Good afternoon, everybody. This is day one of the JP Morgan Natural Resources Conference. My name's Mark Strouse. I cover clean energy and power infrastructure here at JP Morgan. This next session is with ChargePoint. Very happy to have Rick Wilmer, President and CEO, and Mansi Khetani, CFO. Welcome. Thank you very much for joining. Thanks, Mark. Thank you. Maybe, Rick, if I can just start off. Maybe just for folks that are less familiar in the audience, just give us a quick intro on what ChargePoint's all about. ChargePoint is one of the largest EV infrastructure providers in the world. We serve all the different sub-markets within the EV space, including home charging, commercial charging, and fleet charging, with our geographic focus being here in North America and in Europe. Very nice. Okay. Let's see. I think you've now delivered three consecutive quarters of year-over-year revenue growth. Can you just talk about what's giving you confidence that this is durable? What are the biggest risks that you see sustaining that momentum through the back half of the year? Yeah. I think we've turned a corner. The industry went through a pretty significant down cycle when I think the public realized it would be harder to switch to EVs from a driver behavior standpoint than originally anticipated, and some of the auto OEMs didn't get the right product into the market. Tesla had addressed the market, obviously, much earlier than the traditional OEMs and really targeted the affluent buyer that was climate conscious. That was a fairly saturated market, so when the traditional OEMs came out with the vehicles that attacked the same market, the transition just didn't happen. When we elected the current administration and all the government incentives and/or penalties to transition to clean energy went away, that was a second blow. The worst of it is definitely behind us, and what's happening now is that free market forces are starting to drive the market because a lot of the government incentives, at least here in North America, are gone. What's most fundamental to that is that EVs, I think a lot of people are realizing, are just a better product than a gas car. Completely biased as 100% EV family, but the cost to operate is so much lower, and that gap has only increased as the price of gas has gone up as a result of the Iran conflict. The driving experience is better. I've had my current vehicle for well over two years and never taken it for service. For us at work, we provide free charging as amenity for our employees, so I haven't paid for fuel in years either. It's a superior product, I think the general public is starting to recognize that. What's helping in that regard is, one, the penetration of EVs continues to increase, albeit gradually here in North America compared to Europe. You've got a lot of EVs that were leased that are coming into the market as used cars. You've got now cars at price parity with an equivalent gas car with the same mileage. You no longer have a premium to get into an EV if you're going into an EV that's coming off lease as a used vehicle. You also have a lot of compelling EVs coming into the market now that a lot of the non-Tesla OEMs have learned their lesson about what the market wants in terms of a vehicle. Ford's announced a new low-cost truck platform. Pictures are starting to show up online. You've got a startup called Slate, funded by Jeff Bezos, that's bringing a sub-$25,000 small pickup truck to the American market. A bunch of the Asian OEMs are bringing in some pretty compelling vehicles under $40,000. If you're a two-car family and you want to go EV, you're typically going to do that for your daily driver, where you don't have to charge on the road. You can charge at home or charge at work. Now you've got vehicles that are addressing that use case. I'm optimistic that things are turning around in North America from a vehicle adoption standpoint. What we're seeing on the fleet side is that's a purely TCO-driven story, where if I can deliver goods or people less expensively with an electric fleet than with a gas-powered fleet, I'm going to switch to electric. We've seen the availability of vehicles in the fleet space improving. Again, to the high cost of liquid fuel, the TCO model continues to tip in the favor of EV. We've also got technology that we've developed ourselves that's going to help that equation. If you look at the TCO model for a fleet, it's driven by the cost of the vehicles, the cost of the infrastructure to charge them, the cost of the fuel to operate them. We are at a point where I think the equation is now clearly tipping in favor of electrified delivery vehicles. In Europe, it's a bit of a different story. You didn't have the turmoil that we had here with the administration change and all the changes to the EPA rules around tailpipe emissions or tax incentives for charging our electric vehicles. Europe has stayed pretty steadfast in their commitment to mitigating climate change. I think, again, their lack of fossil fuels and the Iran war conflict has only strengthened their commitment and their urgency to go all electric because they're not energy independent, and they're not going to get that, to energy