Please stand by. We're about to begin. Ladies and gentlemen, good afternoon. My name is Beau. I'll be your conference operator for today's call. At this time, I would like to welcome everyone to the ChargePoint third quarter fiscal 2023 earnings conference call and webcast. All participant lines have been placed in listen-only mode to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. I would now like to turn the call over to Patrick Hamer, ChargePoint's Vice President of Capital Markets and Investor Relations. Patrick, please go ahead. Good afternoon and thank you for joining us on today's conference call to discuss ChargePoint's third quarter fiscal 2023 results. The call is being webcast and can be accessed on the Investors section of our website at investors.chargepoint.com. With me on today's call are Pasquale Romano, our Chief Executive Officer, and Rex Jackson, our Chief Financial Officer. This afternoon, we issued our press release announcing results for the quarter, which can also be found on the website. We'd like to remind you that during the conference call, management will be making forward-looking statements, including our fiscal fourth quarter and full fiscal year 2023 outlook. 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. 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 September 8, 2022, and our earnings release posted today on our website and filed with the SEC on Form 8-K. 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 historical periods in the investor presentation posted on the Investors section of our website. Finally, we'll be posting the transcript of this call to our investor relations website under the Quarterly Results section. With that, I'll turn it over to Pasquale. Thank you, Patrick. Thank you everyone for joining our eighth earnings call as a public company. We had another record quarter with strong growth yielding $125 million in revenue at the low end of our guidance range, up 93% year-over-year and 16% sequentially. The difference between $125 million in revenue and our guidance midpoint was largely made up of production constraints on our most mature AC product as a result of supply-driven redesign. The delay in shipping this high-margin product held our margin improvement for the quarter to 1 point. We have now shipped the shortfall and more in November. Demand again exceeded supply for the quarter, resulting in additional growth and backlog. We are on track to achieve our revenue target for the year. Rex will provide more color on revenue and particularly on gross margin in his comments. As we manage the revenue and gross margin challenges presented by supply chain constraints, logistics disruptions, and new product introductions, I'd like to comment on operating expenses. As our OpEx this year shows, we've significantly slowed our operating expense trajectory. We are managing OpEx as a key driver of turning cash flow positive in the fourth quarter of calendar 2024. Think we have made and are making the right choices in investing to achieve our market position. As we have commented previously, we have invested ahead of the market for many years. Our revenue growth has been and continues to be correlated with the availability of electric vehicles. With the continuing announcements by manufacturers of new EVs for consumers and fleets, we believe the global vehicle industry has passed the point of no return. Spending ahead of revenue has enabled us to engage across our key verticals in North America and increasingly in Europe. Our spending has enabled us to build out a broad product portfolio and core functions within the company to support those product lines in our geographies. Though we have the typical challenges ahead to scale rapidly, we expect to grow operating expenses opportunistically and thus to continue to show improved operating leverage as we've done this year. Focusing for a moment on R&D, ChargePoint believes a broad product portfolio is essential because you have to be everywhere drivers go to be relevant. We have achieved major recent releases of our highly modular Express Plus DC product line, which powers our global fleet and passenger car fast charge solutions, and introduced the CP6000, our newest commercial and AC fleet product line, expanding our capabilities in the geographies we serve. With these products in production, we expect to shift a higher percentage of R&D spend to evolutions of our platforms and to continue investments in our cloud software, which comprehensively drives our entire ecosystem for drivers, commercial station owners, fleets, and a large array of ecosystem partners. Given our pace of growth, we will of course continue our investments in sales and in our channel relationships, which combined give us industry-leading reach. A useful growth indicator in this area is the number of bookings in a quarter that exceed $1 million. Last year, we averaged one booking over $1 million per quarter. This year, we have seen steady increases in the number of bookings exceeding $1 million within a quarter, which is a reinforcing trend supporting our land and expand strategy. In the third quarter alone, we had 11 bookings to end customers of over $1 million. We continue to add customers at a rapid clip. Our consistent expansion within existing customers was over 65% of our billings for the quarter, consistent with historical trends. We now count 80% of the 2021 Fortune 50 as customers and 64% of the 2021 Fortune 500. Lastly, on investments in support of the remarkably increasing scale of the business, we will be adjusting spend proportions in favor of business systems, sales automation, customer life cycle management, support operations tools, and installer and channel partner platforms. We believe that the breadth of our product lines backed by the right systems infrastructure are significant competitive advantages. In Rex's commentary, he will address billings by vertical, I wanted to comment briefly on some of the progress in Europe and fleet, two key enablers we believe critical to ChargePoint's revenue growth outpacing North American consumer EV arrival rates. In Europe, we have been acutely supply constrained. Until the introduction of the CP6000, we did not have our own AC product for most countries. Despite the limitation, we have been winning logos at an impressive rate and are encouraged by the reception of the new solution. In fleet, the demand has been strong, the market has been vehicle limited. We are seeing impressive