Earnings call transcript: ChargePoint’s Q2 2025 sees revenue growth but EPS falls short

ChargePoint Holdings Inc. reported its Q2 2025 earnings, revealing a significant discrepancy between its expected and actual earnings per share (EPS), while revenue slightly exceeded forecasts. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculations, despite showing high price volatility with a beta of 2.22. ChargePoint’s revenue reached $99 million, surpassing the forecast of $96.02 million, but it reported an EPS of -$2.85, far below the anticipated -$0.12. The stock rose by 0.56% in regular trading and saw a further 1.87% increase in aftermarket trading.

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Key Takeaways

• ChargePoint’s revenue exceeded expectations, reaching $99 million.
• EPS reported at -$2.85, significantly missing the forecast of -$0.12.
• Stock prices rose by 0.56% during regular trading and 1.87% in aftermarket.
• Non-GAAP gross margin reached a record 33% since going public.
• European market expansion remains a key focus.

Company Performance

ChargePoint’s performance in Q2 2025 was marked by a strong revenue showing, which was at the top of the company’s guidance range. This was driven by robust sales in its Network Charging Systems and Subscription Revenue segments. InvestingPro data reveals concerning metrics: the company’s EBITDA stands at -$201.2 million for the last twelve months, with a rapid cash burn rate. Despite this revenue growth, the company’s EPS fell significantly short of expectations, reflecting ongoing challenges in achieving profitability. With a weak Financial Health Score of 1.68 out of 5, the company remains the largest charging infrastructure provider, with a comprehensive product portfolio and strategic partnerships bolstering its market position.

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Financial Highlights

• Revenue: $99 million, a slight increase over the forecast of $96.02 million.
• Earnings per share: -$2.85, compared to a forecast of -$0.12.
• Non-GAAP Gross Margin: 33%, the highest since becoming a public company.
• Non-GAAP Adjusted EBITDA Loss: $22 million.
• Cash Balance: $195 million, with a minimal reduction from Q1.

Earnings vs. Forecast

ChargePoint’s EPS of -$2.85 was a substantial miss compared to the forecast of -$0.12, marking a surprise of over 2,275%. This variance highlights the challenges the company faces in its path to profitability. However, revenue of $99 million slightly exceeded the forecast of $96.02 million, resulting in a positive surprise of 2.68%.

Market Reaction

Following the earnings release, ChargePoint’s stock price increased by 0.56% during regular trading hours, closing at $10.72. In aftermarket trading, the stock further climbed by 1.87%, reaching $10.92. InvestingPro data shows the stock has fallen nearly 70% over the past year, though it’s showing strong returns over the last month. The current price sits significantly below its 52-week high of $37.60, with a market capitalization of $251.6 million. This movement reflects a cautiously optimistic investor sentiment, given the company’s revenue performance despite the EPS shortfall.

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Outlook & Guidance

ChargePoint provided Q3 revenue guidance of $90-100 million, indicating a stable outlook. The company anticipates ongoing product innovation and market expansion, particularly in Europe. However, it has delayed its EBITDA breakeven target beyond the current year, emphasizing a continued focus on reducing cash burn and managing operational expenses.

Executive Commentary

CEO Rick Wilmer emphasized the company’s strategic position amid potential industry consolidation, stating, "We are in the best position to capitalize on [industry consolidation]." CFO Monte Khitani noted the potential for generating cash before achieving EBITDA profitability, highlighting the company’s financial management efforts.

Risks and Challenges

• Persistent EPS losses and delayed profitability targets.
• Uncertainty surrounding EV tax credits, impacting market dynamics.
• Slower EV sales growth in North America, contrasting with strong European performance.
• Supply chain management and inventory challenges.
• Macro-economic pressures affecting global operations.

Q&A

During the earnings call, analysts inquired about potential project cancellations and the company’s European market strategy. Executives reassured stakeholders, noting no cancellations, only project delays, and expressed optimism about European expansion. The focus remains on integrating hardware and software solutions and managing supply chain effectively.