independence, without a clean source of energy. In Europe, we're seeing a very healthy macro environment and a stronger growth profile in Europe. I'm very excited about a bunch of the new products that we're putting into the market that were built to be global products, not specifically for just North America or just Europe. We may get to talk about our new DC fast charger here later in the talk, but that product is the first DC product, for example, we're bringing to Europe. Early indications are very positive that that's going to be a winning product in Europe. Let's go there. Express Solo. The early access units are fully committed. How should we think about the production ramp timeline, your initial volume contribution to revenue, and the margin profile relative to your legacy DC products? Let me start off with what the product is. This is a new DC fast charger with a different architecture than every DC fast charger that's been out so far. It changes the architecture in a way that's extremely beneficial in two ways. Number one, it reduces the cost of the product. To the question mark about why is this going to be different than our prior products from a margin perspective, it's because the architecture drives lower cost. If you think about a DC charger, one of the key metrics is how much power does it deliver. This is a 600 kW DC box. The cost per watt on this box is very, very competitive and lower than anything we've ever done in the past. We would expect to generate much better margins on a product like this than we have with our products historically. Okay. Back to the architectural difference. I don't want to go too technical here, but if you think about the grid, the grid is AC. It's alternating current. That's what's in your house, that's what's in your workplace, that's what's everywhere. A car wants DC, direct current. When you plug a charger into the grid, you're taking the alternating current and converting it to DC, right? When you hear about solar and inverters and micro inverters, that's exactly what they do. They're taking solar energy that's DC and converting it to the AC that your house needs. We're going the opposite direction. We're taking the AC and converting it to DC, which is what the car needs. You convert that DC voltage to the DC voltage that the car wants so it can charge in the most efficient way possible. That is a lot of expensive power electronics to do all that conversion. We have architected it in a way where we minimize the amount of power electronics, and we pack it together in a very dense footprint, and it allows us, for example, to integrate clean energy sources like solar or battery energy storage directly into the charger with no inverter because we have a DC grid forming in the charger that allows us to accept storage and solar without any inverter. This is a massive cost reduction. The other advantage to this design is that it's very small in terms of its physical footprint. When you talk to an autonomous vehicle fleet, a European ChargePoint operator, a European fleet, Europe especially where all the dimensions are smaller, the streets are narrower, the parking spaces are smaller, real estate is a premium. If you can develop a smaller charger that delivers more power than any other charger on the market today, you end up with a very significant advantage in terms of the flexibility to design your parking lot, the cost of construction to put the chargers in. Then again, because of the efficiency of the electronics and being able to directly integrate with battery storage and solar, you're saving a lot on operating costs because you're not turning electricity into heat through all these different electrical conversions that happen in a traditional design. We believe this is a very unique design that's got some very significant competitive differentiation. The demand for it is completely oversubscribed right now. We've got more demand than we can supply as we begin to ramp this into production. We'll be delivering our first unit probably in about a week or two, then we'll deploy a bunch of early access units into the fall. Our fiscal Q4 ends on January 31st, and our goal is to be delivering production units in our fiscal Q4. Okay. Have you quantified what your capacity looks like? You said demand is oversubscribed. If you can't meet all of, with your existing footprint, what does that look like on an annual basis? From a capacity standpoint, we've got a lot of flexibility to expand capacity to meet demand. We'd probably be more constrained by supply chain because some of the components that we buy are components that are used in AI data centers. If we make purchasing commitments far enough in advance, we'll be able to secure what we need to meet the demand that we expect to see on this product. Quite frankly, I look forward to the day where all the stress is on our operations teams to build enough as opposed to our sales teams to sell enough. Mm-hmm. Yeah. Okay. Kind of tying a couple of things in there. Can you talk about the European business? What percentage of your business that is today in revenue? Where do you think that goes near to medium term? How does Express Solo play into that? You mentioned some of the aspects of