing operational excellence, as evidenced by seven consecutive quarters of non-GAAP gross margin improvement and significantly reduced cash burn, the company is building a more resilient financial foundation. Its robust, open software platform, coupled with a pipeline of innovative hardware solutions and transformative partnerships like the one with Eaton, positions ChargePoint to capture substantial market share. While macroeconomic headwinds and project delays necessitate a revised timeline for achieving adjusted EBITDA breakeven, this strategic patience allows for continued investment in the technological differentiators that will drive durable, profitable growth. ChargePoint's comprehensive ecosystem, commitment to customer support, and strategic adaptability underscore its potential to emerge as a dominant force in the consolidating EV charging industry, offering a compelling long-term investment thesis for discerning investors.