Full transcript - ChargePoint Holdings Inc (CHPT) Q2 2026:

Conference Operator: Good afternoon and thank you for standing by and welcome to ChargePoint Second Quarter Fiscal Year twenty twenty six Financial Results Conference Call. Please be advised, today’s conference is being recorded and a replay will be available on ChargePoint’s Investor Relations website. I would now like to hand the conference over to A. J. Gosselin, Director of Corporate Communications.

A.J. Gosselin, Director of Corporate communications, ChargePoint: Good afternoon, and thank you for joining us on today’s conference call to discuss ChargePoint’s second quarter fiscal twenty twenty six earnings results. This call is being webcast and can be accessed on the Investors section of our website at investors. Chargepoint dot com. With me on today’s call are Rick Wilmer, our Chief Executive Officer and Monte Khitani, our Chief Financial Officer. This afternoon, we issued our press release announcing results for the quarter ended 07/31/2025, which can be found on our website.

We’d like to remind you that during the conference call, management will be making forward looking statements, including our outlook for the 2026. These forward looking statements involve risks and uncertainties, many of which are beyond our control and could cause actual results to differ materially from our expectations. These forward looking statements apply as of today, and we undertake no obligation to update these statements after the call. For a more detailed description of certain factors that could cause actual results to differ, please refer to our Form 10 Q filed with the SEC on 06/06/2025, and our earnings release posted today on our website and filed with the SEC on Form eight ks. Also, please note that we use certain non GAAP financial measures on this call, which we reconcile to GAAP in our earnings release and for certain historical periods in the investor presentation posted on the Investors section of our website.

And finally, we’ll be posting a transcript of this call to our Investor Relations website under the Quarterly Results section. Thank you. I will now turn the call over to our CEO, Rick Wilmer.

Rick Wilmer, Chief Executive Officer, ChargePoint: Good afternoon, and thank you for joining the Charge ChargePoint second quarter fiscal twenty twenty six earnings call. We are pleased to report solid results for the quarter. Second quarter revenue was $99,000,000 landing at the top of our guidance range. The non GAAP gross margin improved sequentially with Q2 results coming in at 33%. This figure is notable as the highest gross margin we’ve reported since becoming a public company, and we successfully mitigated tariffs to achieve it.

Cash management was exceptional with our ending balance at $195,000,000 only $2,000,000 below Q1’s close, largely driven by structural OpEx changes we’ve been making over the last year. Our collaboration with GM is also progressing with nearly a dozen sites and more than 50 new fast charging ports and many more scheduled to launch this year. Overall, ChargePoint now manages over 363,000 ports, including more than 37,000 DC fast chargers and 123,000 located in Europe. Globally, charge point drivers can access nearly 1,300,000 charging ports. We achieved this performance despite the uncertainty, particularly in North America.

Within The U. S, passenger EV sales growth slowed to a 3% year over year increase. The forthcoming expiration of the Consumer 30D EV tax and 30C alternative fuel vehicle refueling credit are also sources of concern for future EV adoption, along with the evolving tariff landscape.

Conference Operator: This has translated into delays for major projects we have won and extended expansion build outs, but no project cancellations. So while we are making solid progress on our path option,

Rick Wilmer, Chief Executive Officer, ChargePoint: to non GAAP adjusted EBITDA breakeven as we saw over the past year, considering these delays and their impact on revenue, we’ve determined we will be best positioned if we push out our EBITDA breakeven beyond this year. This is to ensure we can fund product innovation and commercialization efforts, which we expect to drive durable revenue growth. Uncertainty aside, we believe our go to market strategy and innovation put us on a firm footing to drive growth, win market share and hit EBITDA positive in the coming quarters. Regarding our go to market strategy, we are rapidly operationalizing our partnership with Eaton and that work will be largely completed this quarter. Since this partnership was announced in May, we continue to build confidence that together we will accelerate the deployment of electric vehicle charging infrastructure across North America and Europe.