growth in fleet where vehicles are being delivered and in scenarios where customers are anticipating deliveries. For example, short haul and last mile billings are up over 475% year-over-year, and transit is up 180% year-on-year. Our installed base of network ports under management grew to over 210,000, a year-over-year increase of 30% and sequential increase of 6%. Of those, over 65,000 are in Europe and over 16,700 are DC fast, an increase of more than 1,000 DC fast ports quarter-over-quarter. I'll remind you that ports under management is one way to track progress in our commercial and fleet verticals, as this represents the install base generating an annual software subscription. As a reminder, we do not include home chargers for single family residences in our network port count, but we continue to see strong demand for residential. Complementing this, our roaming reach is now over 400,000 ports in North America and Europe. Combined, that's over 600,000 ports available through our platform. Rex will elaborate on guidance. In short, the breadth and scale of our business model, combined with accelerating driver demand for EVs, has allowed us to narrow our annual revenue guidance range with a higher midpoint than we gave in March and reiterated at each quarterly call. This growth is despite persistent supply chain headwinds. While these headwinds continue, we are seeing signs of freight cost decline and component shortages concentrating. Looking at some of the environmental statistics that are so critical to all of us, we estimate that our network has now fueled approximately 5 billion electric miles to date. We estimate the drivers utilizing our network have avoided approximately 200 million cumulative gallons of gasoline and over 940,000 metric tons of greenhouse gas emissions. In conclusion, we continue to focus on execution. We strongly believe we have the right products and the right business model. We are growing rapidly across our three verticals and two geographies, so we simply need to do everything bigger and better to maximize our opportunities and generate maximum returns for our shareholders. We believe that with each passing quarter, we add to the remarkable technology team, customer relationships, channels, structure, and other competitive advantages we have been building over the 15-year history of the company. Rex, take us through the financials. Thanks, Pasquale. Good afternoon, everyone. A quick reminder, excuse me, as in previous calls, my comments are non-GAAP, where we principally exclude stock-based compensation, amortization of intangible assets, and non-recurring costs related to restructuring and acquisitions. Please see our earnings release for our non-GAAP to GAAP reconciliations. For Q3, revenue was $125 million, up 93% year-on-year and 16% sequentially at the low end of our guidance range of $125 million-$135 million. As Pat mentioned, the difference between our results and the midpoint of our guidance was largely due to shipments of AC units delayed beyond quarter close, all of which shipped in November. As we have for multiple quarters running, we fundamentally ship what we could build and book more than we could ship. Though we worked down a meaningful percentage of our existing backlog during the quarter, a good thing since much of our backlog was at older and thus lower pricing, our ending backlog increased. Network charging systems revenue at $98 million, with 78% of Q3 revenue, up 105% year-over-year and 16% sequentially. Subscription revenue at $22 million, with 17% of total revenue, up 62% year-over-year and 7% sequentially. Other revenue at $6 million and 5% of total revenue increased 47% year-over-year and 56% sequentially. Our deferred revenue, which is future recurring subscription revenue principally from existing customer commitments and payments for our cloud software and Assure warranty coverages, continues to grow, finishing the quarter at $175 million, up from $168 million at the end of Q2. Turning to verticals, as you know, we report them from a billings perspective, which approximate the revenue split. Q3 billings percentages were commercial, 69%, fleet, 18%, residential, 12%, and other, 1%, representing a slight shift in favor of fleet. Residential contribution was strong, but on a percentage basis was impacted by supply shortages. From a geographic perspective, North America Q3 revenue was 86% and Europe was 14%. In the third quarter, Europe delivered $17 million in revenue and grew 145% year-over-year. Europe revenue was essentially flat sequentially due to product availability, but from a bookings and backlog perspective, Europe had a record quarter. Turning to gross margin. Non-GAAP gross margin for Q3 was 20%, up a percentage point from Q2's 19%. ASPs in the quarter improved. We saw about half of the June price increase flow through in Q3 as we continued to work off backlog generated prior to the price increase. That impact was partially offset by $7 million, or 5 points, of purchase price variances and elevated logistics costs. The margin impact of a heavier DC mix due to AC supply shortages and $3 million or 2 points in product transition charges. Non-GAAP operating expenses for Q3 were $79 million, a year-on-year increase of 26% and down 1% from Q2. We are pleased to see OpEx as a percentage of revenue drop from over 100% in Q1 to 74% in the second quarter and to 63% in the third quarter. This progression is a critical component of the combination of revenue growth, margin expansion and OpEx leverage improvement necessary to reach our stated goal of generating free cash flow by the fourth quarter of calendar 2024. We do not expect OpEx to drop in dollar terms as we go forward. Expect leverage to continue to improve, especially given that we have now released a number of core products that have taken years to develop. Stock-based compensation in Q3 was $26 million, essentially flat from Q2. Recall our stock-based compensation typically stairsteps each Q2 due to the timing of annual grants to our employees. Looking at cash, we finished the quarter with $398 million in cash and short-term investments. We had approximately 342 million shares outstanding as of October 31, 2022. Turning to guidance. For the fourth quarter of fiscal 2023, we expect revenue to be $160 million-$170 million, up 108% year-on-year and up 32% sequentially at the midpoint. This translates to annual revenue guidance of $475 million-$485 million, slightly above the midpoint we've had all year and