Q1 2021 ChargePoint Holdings Inc Earnings Call
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Yeah.
Ladies and gentlemen, good morning, My name's Louisa and I'll be your conference operations today at this time I would like to welcome everyone to the charge 0.1st quarter fiscal 'twenty 'twenty earnings conference call and webcast. All participants lines have been placed on listen only mode to prevent any background noise.
After the Speakers' remarks, there'll be a question and answer session.
If you'd like to ask a question at this time. Please press star 1 on your telephone keypad if.
If you need operates assistance please press star zero.
I'll now turn to the cool to Patrick Hammer, Vice President of capsule market on Investor Relations. Patrick. Please go ahead.
Good afternoon, and thank you for joining us on today's conference call to discuss financial results for charge points first quarter of fiscal 2022 on Patrick Hamer head of capital markets and Investor Relations discharge point. This call is being broadcast over the web and can be accessed on the investors section of our website at investors day <unk>.
<unk> Dot com.
With me on today's call, our cash quality Romano, our president and Chief Executive Officer, and Rex Jackson, Our Chief Financial Officer.
This afternoon, we issued a press release announcing results for the first quarter ended April 32021, which can be found on our website.
We would like to remind you that during the conference call management will be making forward looking statements, including our second fiscal quarter and fiscal year 2022 outlook and our expected investment in growth initiatives.
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 factors that could cause actual results to differ please refer to our form 8-K filed with the SEC on April 1.2021, and our earnings release posted today on our website and filed with the SEC on form 8-K.
Also please note that certain financial measures. We use on this call are non-GAAP for historical periods. We provide the reconciliations of these non-GAAP financial measures to GAAP financial measures in the investor presentation that can be found on the investors section of our website and finally once we've completed this.
Paul will be posting the transcript of our opening remarks to our Investor Relations website under the quarterly results section and with that I'll turn the call over to picture quality.
Thank you Pat and good afternoon, and thank you for joining our first quarter earnings call. Our strong results. This quarter reflect our commitment to execution as we continue to build on our established leadership position in EV charging our exceptional charging technology built over 13 years and broad customer base positions charge point.
To capitalize on the ongoing and accelerating shift to electric mobility.
We are deep in execution and next I will share the extent to which our team and operations are scaling to support the unprecedented pace of fueling infrastructure buildout.
The charge point team is now over 900 strong we have attracted an engaged high caliber talent across North America, and Europe, and our productivity remains strong as we transitioned to predominantly virtual operations amidst the pandemic.
Our channel partners in North America, and Europe help us reach more customers on a local level, including distribution partners value added resellers and installation partners. In fact, we added 53 additional channel partners in Q1.
Our support team services a range of customers from site hosts to drivers we continue to offer scaled support operations around the clock in 9 languages on our operations and maintenance group is now 1.180 partners strong.
EV charging requires compliance with electricity metering accuracy requirements and we continue the extensive software work associated with this.
The build out of the new fueling network is supported by our utility and energy partners and we saw there was an estimated 200% increase in total approved utility customer incentive program funding in North America over the last 12 months in Europe. Our team is engaged with more than a dozen energy retailers in Utah.
<unk> developing strong partners that want to leverage our technology.
We continue to work with the industry to enable drivers to roam across networks without penalty of access fees. The number of roaming ports accessible from a charge point accounts now tops 175000.
These are just a few examples on what it takes to generate new customer growth service existing customers and deliver a great experience for drivers.
The EV and EV charging markets continue to gain momentum vehicles are essential to this category. According to Bloomberg and he asked there were 378000 EV sold in North America in 2020, they expect nearly 540000 to be sold in 2021, an increase of 43%.
The European market is large and growing rapidly Bloomberg on Es expects over $1.9 million vehicles will be sold in 2021. Thanks to the addition of over 165 new vehicle models.
Vehicle announcements in both markets are accelerating as Oems commit to electrification.
Supply chain willing the new vehicle sales market is poised for a breakout.
We believe charge point unmatched scale and industry, leading platform uniquely position us to win business in this fast growing market across lines of business.
This was evident in our impressive first quarter results.
As we saw over the past year, our segment diversity helped us to mitigate the impact of Covid related slowdowns in the commercial business. Thanks to strength in our fleet and residential business we.