We have already introduced our co branded product, expanded our channel reach, accessed new strategic accounts and started generating new streams of revenue together. We are delivering innovation, which has been accelerated and expanded because of our partnership with Eaton. The Express line of DC charging solutions powered by Eaton and announced last week combines the strength of both companies to deliver more power in less space with massive scalability along with the easiest and fastest installation. It features Eaton hardware for grid connectivity plus V2G capabilities. The net result will be substantially lower CapEx and operating costs and faster deployment time lines.

It will change the game in terms of the economics of DC fast charging for our customers. We are also co developing bidirectional home charging solution with advanced energy management. The integration of ChargePoint’s Flex Plus chargers with Eaton’s Able Edge Smart Panels and breakers enables vehicles to supply backup power to homes and also automatically adjust EV charging based on the home energy usage to allow homeowners to install EV charging. The behind the meter insights will help utilities manage grid stress and transformer loads. We expect this synergistic type of innovation will deliver real value to homeowners, utilities and auto OEMs, while at the same time driving market share gains.

Both the new Express line of DC solutions and Flex product line were designed to not only deliver market differentiation, but also cost effectiveness. We expect both product lines to have a positive impact on our hardware gross margins. Moving to markets. Europe seems promising going forward. Roadmotion reports a 26% year over year increase in European EV sales during the first half of the year, which is a strong indicator of future charging demand in Europe.

We believe the current infrastructure cannot support such growth. With the innovation and new products we are delivering, we will be well situated to capture much of this demand. In summary, despite an uncertain environment causing delays, we delivered strong results. We are operationalizing our strategic Eaton partnership, which accelerates innovation and expands our reach. We are delivering game changing products poised to strengthen our market share and profitability.

Internally, our team continues to execute with excellence. Our long term thesis remains intact, validated by the strength of our pipeline, the positive reaction to our new products and the new partners and customers we’re actively signing. I will now turn the call over to our Chief Financial Officer, Manzi Katani.

Monte Khitani, Chief Financial Officer, ChargePoint: Thanks, Rick. As a reminder, please see our earnings press release where we reconcile our non GAAP results to GAAP. Our principal exclusions are stock based compensation, amortization of intangible assets and certain costs related to restructuring, settlements and non recurring legal expenses. Revenue for the second quarter was $99,000,000 at the high end of our guidance range, sequentially higher than the prior quarter and down 9% year on year. Network charging systems at $50,000,000 accounted for 51% of second quarter revenue.

Subscription revenue at $40,000,000 was 40% of total revenue, 5% higher sequentially and up 10% year on year as our total installed base continued to increase. Other revenue at $8,000,000 was 8% of total revenue. Turning to verticals, which we report from a billings perspective, second quarter billings percentages were commercial 75%, fleet 11%, residential 10% and other 4%. From a geographic perspective, North America made up 84% of revenue and Europe was 16%. This was relatively consistent with the first quarter.

Non GAAP gross margin was 33% growing by three percentage points sequentially and eight percentage points year on year. This is attributable to higher hardware margins, higher subscription margins as well as subscription revenue growing as a percentage of total revenue. I’d like to point out that this was our seventh straight quarter of sequential non GAAP gross margin improvement. Hardware gross margin increased 1% sequentially despite the impact of higher tariffs. Subscription margin continued to grow reaching another record high of 61% on a GAAP basis and was even higher on a non GAAP basis reflecting economies of scale and continued optimization of support costs.

Non GAAP operating expenses were $59,000,000 up 3% sequentially and down 12% year on year. The small sequential increase this quarter was mainly due to a temporary increase in R and D spend as a result of higher NRE and contractor spend related to the development of our recently announced new AC and DC charging product architecture. This increase will persist in the third quarter, but we should see the spend gradually coming down in Q4 and then further reducing next year. We are continuing to closely manage operating expenses, balancing investments that we believe will lead to significant future growth and margin expansion, while also being mindful of current constraints. Non GAAP adjusted EBITDA loss was $22,000,000 This compared with a loss of $23,000,000 in the prior quarter and a loss of $34,000,000 in the second quarter of last year.