doubling year-on-year. For the fourth quarter, we expect non-GAAP gross margin to again improve sequentially, but for the year to be below the 22%-26% range we previously targeted. With our continued focus on OpEx, we are lowering our annual guidance for non-GAAP operating expenses to $325 million-$335 million, down from our prior guidance of the lower end of $350 million-$370 million. With that, I will turn the call back to the operator for questions. Thank you very much. Ladies and gentlemen, at this time, any questions, simply press star one, and if you find that your question has already been addressed, you can remove yourself from the queue by pressing star one again. We'll take our first question this afternoon from James West of Evercore ISI. Hey, good afternoon, guys. Hey, James. Hey, James. Hey, Pat, on the fleet side of the business, which obviously is a huge opportunity, I know we're still a bit vehicle constrained, but every kind of quarter we get closer to that constraint coming down. Are you starting to see, you know, urgency building within your customer base, as we get closer to this kind of unleashing of vehicles on the market? I mean, the urgency has been there. I don't see a change in urgency because I mean, I think there's been a lot of pent-up demand for vehicles because they just pencil. Right ... what you are seeing, I'll just draw your attention to a couple of comments that I made. Large growth rates year-on-year in both the kind of mid-size logistics, short haul vehicles, 'cause you're starting to see more supply come online. You're also seeing what is a disproportionately mature transit industry, so effectively buses. Right ... where because there are plenty of manufacturers that have, mature, you know, maturing products, you know, products that have actually seen more than one generation. You're seeing that growth rate as well. We expect this to, that trend to manifest the minute vehicle availability, you know, kind of percolates through all the other sub verticals. Okay. Okay, that's helpful. On the production constraints, or logistics and supply chain constraints that you guys are still experiencing, are those easing at this point, or are they similar to maybe last quarter? I, you know, had some specific comments in my remarks on that. The components that are, you know, continuing to be on the problem list are narrowing. The list is narrowing, and I made a similar comment in answer to a question, I believe, last earnings- Right Q&A. That's continuing. The freight and logistics, we got headlights into that starting to normalize. That's, that's moving in the right direction for sure. Just to kind of a little bit more color on, you know, kind of what held us up a bit this quarter, you know, on the revenue side, we made a supply-driven design update effectively of one of our AC platforms that was planned. As a result of components coming in a bit late and a very complicated, you know, transition in a, what is a, you know, kind of mature product in the factory, just didn't get it all built in time. We, as Rex pointed out in his comments, I think I made them in mine as well, we cleared all that and shipped it. We just, you know, shipped it on the wrong side of the quarter boundary. That's all, you know, that stuff's all out and we're continuing to build now in the factory. Okay. On that product. Thanks, Pat. Perfect. Thanks, Pat. Thank you. Just a reminder, ladies and gentlemen, please press star one for any questions. We'll go next now to Matt Summerville of D.A. Davidson. Thanks. A couple questions. I want to put just a finer point on the supply chain side of things. In an unconstrained supply chain environment, what would revenue have looked like in Q3, and what could it look like in Q4? That's a good question, but one I can't directly answer. You know, we've been building backlog, as we've said, at a rapid rate this year. You know, I think the only I could say is it would be substantially higher, you know? But I just can't give that out. Anyway, the other thing I was thinking is in listening to the questions from James West and how we're handling things, you know, we have supply chain constraints, but our growth rate is fairly astounding. I think we're banging through this pretty well. Then I would expect from a backlog burn off perspective next year for that to be a nice boost to or maybe a boost or a sustainer of growth rates, right? It'll help us get, you know, keep the engine running. You know, I don't know how fast it'll burn off, but I don't see this being, you know, brutish. You know, to your point, Rex, in your prepared remarks, you called out $7 million in purchase price variance. Yeah ... in product transition costs. How much of that goes away, outright goes away in Q4? How much lingers into Q4? When will you be 100% receiving 100% of the benefit from the pricing actions you've taken? Will that be in Q4, or will that not be until Q1 of next year? Thank you. If you're, if you're focusing on the price increase, as we said, we got about half of it in Q3. I would expect to get most of it, most of the rest in Q4. It's really dependent on how fast we burn the backlog off, and there are different components of the backlog, and some stuff will ship, some stuff won't. I would expect us to be, you know, hitting 100% by Q1. I'd be surprised if that didn't happen. In terms of the variances and whatnot, as Pat mentioned just a moment ago, the logistics, the logistics side of the house is turning around pretty well. I think logistics have pretty well normalized and look a lot like they should going forward, so I would expect a benefit there. As far as the PPV, it's more isolated and it used to be pretty much across everything, and now it's more isolated components and I would see that coming down nicely over the next couple quarters. Can't forecast when it goes away entirely, but I do think it would be on a downward trajectory, maybe not in Q4 'cause a lot of things are baked in, but certainly as we go into next year. One thing you should know, in terms of getting to 100% on price increases, you know, make sure you understand where they apply. They apply mostly to North America, hardware in North America. We did a price increase on software earlier last year, and if you're doing a model, it'll apply when we get to 100%, it won't be 100% 'cause we have contracts with major customers that won't let us do that everywhere. The impact is certainly meaningful and positive as we saw in Q3 and expect to see in