We saw a recovery in our commercial business this quarter, which I will address in more detail shortly.
Before we continue I would like to welcome Susan <unk> to our board of Directors, Susan brings technology and revenue leadership to our board.
She currently serves as a strategic advisor and director of <unk>, Inc. A public Lidar company previously she led Verizon Telematics global OEM business.
And I would also like to thank Neal Suslik for his many years of service as a board member Neal made an early commitment to electric mobility as an early investor in charge point and it's been a board member since March of 2014.
Moving on to the first quarter.
We reported revenue of $40.5 million or 24% year over year increase in slightly ahead of the high end of our guidance range.
Strong trends in all 3 lines of business commercial fleet and residential.
And across North America and Europe.
Commercial billings increased by 50% year over year in the first quarter against the quarter last year that was only nominally impacted by Covid.
We added a record number of new customers in Q1, bringing the total to more than 5000 existing customers expanded ports as EV penetration increased and this drove topline growth in the quarter with a customer rebuy rate at well over 60% in both North America and Europe.
We ended the quarter with over 112000 active public and private charging spots on our network up from approximately 106000 last quarter.
This reflects activated port growth of 28% year over year, we provided active port count as it reflects the ports that are available for use and generating recurring high margin software subscription revenue.
As a reminder, our hardware is always accompanied by our software.
We offer both level, 2 and DC fast charging solutions, while we continue to observe that the majority of fueling as level..2 we offer higher power DC fast charge solutions for a range of use cases, including those occasions when drivers need to fuel up quickly such as in fast fill settings and fleet depots.
Today more than 3500 of our active ports are DC fast charge.
We continue to enable a winning driver experience with charge point integrated on a range of screens from our highly rated mobile app to incur infotainment systems to proprietary auto OEM apps, we announced our support for Android Auto in April and this builds on our prior vehicle integration announcements, including Apple car play.
Volvo and Pollstar among others.
Now I will discuss in more detail 2 of our focus areas for growth our fleet business in Europe operations are.
Our fleet business includes delivery and logistics sales service and motor pool and shared mobility verticals in both North America and Europe.
This was a strong fleet quarter with billings up 172% year over year.
<unk> billings in the quarter were comprised of a diverse group of clients with a wide array of needs, which speaks to the breadth of our solution offering we.
We are working with big box and other large retailers to design and implement charging solutions for the delivery fleets Ikea is a great example from this quarter.
We are seeing more shared mobility business with a growing portion of public transit electrified. We are working closely with leading transit authorities with first quarter engagements, including Orange County Transportation Authority in California, and Pierce Transit in Washington.
New York City continues to deploy EV charging including charge point solutions to support its nation, leading municipal EV fleet and is on track to deploy additional network DC fast Chargers by the end of 2021 for both fleet and public use.
We've seen strong demand for charge point home flex our solution for drivers and single family residences. We are also seeing corporate customers buying charge point home solutions for take home fleets.
Including through auto leasing and fleet management company lease bond in North America.
In Europe, we are working with leading lease management companies like LD automotive for whom we enable automated home reimbursement public charging workplace and fleet charging to provide 1 seamless approach.
Our fleet work with utilities continues this past quarter, we collaborated with XL energy to provide charge point solutions for public charging for its customers at home and across their fleet of utility service vehicles.
Fleet is a category that historically understood the significance of the economic benefit of electrification, but has been hampered by the availability of vehicles.
We see tremendous potential for growth as more vehicles begin to ship in volume and on a wide range of form factors.
Now moving on to Europe.
As discussed on our last call Europe is a key part of our growth strategy. It leads in market adoption of Evs and as progressive policy electrification mandates the charging ecosystem in Europe is fragmented and has suffered reliability issues as compared to the options in North America.
Our ground up technology and field tested solutions address these reliability issues and are selling well we.
We continue to invest in our European team, our European head Count has doubled since the start of 2020 and is just shy of $1.50 with sales leadership well established we continue to grow our sales team and we've made significant hires in engineering as well as product and services.
Our recent investments are paying off we had our strongest financial quarter on record in Europe across essentially all metrics.
Revenue growth in Europe in the first quarter was up over 140% year over year and activated ports increased 24% sequentially from Q4 to over 4700.