Stock based compensation was $18,000,000 flat to last quarter and down from $19,000,000 in the second quarter of last year. Our inventory balance remained virtually flat to the prior quarter at $212,000,000 While this balance didn’t decrease due to existing commitments with contract manufacturers, we continue to drive towards a gradual reduction in inventory over the next few quarters, which will free up cash. Speaking of cash, we ended the quarter with $195,000,000 of cash on hand versus $196,000,000 in the prior quarter, resulting in cash usage of less than $2,000,000 This compares with $49,000,000 of cash usage in Q2 of last year and $29,000,000 in Q1 this year. We have been able to significantly reduce cash burn over the past few quarters, mainly due to spend reductions and working capital management. Our $150,000,000 revolving credit facility remains undrawn and we have no debt maturities until 2028.

Turning to guidance. For the 2026, we expect revenue to be between $90,000,000 to 100,000,000 While we continue to guide cautiously given the challenging and constantly changing macro backdrop, delivering revenue growth and ultimately reaching non GAAP adjusted EBITDA breakeven and generating positive cash flow remain our primary focus areas. As Rick mentioned, given the macroeconomic headwinds, the trajectory of revenue growth required to get to non GAAP adjusted EBITDA breakeven in a quarter will take longer to materialize than this year, but we expect to continue to make progress towards profitability and reducing cash burn, which we have managed to do well over the past year. We will now open the call for questions.

Conference Operator: Thank you. We will now begin the question and answer session. Your first question comes from the line of Colin Rusch with Oppenheimer. Please go ahead.

Colin Rusch, Analyst, Oppenheimer: Thanks so much guys. Now can you just talk a little bit about what the trajectory is on OpEx? Obviously, R and D is remaining at some elevated levels along with the G and A. Just want to get a sense of how that should trend over the balance of this fiscal year?

Monte Khitani, Chief Financial Officer, ChargePoint: Yes. Hi, Colin. I’ll take that one. Yes, as I mentioned in my prepared remarks, OpEx is slightly higher than Q1 because of some investment we did on the R and D front. We have spent on prototyping as we’re releasing these new products and releasing the new AC and DC architecture.

Those are temporary one time, if you will, NRE costs. And then we also had elevated expenses on the contractor side this quarter. Now we expect this to persist in the next quarter because we’re really in the middle of releasing all of these products. There’s a lot of activity going on around that. But I think it should come down gradually in Q4 and then we’ll manage it better next year.

Colin Rusch, Analyst, Oppenheimer: Great. And then just from a sales perspective, we all know what’s going on in North America and then kind of the digestion of the new policy. But I’m curious in Europe, other geographies where you’re seeing any potential higher growth opportunities, particularly with this Eaton relationship and global footprint there? Are there other areas that you see, the products ending up that could surprise us in some way around the growth trajectory?

Rick Wilmer, Chief Executive Officer, ChargePoint: I think hey, Colin. I think the overall macro conditions in Europe are looking better right now than they are in North America. Hopefully, things will start to clarify in North America once we get through the tax credit expiration in September. But in Europe, a lot of the products that are driving some of the incremental OpEx spend that Manzi alluded to are targeted at Europe, where we did not have solutions to serve those use cases in the past. So the Flex product line that we’ve announced a month or so ago, we’ll launch in Europe here soon.

In fact, we’ve now got inventory position in Europe to begin fulfilling early sales. And then the new DC Express architecture that we also announced will be targeted at Europe, where in the past, we have not had a DC product that was developed by us available in Europe. So we are optimistic about Europe as we move forward into the new year. It’s a combination of a more positive macro environment and new products to serve that market that we believe are quite differentiated.

Colin Rusch, Analyst, Oppenheimer: Great. Thanks so much guys. I’ll hop back in queue.

Conference Operator: Your next question comes from the line of Chris Dendronos with RBC Capital Markets. Please go ahead.

Chris Dendronos, Analyst, RBC Capital Markets: Hi, good evening and thank you. I guess maybe to start here, I just wanted to follow-up on that last question in regards to the AC architecture or the new AC launch in Europe. Can you maybe speak to the initial kind of interest levels there and mentioned inventory, I guess, maybe what’s the channel looking like and what has been the response from the dealerships dealer channel there? Thanks.