Q4. Got it. Thank you. We go next now to Bill Peterson of JP Morgan. Yeah. Hi. Thanks for taking my questions. I guess as we look into next year, you know, thanks for the color on how you're prioritizing OpEx. I guess what opportunities are you expecting to show the most growth and thus where are you trying to, you know, prioritize your OpEx? I mean, if you could stack rank between things like fleet or commercial, you know, work, some of the applications. Where are you really focusing the resources as we look into next year? I mean, we're, you know, we're continuing to focus in a balanced way across all the verticals, and we'll continue to do so. We're not gonna overweigh one. We'll, you know, make the necessary operating expense expansion on the sales and marketing side, as, you know, kind of demand dictates essentially by subvertical. It's just how historically we've performed. We haven't steered it unnaturally in any, in any one given direction. I wanna just make sure that we reinforce a point in that I was making in my prepared remarks in that when we, you know, decided to, you know, really, escalate our spend rate relative to where the market was, this was, you know, even before we went public, that was essentially to intersect with the, growth models that we had put together for EV install base effectively. The reason that things have leveled off quite a bit, with respect to OpEx expansion, and as Rex mentioned, it doesn't mean it's gonna go down, it's just we're controlling that trajectory now, is because we've built out most of the functions substantively necessary to support the verticals and the geographies. There'll be continued investments as we flesh things out and as certain verticals unwind from, vehicle shortages. I don't expect us to, you know, unnaturally overweight anything and leave another vertical uncovered. That's just not how we've operated historically. Okay. Thanks for that color. For my second question, I'd like to ask, you know, where service attach rates are trending. Like, where is it today? What has been the trend? Has it sustained as a percentage of installed base? Has it gone up? Obviously, there's a lot of new EV drivers out there, and that could also kind of create friction when service networks don't work properly. What is the team doing to, I guess, to try to drive that higher, you know, as we look ahead? I just want to clarify that. When you're referring to, you mean our Assure programs, our effective... Assure program, yeah. ... our maintenance and support programs. Okay. Rex, why don't you take that, Rex? Yeah. Just to make sure I'm referring to the right thing. Certainly, from a software perspective, which is one of the things we supply that have a call service, attach rates are always 100% out of the gate. Our renewal rates have been very solid. We've said on multiple calls that, you know, our loss rate there is extremely low. As far as our Assure warranty program, we put a lot of energy into increasing the attach rates on that over the last couple of years. They're healthy. They're not 100%, but they're very healthy, and they're not trending down. They're trending slightly up, and we would expect that to continue. Big swing on that is, there are some customers who can't buy it because they wanna self-serve, and then obviously, we have to work successfully with our extensive channel network to drive Assure through that, and we're working on that steadily. Assure is in a great place. We haven't seen any downward trends on either. Okay. Thanks for that. Yep. Thank you. We go next now to Gabe Daoud at Cowen. Thanks. Good afternoon, everybody. Thanks for all the prepared remarks. Pasquale, you talked about demand trends and you know, you talked about fleet, particularly in Europe. I was just curious if you can maybe talk a little bit about commercial, and within commercial, what's maybe what you're seeing there. What's the largest source of demand, I guess, at this point within that channel? Also- Yeah ... just mix shifts... Sorry, Pasquale. Just mix shifts on a product basis. Like, should we expect you over time that DC will continue to grow, particularly as the NEVI program kicks off? Sorry, I know there's a lot in there, but... There's a lot to unpack there, Gabe. Let's see if we can take them in order. The first one regarding hot or cold spots in commercial. I'll shorthand your question that way. You know, we're not, you know, we've been serving literally every type of parking lot and every type of business since, you know, for the foreseeable history of the, you know, company. There's no major hot or cold spots in that. You know, as Rex has mentioned, I think on a few earnings calls, you know, the workplace component, while it's, it's there and continues to be vibrant, is muted a little bit relative to what it would be if people were in the office five days a week, 100%, you know, 100% of the, you know, previous workforce that was in office have returned to office. That's largely offset by the growth rate of EVs in the installed base of cars. We just kind of view that as a delay in workplace. You know, even relative to the previous answer that I gave to one of the questions today, it stresses why you have to be everywhere drivers go. You lose your network effect if you're not everywhere and in every parking lot that they may encounter a charger. We lose our network effect advantage to businesses if we were to see a focus on one sub-vertical versus another. That's why we don't do it. Most importantly, when we see unforeseen macro trends that'll change traffic patterns and driving patterns, if you're in every vertical, you're a bit insulated from that. That's, you know... You've seen us, you know, despite a lot of supply chain constraints, et cetera, effectively doubling the business. You know, that is largely due to the fact that we're a bit insulated from mix shifts due to grant programs, things like that. Because as things bubble up in one vertical and maybe bubble down in another, the puts offsets the takes, and you wind up having a fairly predictable, steady, and healthy growth rate. That tacks into the NEVI program. I wanna make one quick comment. We don't see a mix shift in port count to DC. From an ASP perspective, it's so much higher on an ASP basis. That's why you see it outsized from a percent of revenue relative to the port count percentage it represents. If you look at the active ports under management, which is a reasonable view because we do represent, you know, a