In summary, we believe we are well positioned to pursue growth opportunities in commercial fleet and residential in North America and Europe.
On the policy front, we are encouraged by the inclusion of EV charging and president of items proposed American jobs plan for infrastructure funding.
We are actively engaged with parties in Washington, DC with states across the U S and Canada, and the EU to provide guidance and shaping policy to support our vision to move all people and goods on electric power.
Our balance sheet remains strong with over $610 million in cash at the end of the quarter. Our capital light business model provides us the flexibility to execute on our long term growth plans and for more reqs over to you.
Thanks, Pasquale and good afternoon, everyone first my comments on non-GAAP and our non-GAAP results, we principally excludes stock based compensation and the effect of the value at valuation of our preferred stock warrants, we reconcile to GAAP in our earnings release.
Second after a quick review of our results I will provide revenue estimates for Q2 and for the year.
Third consistent with our March call and as you can see in our earnings release.
Reported revenue along 3 lines network charging systems subscriptions and other debt.
Net we're charging systems represent our network hardware.
Subscriptions include our cloud services.
Our share of warranties, and our charge point as a service offerings, where we bundle our solutions into a recurring subscription.
Other includes energy credits professional services.
And certain non material revenue streams.
Q1 revenue was $40.5 million up 24% year over year and slightly above the high end of our guidance range of $35 million to $40 million.
Net we're charging systems revenue was up 36% year over year as commercial began its recovery and <unk>.
Fleet in residential posted strong results.
North American commercial outperformed our fourth quarter, an encouraging signal from a return to work perspective.
Subscription revenue was also up 20% from Q1 of last year.
Other revenue declined largely because of lower energy credit related revenue.
Billings by category for the first quarter, where commercial 73% fleet, 12% residential 11% and other 4%.
Billings by percentage for the fourth quarter, where commercial is 68%.
Fleet, 17%.
Residential, 12% and other 3% fleet.
<unk> fleet had its second best billings quarter ever after a particularly strong Q4.
From a geographic perspective Q1 revenue from North America was 91% in Europe was 9%.
Compared to 96% and 4% respectively. In Q1 of last year, demonstrating early returns on our continued investments in the European market.
Our subscription charge point as a service offerings, which yield ratable recurring revenue turned in a solid quarter growing 64% year over year.
As <unk> indicated new customer acquisition was particularly strong and repeat customer business. The cornerstone of our strategy was in line at over 60% of total billings.
Demonstrating the power of our land and expand model is small first purchases create sticky relationships and a significant repeat rate.
Turning to gross margin non-GAAP gross margin for Q1 was 23% up sequentially from the fourth quarter is 22% on similar mix, which continued to favor our lower margin DC and residential products.
The improvement principally reflects ongoing component cost reduction activities and operational improvements.
Turning to operating expenses in the first quarter on non-GAAP operating expenses were $47.2 million, an increase of 32% from the first quarter of last year.
As a leader in this space.
We're investing heavily in sales and marketing to support our land and expand model in North America, and Europe, and R&D and operations to support significant new product development and a rapidly expanding customer base and across the company to meet the unique demands of this new space and is being SaaS scaling newly public company.
During the quarter, we repaid $35 million in debt.
Also during the quarter holders exercised $11.9 million on public and private warrants associated with the merger.
These warrants are cash exercise on contributed $74 million to our balance sheet.
We finished the quarter with $610 million in cash and cash equivalents.
And are well capitalized to fund our business plan.
During the quarter, we issued approximately 18 million shares associated with 2 or 3 merger earn out tranches and we ended the quarter with 305 million shares outstanding.
Turning now to guidance for the second quarter, we expect revenue of 46 million to $51 million at midpoint, an increase of 39% versus Q2 of last year and representing a strong first half of this year.
As we look beyond Q2, where.
We're continuing to assess ongoing developments regarding the reopening of economies in North America, and Europe, and the challenges and opportunities they present.
Accordingly, we continue to expect revenue of 195 million to $205 million for the year.
Consistent with the guidance, we provided on our last call and at midpoint, reflecting a 37% year over year increase I will now pass the call back to Pascal for closing remarks.
Thanks Rex.