Rick Wilmer, Chief Executive Officer, ChargePoint: Yes. So it’s very early, Chris. We’ve just moved the first bit of inventory into Europe. We’ve had successful early access customers, and we’re beginning to build up our channel interest and target our end customer base in three major geographies in Europe, The UK, France and Germany. We’ve got all the approvals necessary to serve all the markets, all those different product configurations based on the requirements in each of those major European geos.

So we’ll be really getting clarity on the overall demand that we expect early on with this new product as we move through this quarter, but early indications have been positive.

Chris Dendronos, Analyst, RBC Capital Markets: Got it. Okay. And then maybe as a follow-up here, we’re only, I guess, month or two removed from the passage of the OB3, but just kind of thinking about the demand outlook and the sort of, call it, lower for longer outlook in The U. S. I guess how are you thinking about the company’s positioning here, just given the changes in that dynamic?

Are you financially in the right place? Do need to change personnel or strategy at all or slow down maybe some of the development going forward? Thanks.

Rick Wilmer, Chief Executive Officer, ChargePoint: No, I think just the opposite. I mean, within the constraints of our OpEx envelope, I really believe the path to success is to deliver innovation to the market, which we’ve clearly been doing as we’ve moved through the year with some of the more significant innovations just announced recently that we mentioned a minute ago. The market, this whole industry went through a hype cycle. It collapsed in 2023. I think there’s going to be ongoing demand for EVs.

There are indications that that’s happening. I think I’ve seen data from Cox that July will be a record sales for EVs in North America, largely as a result of the tax credit expiration coming up this month. But what that tells us is that there is interest in EVs and demand for EVs if the price point is right. And I think we’re seeing a lot of good innovation on the vehicle side. You can look at Ford’s new platform announcement.

Slate Auto, they announced their new vehicle. There’s just a bunch of things out there that are going to bring the selection up and the price down on EVs, which we believe will drive overall demand for EVs and thus charging going forward into the future. This down cycle is obviously putting pressure on everybody. And I think the industry is going to ultimately consolidate as a result of that. And I believe we’re in the best position to capitalize on that.

We’re the biggest company with the biggest balance sheet. We serve both North America and Europe. We’ve got a strong product portfolio spanning from home all the way up to DC Fast Charge along with all the software to manage it for every use case. So I think we’re in a great position going forward.

Chris Dendronos, Analyst, RBC Capital Markets: Got it. Thank you.

Conference Operator: Your next question comes from the line of Mark Delaney with Goldman Sachs. Please go ahead.

Mark Delaney, Analyst, Goldman Sachs: Yes. Good afternoon. Thank you for taking my questions. I was hoping first you could elaborate more on what you’re hearing from customers with respect to their project plans, in particular for North America. Rick, think you mentioned some projects are being delayed but not canceled.

Can you share more on what you think it would take for customers to move forward with those delayed projects? And then any context they’re sharing about how they’re thinking about project timing, especially with the 30C tax credits for charging stations set to go away?

Rick Wilmer, Chief Executive Officer, ChargePoint: Yes, good question. And I think there’s like we’ve got some we’re being cautious about our look forward. I think our customers are as well. They all, again, remain committed to their projects. We have literally not heard of one project cancellation.

But I think once the tax credits go away and we see what that means to EV sales, you’ll see some more decisiveness in the market regarding moving forward and hopefully not canceling or pausing. But we’re waiting for that to happen to provide some clarity. Beyond that, it is the typical stuff that causes project delays. It’s getting grid upgrades, it’s construction timelines. It’s all the things that we’ve historically seen in the past where customers that are doing big projects, particularly often have kind of best case timelines as if everything goes well.

And then a permit gets delayed, the weather disrupts the construction project and all of a sudden things are moving out. So that factor continues to persist, but it hasn’t changed much.

Mark Delaney, Analyst, Goldman Sachs: Okay. Thank you for that detail, Rick. My other question was for you, Monty, on the gross margin. Nice to see the improvement you reported this quarter. You’ve spoken in the past about the potential for the hardware gross margins to continue to improve as you work off inventory of older product and shift your mix toward the lower cost product that you’re building with contract manufacturers.