network that is in, you know, virtually every use case a driver might encounter publicly, you'll see a fairly steady port percentage of DC. Specifically with NEVI, you may see some pull forward there. You may see some. I'll remind you that in the inner years, because it is a five-year program. In the inner years, that'll be a bigger percentage of the overall DC requirement in the United States. In the outer years, because the amount of grant money per quarter there is constant, but the market will be so much bigger, it will get more diluted. It will still do its job, but it will get more diluted. I'll also remind you that we're operating in two geographies, and that phenomena does not exist in Europe. As fleet unwinds, from a vehicle supply perspective, that'll start to build. One of the biggest shortages in vehicle supply and fleet is light commercial fleet. As light commercial fleet starts to come up the chain, that'll move around ASPs a bit in the fleet segment. Right now, fleet is very heavily DC-oriented because so much of it is transit and mid-size trucking, et cetera. You know, hard to call the fleet impact on this whole thing. Again, the DC mix is much more of an ASP ratio problem, or not problem, but phenomena than it is a port count shift or a demand shift. I'll remind you that regardless of port, there's a recurring software license attached to it. Yep. Got it. Got it. Okay. That's really helpful. Thanks, Pasquale. Sorry again for all the multiple questions within one. I'll just quickly follow up with one last one on the supply chain front. Could you just talk about what some of the component shortages are at this point? I know last year was maybe more of a whack-a-mole. Maybe this year it's just more of a chip issue. Just any call around that, and then, you know, if you look into your crystal ball, like when you think this all kind of eases. Thanks, guys. Well, one of the Gabe, one of the things I've learned over my career is, using a crystal ball is probably not a great way to run a business, when something is driving the financials as hard as supply chain is. I can't, you know, life has more imagination than we do, so I don't know what the hell is gonna happen in the macro that could potentially stop the recovery that's happening on the supply chain side, but something could happen that's unforeseen, so it's just too difficult to call. We are seeing, as we've reported now for several quarters, a concentration on the material side that is concentrated largely in ICs. In the long term, if, it's a big if, the macro starts to significantly pull back demand for consumer electronics that use common ICs that would be prevalent in chargers, we would see that segment of the IC shortages clear up substantially. We do see some of that now. Hard to call how long it's gonna take to fully, you know, kind of fully relieve itself there. Then in the long term, we expect that power semiconductors will likely continue to be in demand because they're used across the energy transition. We're gonna have to be very strategic with respect to power semis and how we manage that in our supply chain. Obviously, because I just said that, you know that that's something that our supply chain team is working on continuously. That's nothing new. That's known in the industry for quite a long time. That's sort of how it naturally funnels down. Again, you know, anything can happen in the macro, as we all know, so we are trying to be exceedingly careful. I think we've done a good job really building a lot of product and supporting the growth of the company in what is a situation I've never seen before in my entire 30 some odd year career of building products. You know, we're welcoming a relaxation of these trends. Thanks, Pasquale. Great color. Thank you. Thank you. The next now to Colin Rusch of Oppenheimer. Thanks so much. Pat, g iven the diversity of requirements across geographies, could you talk a little bit about what you're seeing on the standards development side and the potential to move increasingly towards standard hardware with dynamically configurable software, you know, from a single SKU potentially? Yeah, I mean, look, the Fast Charge product line that we've been kind of grooming and expanding, that is a product line it ships everywhere now. It may, because everything has been designed to be fairly Lego block, whether we have a European standard cable or a U.S. standard cable attached, it doesn't change the fundamental electronics of the core or the software. The software just wakes up and understands what it's in and what country it's in, it just does the right stuff then makes sure that everything is set up in accordance of all the local guidelines and local standards, because the hardware remains configurable in that dimension. We launched the CP6000, that's up and running and in manufacturing and shipping now. That one there is a global AC platform, so it can do the entire power range as well as single or three-phase. It does all the metering required for the entire world that we can see from a meter standards perspective. We're systematically going through all the incremental certification processes to cover the globe there. We haven't gotten through 100% of everything in every corner of the markets that we serve, but, you know, we're making steady progress, and that'll wrap up in the not too distant future. It is possible to build something. I'll point to a specific example. You know, it's completely modular with respect to whether it's socketed or cable attached. Some European countries require socketed in some scenarios where the driver brings their own cable. You can dynamically change a unit from socketed to cable attached, and you can meet all of the shuttered or not socket requirements all over Europe with the same platform. Again, from a manufacturing velocity standpoint and ability to deal with demand, instantaneous kind of mix issues which always happen, like the long-term trends we can predict pretty well. Instantaneously, within a quarter, especially as you get close to the end, you could get, you know, deals that come in that move things around locally really quickly. It's nice having the ability to have a product that is built that way because you can satisfy demand from what is a manageable number of sub-assemblies and inventory. That's why we do it that way. Perfect. That's super helpful. Then, I guess the second question is really around the advantages of slowing some of the growth. You know, you guys have done a