that smaller charger and whatnot. What does that do to your mix of business over time? I think the European mix is going to increase. I talk about within the next three to four years getting to 50/50 revenue split between Europe and North America. Today it's about 80/20, with 80% being in North America. I think that is, again, just an artifact of the strength of the European market and their commitment to the transition to clean energy and electric transportation. The Express product, much of that early demand that's been committed is in Europe. The first units will ship next week or to a European company that's a big freight company operating large trucks. We've got a lot of interest from the European market. When you look at just the opportunities in Europe, the number of opportunities that are $10 million+, the quantity of those is more than what we're seeing in North America. Deals like that exist in North America, the number of them in Europe is larger. Just again, overall macro opportunity in Europe looks stronger, Express squarely fits a very important use case in Europe or two use cases, which is, again, fleets and ChargePoint operators that are offering public charging. A lot of growth in both markets in Europe, this is a product that's very well-suited for both markets. Can you talk about the Eaton partnership? Yes, we think it's a meaningful differentiator, particularly around the DC grid architecture and the home charging. Can you talk about how you're communicating that value prop to your customers today? Where are you in terms of commercial traction? The Eaton partnership was originally catalyzed by innovation. If we take the product I was just talking about, the Express product, the one we just announced that I just opined on, there's a version of that product that can be a DC-only product. This now doubles the energy or the capacity of that product. You go from a 600 kW product to over a megawatt. If it's a DC-only product, it needs to plug into a DC grid. DC grids are getting built for AI data centers. They're getting built for factories, but they're somewhat bespoke large projects. When we realized we could build a DC-only version of this product that reduced the cost even further for an operator of this product, we knew we needed a partner that was building the grid. That is how the Eaton partnership formed. It was originally around coupling a DC version of this product, which we call the Express Grid, with a DC microgrid that would be built by Eaton. This will be an architecture, a footprint that will be coming for charging sites all over the world because it's so cost-efficient, both from a CapEx and an OpEx standpoint. What happened since then is all kinds of other opportunities for innovation opened up with Eaton. For example, Eaton has a product line called AbleEdge, which are smart breakers for home panels. What that allows us to do with our new home charger is in a very cost-effective way enable the vehicle-to-home use case. Which in the U.S., I think the primary need is my power goes out and I want my house to run from my car, not from a noisy generator that's burning liquid fuel in my yard. With the AbleEdge smart breakers and our new home charger, we're able to put V2H capability in along with home charging without a panel upgrade, without a service upgrade. Today, in many cases in the U.S., if you want to put EV charging in, not even vehicle to home, you need a panel upgrade or a service upgrade. That's another good example of innovation where we should be able to reduce the cost of getting home chargers in, especially with vehicle-to-home capabilities, very effectively. Another example, Eaton has solid-state transformer technology that comes off a medium-voltage transmission line. If you can go from medium-voltage transmission into a solid-state transformer and down to charging, you're again touching new benchmarks of capital costs that are lower than anything that's out there today. There's other areas of innovation we're working on with Eaton around energy management beyond what I've talked about. There's just a whole slew of opportunities to bring value to the market that we couldn't do by ourselves. Yeah. Great. All right. You've talked about AI as a driver of OpEx efficiency and product innovation. Can you talk about what you're seeing as the most measurable impact today and what the product road map looks like for customer-facing AI features? Yeah. There's really four areas of AI focus within ChargePoint, and we're the only EV charging company in Silicon Valley, so we're at the epicenter of the AI innovation engine that we're living in, and we're very committed to adopting AI. We've got four areas of adoption. One is customer support. We're using it to handle support cases and not have human beings have to take those calls, and that's saving us a significant amount of money. That capability is ramping up. The second area is just business process automation. For example, in Mansi's area, our CFO, we were able to reduce our accounts receivable team from 20 to what, four or five? Because we were able to automate the accounts receivable process with AI tools. That applies to many repetitive business processes across the