Maybe you can share more where you are in that process? And as you fully make the transition, how much do you think it could help the hardware gross margins? Thank you.

Monte Khitani, Chief Financial Officer, ChargePoint: Yes. Hi, Mark. So what we saw this quarter was hardware margins improved sequentially by a percentage point and this was because of we actually did see some products coming from Asia at lower cost. But we also saw improvement in warranty costs and we saw efficiencies in non BOM related costs, which drove the margins up. Going forward, I think those factors will continue to benefit us.

And then depending on inventory and sell through, we should start seeing the benefit of the Asia manufacturing as well.

Conference Operator: Your next question comes from the line of Mickey Legg with The Benchmark Company. Please go ahead.

Mickey Legg, Analyst, The Benchmark Company: Hey guys, thanks for taking my question. I want to dig in on the competitive landscape and how that’s evolving a little bit. Could you talk about how you view your software and the moat you’ve built around that now that peers seem to be moving a bit harder into operation and software platforms? Thanks.

Rick Wilmer, Chief Executive Officer, ChargePoint: Yes. Hi, Mickey, good question. I think we’ve got a state of the art software platform that continues to evolve and modernize. We’ve now got a hybrid cloud solution. The amount of AI that we’re integrating into the product is very interesting and exciting.

I think it’s going to unleash some real value for our customers. I also believe and know quite frankly that we can unlock all kinds of value by having our software work with our hardware. While we’re happy to have our software managed third party hardware, which we do all the time, which is oftentimes a requirement for customers, we’ll continue to do that. But we remain committed to develop hardware as well because we know that our hardware plus software our software can create more value and do things that can’t be done with just stand alone software.

Mickey Legg, Analyst, The Benchmark Company: Okay, great. That’s all for me. Thanks.

Conference Operator: Your next question comes from the line of Chris Pearce with Needham and Company. Please go ahead.

Chris Pearce, Analyst, Needham and Company: Hey, good afternoon, Rick and Monty. I was just curious, at least out in California, we’re seeing a lot of increased DC charging setups, money going into DC charging. I was curious, do you think that taking share from level two where people thought level two might have higher share in if we look back a couple of years to what people might see now? Or what are you guys doing around that? Or do you think idea behind the question is wrong?

I just kind of want get a sense of level two demand, DC charging demand, how you’re kind of fitting both those buckets and what you’re seeing?

Rick Wilmer, Chief Executive Officer, ChargePoint: We don’t see DC cannibalizing AC demand. I mean, there are different use cases. And as we’ve talked about more than once, the vast majority of charging is done at home and at work, which is typically Level two charging. On the financial side though, we are seeing a lot of interest or a reasonable amount of interest, I would say increased interest from financing partners behind DC fast charging for general public charging. We’ve had some good success with partners that we’ve found that want to work with us to deploy DC fast charging for general public.

Chris Pearce, Analyst, Needham and Company: And then if we go back to the inventory, Manzi, this one is sort of for you. Is that something you have in the inventory now? And I guess with the inventory dollars staying where they are, things but are changing under the surface. I just wanted to kind of check-in on any outsourcing risk or DCAC new product versus old product, how you kind of frame all that?

Monte Khitani, Chief Financial Officer, ChargePoint: Yes. No, I mean, we our inventory balance has variety of different products and different volumes of all the different products. And we’re managing that based on the arrival of the new products. We’re watching that closely. Again, release date of the new products and the general availability and increased volume is going to take some time and we’re kind of watching each product level with their release date and inventory balance and managing that.

But in terms of if your question is about shortage or any kind of movement needed from one product to the other or the need to kind of source more, we don’t see any of that.

Chris Pearce, Analyst, Needham and Company: Okay. Thank you for your time.

Conference Operator: Your next question comes from the line of Craig Irwin with ROTH Capital. Please go ahead.