very admirable job of growing the team as actively as you have. With some of that growth slowing and, you know, the ability to have a more cohesive, integrated team, can you talk about some of the efficiencies you're expecting to get and what you're seeing from a, you know, cultural perspective, as you start to see this group get a little bit closer and get some incremental leverage from an operating perspective? You know, I think there's two big, two big things to highlight that may or may not come to mind immediately when people listen to your question. We had to go through two acquisitions and integrate them, and I couldn't be happier with how the teams have come together in both those acquisitions. They're fully integrated. Many of the folks that came in from the acquisitions have senior positions within technical and other, and sales leadership within ChargePoint. It was a really great add from a talent perspective. We've kind of culturally we've learned a lot from those folks, and they've, I think, you know, learned a lot from us, and together I think we're better than we were before all three of those companies came together on the technical side and on the sales side, so we're really happy with that. I think the bigger impact is how many people we've added since COVID, because that forced us into a remote environment like any other company for so many years. If you look at how many, you know, if you look at the historical headcount of the company, kind of pre-COVID and then, you know, we were still private, right? Going public and now being public for nearly two years, we two years in March. Most of our workforce, not most, but a substantial percentage of our workforce that has been hired since COVID have not had the benefit of a great amount of personal interaction just because it's been constrained. Now that's coming back, and we're doing a lot of things to make sure we actively get people collaborating and being very careful, by the way, to make sure that we embrace the flexibility that today's workforce sort of demands. We're, you know, we're trying to make sure that we don't culturally slow down the integration, but that we also don't throw cold water on people's expectations of a slightly more flexible work environment. I think we've managed it incredibly well. You know, feedback, you know, we've gotten is people are adapting, and they're coming back together, now since, you know, the restrictions have lifted. Culturally, it's gelling really well. We're also looking internally, because of all the shifts to now we know what this looks like at scale, so now we know what to invest in from customer onboarding tools and automation, sales force automation, business process re-engineering internally to support what, you know... You know, you think you know what it's gonna look like, and then you really know what it's gonna look like when it's upon you. There's a ton of that stuff going on cross-functionally inside the company. You know, I think it's going about as well as it can, which doesn't mean it's going bad. It's going actually quite well. It'll take time to come to complete fruition 'cause we're also trying to run a business while we're doing that, but I'm very happy with how the team has come together. Thank you. Ladies and gentlemen, just a reminder, we ask that you please limit yourself to one question. We'll go next now to Craig Irwin at ROTH Capital. Good evening and thank you for taking my question. Pasquale, I share your preference for performance indicators over fortune telling with a crystal ball. That being said, you have the largest business development team in the industry and have a very interesting way of managing that team, making them compete for resources. Can you maybe update us, you were appropriately conservative on the funding from the infrastructure bill and, you know, said that this is really gonna be a 2023 benefit. Can you maybe update us on what you see as a potential timeline for different states to disperse that money in a meaningful way? You know, is there anything else maybe that you're more optimistic about in the, in the short to medium term, that might have a bigger impact on the overall levels of market activity? Well, I mean, I don't think we have a shortage of market activity. I'm not trying to be glib. I'm, you know, the... With respect to NEVI, I'm not disappointed. As you mentioned, we've been very consistent. We didn't expect anything to happen before 2023. If you wanna update, as you asked, I expect something to happen in the front half of the year, but not a lot. There'll be some things that happen in the front half of the year for sure, on NEVI. It'll grow. It won't, it won't be a cliff, but it'll grow through the year, and I think you'll start to see quite a bit of activity in the back half of the year in 2023. That's if things continue on the current trend. I mean, you know, that's our current visibility. I'll also point out that we don't engineer things like that into our models specifically as we're managing the company because we like to be conservative with respect to the dynamics that can happen that slow programs like that down. I mean, you're dealing with governments and, you know, it just moves at the pace of government. If you're in our position and you're betting on something on an optimistic side, or you're betting on something at all until it materializes, it really undermines your ability to be predictable. As a public company, it's a bit reckless. When we start to see it ramp and we start to see what our win rate will be, we will, you know, we'll be able to make further comments. Thank you. We go next now to Alex Vrabel at Bank of America. Hey, guys. Thanks for having me on. just one other one for me, and I'm just curious if you can comment. I know it's relatively fresh, but just on this NEVI news that came out today, just curious if you can kind of clarify how you guys are positioned around that, you know, what you expect. I know the details are very fresh, but just curious anything you can offer at this point. You know, I haven't had a chance given that we've been a bit preoccupied with the goings-on of this call today to really circle with our Clean Fuels Program people here to get a full impact statement. What I can say is that the current LCFS program credits that we take advantage of or the proportions that we can take advantage of that we share with certain customers, that's in the other line on the revenue line. Where NEVI will show up for us