country. Order management, order entry, accounts payable, accounts receivable. There's a multitude of examples. The third area is in just code generation. We're an Anthropic user. We use their latest models to generate code. A fascinating story. We used an AI agent to run a competitive analysis, and we found a startup company that was in the fleet space that did software only that had some advantages over what we were offering. We were able to use an AI agent to analyze their solution versus ours. It produced a very coherent, concise competitive analysis report. I was on a flight home from Europe. I took that report and I personally wrote a PRD to cover the most important feature gap we had versus this competitor. I walked into the office Monday, got with our Chief Software Development Officer. He brought a couple engineers into the room. We vibe coded that feature live in a conference room with the CEO writing a product requirements document, and it went live to the market in 13 days. That feature would've been a six to nine-month development in the old way. We jokingly called that project Mission Impossible because we did something that would not have been possible prior to the advent of AI. We now have Mission Impossible two kicked off. Mission Impossible three is about to get kicked off. The pace of innovation, especially on software that we're able to deliver with AI, is remarkable, and we've seen it firsthand. The final area, which you asked about, Mark, is how is it showing up in our products? We've got a multitude of features. In fact, Mission Impossible two, which I won't talk about in detail because it's not launched, is an AI-driven feature. We've got other capabilities coming, things as simple as dynamic pricing. If you're offering EV charging to a constituency and you're charging for electricity and you want to be profitable or break even, depending on what your use case is, you can change pricing as a function of demand. You can use AI algorithms, AI calculations to figure out what the optimal pricing is to maximize the profitability of your site while keeping your drivers happy and not driving them away, either because the prices are too high or because all the stalls are filled up with cars. We've got a whole bunch of examples of AI use cases coming in the products beyond just the example I mentioned here. Okay. I think within the Level 2 market in North America, you've got roughly 70% market share. Just talk about what you've seen during this cyclical downturn that you saw competitors exiting. How does that set you up for market share gains now if you are right that we are coming out of this? Yeah. I think the Level 2 market, which we also refer to as the commercial market, can really be broken into two major segments, retail and non-retail. Non-retail is primarily workplace, but you can think about educational institutions as non-retail, and then retail is retail. It could be this hotel, a parking garage, a restaurant, a shopping mall, you name it. If they want you to come there and spend money, that's retail. The thing that ties that whole market together is that charging is a discretionary purchase. It isn't core and mission-critical to their business the way it is in fleet. When you're selling commercial charging, why is the customer putting that in? Well, the reason they're putting that in is to attract the people they care about to come to that place. If it's at work, it's a way to retain employees or attract climate-conscious employees that are really smart that you'd like to have come work for your company. If it's a hotel like this and you're trying to compete for occupancy or bookings, if you offer EV charging, you may have an advantage versus your competitor across the street. That's what Level 2 charging is all about. The reason I tell that story that way is because we build the whole ecosystem, which is what makes our solution so powerful. We have the largest community of drivers in the U.S. on the ChargePoint app. We call that an e-mobility service provider solution. If we're providing the charging to this hotel, for example, and we have the largest community of drivers that we can make aware that this hotel has charging available to them, we can now create synergy between our driver community and our business community that is purchasing commercial chargers. You get into all sorts of interesting ideas on how do we help the InterContinental Hotels drive their core business through charging. If you're a rewards member, can you get free charging with your hotel stay? Can you reserve a charger as a rewards member? There's a myriad of ideas, and again, Europe is further ahead here. We've got European customers that have implemented charging at retail stores that can tell you down to the second how much longer a shopper stays if they're charging at the store and how much bigger the basket size is. For retail in particular, charging is becoming a more and more important way to drive the core business of the retailer because the number of EVs on the road is going up, especially in the coastal parts of the country where penetration's pretty high. We've got the solution and the driver community to help these businesses drive their core business