Craig Irwin, Analyst, ROTH Capital: Good evening. Thanks for taking my questions. So cash use this quarter was really tight, right? You guys have been squeezing a lot of cash out of receivables, inventories, prepaid, I mean, payables, everything was a contribution this quarter. Can you talk about the ability to continue squeezing the balance sheet for cash?

And the new products that are launching for the end of the year, do they need a cash contribution for inventory for us to see the revenue start to ramp? Or can that be offset by continued progress bringing down balances from other products?

Monte Khitani, Chief Financial Officer, ChargePoint: Yes. Hi, Craig. So I think there may be quarterly fluctuations in cash usage. Obviously, Q2 was fantastic in terms of cash use of used less than $2,000,000 but there may be slight quarterly fluctuations depending on the timing of receivables, payables, sale of inventory, etcetera. But we do anticipate that the overall trend of declining annual cash usage will continue and it’s entirely possible that because of our capitalized business model, we might get to the point where we generate cash in a quarter before we achieve EBITDA profitability.

And we anticipate that we will particularly benefit from this when we start to bring inventory balance down. In terms of the new products, I don’t think it will impact inventory because I think the overall inventory reduction trajectory should still happen and it should release cash because obviously the inventory number as it stands now is pretty high.

Rick Wilmer, Chief Executive Officer, ChargePoint: The other comment I’ll make Craig is that the supply chain timelines or lead time is pretty balanced with the sales cycles now in many cases. So unlike the COVID days, for example, we don’t need to build far in advance of demand such that we can adhere to customer lead time requirements. We can balance that pretty effectively now.

Craig Irwin, Analyst, ROTH Capital: Understood. And if I could squeeze another one in on the gross margin side. Can you maybe talk about the commonality of parts in the new products that you’re launching? I know a lot of your products introduced to date, have had substantial commonality in the architecture and components, to drive purchasing leverage. Is there maybe a change in architecture or an evolution here?

How much do the new products benefit from the pre existing buy? And would you expect these products to potentially be margin accretive heading into the end of the year?

Rick Wilmer, Chief Executive Officer, ChargePoint: Yes. So at a part level, there’s probably not that much commonality between the old products and the new. There are some exceptions, for example, charging cables or charging cables. They don’t change very much from product to product depending on level two, level three, for example. What is common is the vendor base.

And the leverage we have with the supply base is really driven by the amount of business we concentrated into certain suppliers as opposed to specific individual parts that we buy from them that may change as we move on from product generation to product generation.

Craig Irwin, Analyst, ROTH Capital: Thank you for that. Congratulations again on the progress this quarter.

Rick Wilmer, Chief Executive Officer, ChargePoint: Thanks, Craig.

Conference Operator: Your next question comes from the line of Ryan Sings with B. Riley. Please go ahead.

Colin Rusch, Analyst, Oppenheimer: Hey guys, thanks for taking my questions. I’ll just ask a couple of follow ups on Europe. Looks like it’s almost 20% of revenue right now. I’m curious where you think Europe could go in terms of ChargePoint’s overall revenue mix over the next few years? And could you remind us if there are any material differences in terms of your economics in Europe compared to in North America?

Rick Wilmer, Chief Executive Officer, ChargePoint: The economics are a lot different. The different European countries have different regulations and requirements, which makes it a bit more complex from an inventory standpoint to make sure you have the right product for the right country, for example. But that’s fairly minor relative to the overall dynamics of the business comparing North America to Europe. We’re not guiding revenue beyond this quarter, but the fact that we’ve got hardware products going into Europe that are our products that we haven’t been able to offer previously implies that Europe will definitely be growing for us.

Colin Rusch, Analyst, Oppenheimer: Got it. Appreciate that color, Rick.

Conference Operator: Your next question comes from the line of Bill Peterson with JPMorgan. Please go ahead.

A.J. Gosselin, Director of Corporate communications, ChargePoint0: Yes. Hi, good afternoon and thanks for taking my questions. I would like to follow-up on gross margins. It’s been asked a few different ways. But just looking ahead, how should we think about steady state margins for hardware when you’re really past any sort of existing inventory and you’re on, I guess, an optimized platform?