will be in that line if we can take advantage in the scenarios where we can take advantage of it. I'll remind you that we are not a station owner in general. There are occasions we are, but it's not material to our business model. We have to really analyze the scenarios and where those credits go, whether, you know, what percentage are gonna go to us, what that will look like in the long term, and how much we'll administer on behalf of our customers but largely benefit our station owner customers. Too early to give you a full answer. If you look at the other line, you'll get a pretty good indicator of what LCFS has done. Thank you. We go next now to Steven Fox of Fox Advisors. Hi, good afternoon. Just had a couple quick questions on gross margins. One, you mentioned how your, you know, some of your backlog's still on old pricing versus new pricing. What's the difference in sort of the expected margin on the backlog that's sort of more favorable versus less favorable? I'm just wanna make sure I'm clear on the gross margins going forward. With the full year guidance, are you implying that the gross margins for Q4 might be down from Q3 or just that you're gonna be below the full year guidance? Thanks. Let me take the second one first. What we expect to have happen is contingent sequential improvement. If you look at the year so far, we've gone 17, 19, 20. For Q4, we think we will improve on 20, given mix and the other things that we have to wrestle with on PPV and that sort of thing. It's getting hard to put ranges on it, but we definitely see that going up in Q4. We did want to let people know in being transparent that the 22 to 26, which we thought we could get to, is not mathematically likely, so we're taking that off the table. We do expect to get better Q3 to Q4. As far as the backlog is concerned, we, you know, we burn off a significant amount of backlog every quarter, so it's reloading. We did our price increases in June. As you can imagine, that takes a while to work through the system in terms of, you know, you got a bunch of quotes out there. When you're doing new quotes, then you put the new pricing in. It takes a while for that to go through the system. It'll only apply to hardware in North America, keep that in mind. We're rolling through the older commitments, and as I said earlier, I think we'll probably bang through the older pricing, over the next couple of quarters, Q4, Q1, so that we'll be fully on the new pricing. In terms of how the margins improve there, you know, we haven't given out a figure on what the price increase level was, but it was significant, right? It will have a very, very nice impact on margins when we roll that through, increasingly through the next six months. Thank you. We go next now to Maheep Mandloi at Credit Suisse. Hey, thanks for taking the question. Just clarifying the previous comments that talked about transitioning to new pricing over the next six months or the next two quarters, so by Q2 of next fiscal year. Second question just on OpEx. How should we think about that? You were able to reduce it a little bit for this year. Going forward, should we expect somewhat flattish at these levels or obviously slower growth than revenue growth, but just any clarifications or clarity on that would be appreciated. Thanks. Yeah. On, on the, on the pricing front, again, if you think about you announce a price increase, you got to get it out to the channel, you got to get it out to sales. It impacts only new deals that are not, you know, already quoted. You have to get those deals closed. As you know, we've been building backlog all year, so then you got to cycle it through your backlog. It takes. You do a June price increase, to fully see that roll through, you're looking at nine months at a minimum, just the way it works, right? Good news is we're, you know, four months through, and so we're well on our way, and we did see some nice impact from that in the third quarter. I think we just have to be patient there as that works its way through the system over the next several months. As far as operating expense trajectory is concerned, I think if you look at our OpEx for Qs one, two, and three on a non-GAAP basis, which I would encourage you to do, even though we all love GAAP, that you'll get to see, you know, the actual trajectory of the company. It, you know, it's been very steady this year. That's very purposeful. There's some. The nice thing is we look forward, our new product introduction expenses that hit OpEx, many of which were in this past year, will be substantially reduced. We're gonna be intelligent on hiring. As I said in my prepared remarks, I do think OpEx will go up, but I think it's gonna go up in a very, very measured way in the near term and at a substantially reduced rate relative to our revenue increase. Frankly, if you were to look back two years ago and go, "What was the OpEx rate of increase percentage-wise?" I would expect us to be below that. The rate of increase is gonna go down. Thank you. We go next now to Shreyas Patil at Wolfe Research. Great. Thanks so much for taking my question. I just wanted to maybe come back to the margin and just as we're thinking about, you know, the prior guide, I think, you know, was indicating somewhere around 25% or 26% for the back half. It sounds like it's gonna be, you know, more like in the low 20s now. I understand some of that is related to, you know, some of the ongoing supply chain issues. Maybe can you help us reconcile, you know, the missing pieces there that's kind of resulting in the margin softness? Yeah. So number-- If you go through our last, two calls and this one, what you'll see is, that the PPV/logistics side of the house. We had some separate charges this quarter. Then twice we've had, you know, stuff not get out the... get out of the dock, from an AC, which is a higher margin product perspective. You know, there's, there have been 6 to 8, even 9 points in each quarter, that doesn't have anything to do with our business model, doesn't have anything to do with our products, doesn't have anything to do. Well, it may be a little bit with mix, but not really. It's sort of, points lost on the shop floor. Our, our thoughts in trying to recover to get to our annual guidance coming out of Q2, and guiding to the low end of that range was dependent upon some of that stuff cleared up. As luck would have it, as we said, Q3 was another quarter where we just couldn't get enough product out, especially from an AC perspective. When