through EV charging, and I think that value prop is only getting stronger as the number of EVs on the road goes up. Okay. Any questions? Not yet. Can you talk about the software-only managed ports? I think you've got about 135,000 now. How central is that to the longer-term model, and do you think that dilutes or enhance the value of the integrated hardware-software platform? That's a great question, Mark, and it relates to your last question. We have a lot of non-ChargePoint hardware that we manage with our software. If you go back to the software stacks in this business, there are really two. One software stack manages the charging hardware. How do you set pricing? Do you allow for people to reserve chargers? Do you make it inaccessible and a private charger, like at a workplace where you don't want the public coming in? That's the charging software system. We call it the Charging Management System or the CMS. The other big software stack is what manages the community of drivers. I referred to that earlier as the EMSP. What's happening, back to the market consolidating, is you've got big customers that have a lot of chargers in the ground from hardware competitors that have gone out of business, or are going out of business, or exiting a region. They still have useful life, and that customer who spent their hard-earned capital dollars putting their chargers in wants to continue to use them. Our CMS, the software that manages the hardware, is capable of managing third-party hardware. It's a key business KPI for us because if you see that increase, it's telling you one of two things. We're capturing market share from competitors that are going away, or we're winning customers that have what we call brownfield implementations, where they've got prior hardware in the ground, they want to expand with us, but they don't want to lose what they've invested in that prior hardware. They're using our software to not only manage the new ChargePoint chargers that are going in the ground, but all the legacy hardware that they have in the ground. Got it. Okay. Can you talk about gross margins? I think they're near record levels. Can you walk through the bridge from the current 32% pro forma gross margin to kind of the longer-term target? What are some of the milestones that we should be tracking? Sure. About 40% of our revenue is subscription-based revenue, which runs north of 60% gross margin. The other 60% is hardware, which if you do the weighted average math, it's not very good gross margin. Yeah. I mentioned this earlier when we talked about the new Express DC product. We have, as part of our focus, really put a lot of effort and energy into designing cost-effective hardware. It is a major priority for us. It's a higher priority focus than it's ever been, and we expect to earn much better margins on hardware going forward. If the subscription revenue continues at its current levels, maybe with some incremental improvements, but we take a significant step up on hardware margins, which we fully expect to do, I'd like to see us get north of 40% gross margin going into the future as the new hardware starts to become a significant percentage of our overall revenue. Moving up from the mid to low 30%s where we are today. Okay. Similar, maybe just talk about your cash flow or your EBITDA. A catalyst that we should be looking for to inflect into profitability. Any commentary on when you think that could potentially occur? The sooner the better. We're pushing towards that goal very, very aggressively. The math for us is very simple because we're a capital-light company. Yeah. Revenue times gross margin has got to be bigger than OpEx. We're very actively managing all of those lines. We just talked about the gross margin line. We expect to see revenue growth, particularly as a result of our new products and the fact that they're going to be targeting the European market where we have not had DC products available previously. We're very, very focused on OpEx. In the last quarter, we reported our OpEx came down through the utilization of AI and just continued relentless focus on spending. I think you'll continue to see our OpEx trend down for a while before it reaches a steady state level. Working all three lines in the equation very aggressively to get to that EBITDA milestone as quickly as possible. If I may add, from a cash perspective, for us, because we're a capital-light business model, we don't really have much CapEx. EBITDA is a very close approximate for cash and cash usage. As Rick mentioned, as EBITDA loss comes down, we should need to use lesser and lesser amount of cash. At the same time, we are bringing inventory down. In Q1, we brought down inventory by a significant amount. As we continue on that path and continue to bring inventory down through the year, that will release working capital. That helps cash. We expect to be cash flow breakeven and start generating positive cash as early as later part of this year, earlier than getting to EBITDA breakeven. Got it. Okay. With that, we can wrap. Rick, Mansi, thank you so much. Thank you. Thank you. If you want to chat, we're here. Great. Thanks for listening. I love talking about our story. Yeah. Okay. Thanks, everybody.