What should that look like over the long term, I guess, a go forward basis as well as subscriptions? Think you’ve been doing some work there to optimize that part of the business as well. I’m just trying to get a sense for how we should think about steady state margins. And I guess you mentioned you’re navigating tariffs, but can you quantify the impact so we can at least understand what level of impact there is? Should we get any relief or conversely if tariffs become more, I guess, impactful?

Monte Khitani, Chief Financial Officer, ChargePoint: Hi, Bill. I’ll take that one. So I’ll start with the subscription margins. I think subscription margins should continue to improve with economies of scale and ongoing efficiencies in our support organization. Our revenue keeps growing, but we don’t have to scale costs up.

So that the improvement should continue as you said, more than 61% on a non GAAP basis this quarter. I think that trend continues. On the hardware side, again, we see products coming in from Asia, margins should get better. We saw improvement in warranty costs, other efficiencies and non bond costs, of that could help. However, on the hardware side, the overall margin really depends on the mix of products sold, which is difficult to predict.

So it’s hard to call out an ideal state. There are a lot of moving parts there. And also overall, for margins, there is a fact of subscription revenue as a percentage of overall revenue. If that improves, obviously margins go up, but as we start selling more hardware that could impact overall margins.

Rick Wilmer, Chief Executive Officer, ChargePoint: The other comment I’ll make, Bill, is that the new products we expect to have higher baseline margin profiles than any of our existing products. We’ve been very focused on not only designing for features, functionality, broad applicability, but also for cost profiles.

Monte Khitani, Chief Financial Officer, ChargePoint: Yes. And then on the tariffs, so we have a lot of tariff mitigation already in place. We have a spread out manufacturing base across the globe, which we’re kind of leveraging to manage tariffs. It wasn’t really meaningful within this quarter. And like I said, we were able to mitigate the tariffs that we had and whatever we did incur, we actually we had improvements that kind of overcame that.

So I don’t think there is that much of an impact based on what we know today. Of course, that tariff environment changes then things could change.

A.J. Gosselin, Director of Corporate communications, ChargePoint0: Okay. Thanks for that.

Rick Wilmer, Chief Executive Officer, ChargePoint: My

Conference Operator: apologies. Please repress star one. Your next question comes from Jon Winhelm with UBS. Please go ahead.

A.J. Gosselin, Director of Corporate communications, ChargePoint1: Hi, this is Jon. Hopefully, you can hear me okay?

Colin Rusch, Analyst, Oppenheimer: Yes.

A.J. Gosselin, Director of Corporate communications, ChargePoint1: Perfect. You’ve mentioned the potential for consolidation in the industry. I was wondering if you could talk through if there’s been any early signs of that S. Or anywhere, you can sort of point to?

Appreciate it. Thanks.

Rick Wilmer, Chief Executive Officer, ChargePoint: Yes, John, I can’t talk to anything specifically, but it seems like it’s quite active. There’s a lot of interesting conversations going on.

A.J. Gosselin, Director of Corporate communications, ChargePoint1: Maybe just ask the question sort of a little bit differently. And without asking anything specific, in terms of where it would be, what would you see the advantages? So as an analyst, when we’re looking at this, taking out OpEx as a percentage of revenue, greater network scale, if you could just talk to what you think the advantage of consolidation would be? I’d really appreciate it. Yes.

Rick Wilmer, Chief Executive Officer, ChargePoint: I think it’s pretty typical after you go through a hype cycle and you end up with a lot of companies getting started during that hype cycle with what looks like an exciting fast growing market, then you get overcrowding in terms of the competitive landscape. And you’ve got people that are trying to survive and they tend to try and fight on price and they race each other to the bottom. And they end up in a situation where they just don’t have an economic model that no longer makes sense.

Chris Pearce, Analyst, Needham and Company: Perfect. Thank you.

Conference Operator: Your next question comes from the line of Ryan Pfingst with B. Riley. Please go ahead. And we have no further questions in our queue at this time. And that does conclude today’s conference call.

Thank you for your participation and you may now

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