we look at that going forward, it's a pretty simple question of when the external environment eases so that we get those points back, that's a pretty easy fix. We have, I think we've I know we've announced our new head of operations. We're attacking the OpEx side of the house both from a scaling perspective and a cost reduction perspective with a vengeance. I think there's cause to look forward with gross margin and go, "I see how this can improve." We know the recipe. We've got to get it out of the kitchen. Thank you. We go next now to David Kelley of Jefferies. Hi, this is Gavin Kennedy on for David Kelley. Thanks for taking my question. One of your competitors called out installation issues with DC fast chargers, which stemmed from both labor shortages and transformer supply chain constraints. Is that something that your team has seen? If so, any thoughts on the magnitude and timetable of that disruption? You know, whenever you're doing construction, especially when it involves electrical upgrades, things take. You know, you're into construction permitting and utility interconnect, so things take a while. I'll point you. The easiest way I can kind of help you understand it from our perspective anyway, is we added over 1,000 DC fast charger ports to our active ports under management count. That means those products they were sold through in the past, went through site design, construction, permitting, all the usual stuff, utility interconnect, and were activated. It gives you a flavor for the fact that if you have a pipeline, a proper pipeline, the delays essentially pipeline away. The delays aren't there everywhere. They're there for certain, you know, literally certain physical locations where the electrical, the utility infrastructure at those particular locations may require an upgrade to deal with the power levels that are required for that use case at that site. We do see some hotspots, but again, the business is very broad here, and we have a continuous engagement pipeline that's feeding the top of the funnel. In this quarter alone, you're seeing that 1,000 come out, which is a pretty big number. I, you know, I just think as long as you're feeding the top of the funnel, a business like ours, and also because of our diversity of the verticals we're in and geographies, it's a bit more muted for us. Thank you. We take our next question now from Itay Michaeli at Citi. Great. Thanks. Good evening, everyone. Just one quick question on the subscription gross margin. I think it kinda came in at below 40% in the quarter, kinda like flat from last quarter. How do we think about that going forward? Is there any price increases being implemented there? Just kinda curious on the puts and takes in the quarter and the forward outlook. It's funny, I'm so mired in non-GAAP, I'm kinda surprised by the question. It's a fair question from a GAAP perspective. On a non-GAAP basis, our subscription margin actually moved up nicely in Q3. To the extent that it's, if you go to GAAP, you know, obviously we're growing as a team. We're investing heavily, frankly, doing some pre-investing in that space, just because we see good customer support as a huge differentiator for the company and the way you win. Obviously those people live in that line item and the costs are allocated accordingly. Net-net, our subscription gross margin went north and, frankly, we're putting a lot of energy in to make sure that continues. Thank you. We go next now to Mark Delaney of Goldman Sachs. Yes, good afternoon. Thanks very much for taking the question. When you think about the pricing and what that means for margins, do you think you need to do another round of price increases in order to reach your longer term margin targets? Do you feel with the pricing you've already done and some potential for some of these other impacts to perhaps ease like supply chain that you can get there with the pricing you've done, or do you gonna do any other rounds of increases? Sorry, I didn't catch the tail end of the question due to the reception, on the basic question of are we anticipating further price increases, I think the answer to that is TBD with a shading in the direction of not in the near term. Because we just did, we did one early last calendar year, then we did another one that was larger, but very North America hardware solution specific in June. We're seeing the impact of that begin to roll through. We're at, you know, we've seen about half of it in Q3, and we'd like to see the rest of it in Q4 and Q1. We think that'll have a beneficial effect on our gross margins. Beyond that, we've got a lot of operational improvements that we're doing with the PPV, and the PPV and logistics situations ease. I think we can get where we need to be through more traditional means, right? Of just improving our costs and improving our expenses, et cetera, versus going for, you know, further price increases. I mean, we do like most software companies, we do have an automatic increase situation on software. There's a built-in escalator there. In terms of broad-based price increases, I don't see one on the table in the near term. Thank you. That concludes our question-and-answer session this afternoon. Mr. Romano, I'll hand things back to you for any closing comments. Well, I just wanted to say, you know, first of all, thank you for everyone, for the thoughtful questions. Appreciate it very much. Wanna reiterate my usual thanks for our team here at ChargePoint that had to work very hard to pull off the quarterly results. I know they're all very proud of their accomplishments and are looking forward to not only wrapping the year up in Q4, but to the road ahead in 2023 for us. I think it's really, as I said in my remarks, you know, the number of makes and models across the board in both passenger cars and the fleet segment really, it's a really stark difference than it has been even a year ago in terms of availability. As those things reach some reasonable level of manufacturing maturity, I think we'll all be very pleasantly surprised with the pace of adoption and relative to the install base in this market. We're very, very excited about the future. Again, thank you all. We will see you at our last earnings call of the year next time. We'll sign off for now. Goodbye. Thank you, Mr. Romano. Ladies and gentlemen, that will conclude ChargePoint's third quarter fiscal 2023 earnings conference call. I'd like to thank you all so much for joining us and wish you all a great evening. Goodbye.