Based on these results. It is clear we are focused on execution and we believe we are exceptionally well positioned as more fleet and passenger vehicles shipped to.
To support that position, we have exciting R&D work on our way to continue delivering innovative products.
Net charge point, we know that every charging port counts towards a more sustainable future.
Analytics and reporting features make it easy for customers to understand and measure the environmental impact of their charging program.
We are proud of our contribution as a company to mitigating climate change as we shared on Earth day on April 22nd charge point drivers had driven over $2.6 billion electric miles on avoided 107 million gallons of fossil fuels.
Drivers on our network have avoided roughly 387000 metric tons of greenhouse gas emissions.
We expect customers to increase their focus on the ESG benefits of EV charging going forward.
North American and European markets are more environmentally focused by the day.
Commercial fleet and residential electrification is accelerating organically.
This past quarter continues to demonstrate the charge point growth scales with EV adoption. We are on index for the electrification of mobility, a transition, which we believe promises many years of growth ahead.
We will now open the call to your questions.
Thank you very much ladies and gentlemen, if you would like to ask a question. Please press star 1 on your telephone keypad now.
Ask your question. Please ensure your line is on mute.
Our first question comes from Colin Rusch from.
Please go ahead your line is open.
Your line is open. Please go ahead.
Yes.
Although you may be on mute. Please on mute your line.
You guys can you hear me okay.
Apologize for the travel.
Yes.
Yes, we got you call on kind of calling we can hear you okay.
Alright, perfect Hey, can you talk about the competitive dynamics with all the capital that's been raised on the market and then how you think about consolidation as we see it.
All of these departments go out.
Potentially work and potentially not at work.
Could you clarify that.
With respect to yes, I mean, so we're working towards.
Yes, we're expecting you know a bunch of your competitors to rollout some pretty healthy networks and some of those business models may or may not survive.
I'm wondering about how you think about navigating that environment, where there's a lot of capital going on at the infrastructure.
And preparing for potential.
Consolidation in the space.
Yeah on depending on market share along the way.
Well I mean.
Yes.
You know very well.
Developed from a lot of our business models of our over a decade or real world experience in the EV charging market.
So we're confident in our approach we're not we're not frankly spending a whole lot of time pondering that particular question, where we're heads down and executing on if you look at the numbers that we've just reported for the quarter.
We're getting the results we think.
Better commensurate with the model.
With the metalworking that we've been refining over over a decade as I said.
And with respect to capital coming in with this as a capital light model.
The amount of capital that's debt.
This is coming into the different players in the market it doesn't necessarily affect us.
We're not dependent on a capital heavy model and in fact, I think capital heavy models definitely.
Have a challenge in that.
There is that that governor so to speak on foreign velocity based on the need for continued capital where we don't have that.
Perfect and then just around the supply chain and how you guys are managing the risk on that side could you talk about any sort of safety stock that you guys are keeping our share like you'd need to potentially at this point or is it from.
From an environment, where you're able to.
Get what you need and pass on any incremental expenses onto customers.
Uh huh.
I'll make some comments on I'll, let Rick comment as well.
Obviously, our washing that entire set of.
Of issues very very very closely our operations team has doubled down significantly in making sure that we've got.
Good assurance of supply, we're working with our contract manufacturers to put in safeguards.
Nevertheless, we are we are we are seeing issues inside as we entered the quarter as we execute we've mitigated them.
As you've seen in our results we haven't.
Reported any problems so far with the supply chain.
Hindering our performance.
And we're going to continue to put in the necessary mitigation mechanisms to guarantee that we've got a.
Park flow into our contract manufacturers to support our forecast.
Yes, that's right. Thanks, so much.
I think if you look back on Q1, we had some impact due to supply chain, but it was immaterial and well mitigated as Pat said.
It did cost us a little bit of expedited other other fees that we still managed to improve our gross margin sequentially. So that's good as we look forward to this quarter. We've taken we've taken what we know about supply chain into accounts and providing our guidance.
And as we look out into the second half of the year, which against our annual guidance.
Implies.
Very nice growth numbers sequentially for Q3 and Q4.
We're managing that very very closely.
And so we don't have any conclusions on that yet, but we are definitely taking the things we see on the supply chain into accounts.
Okay. Thanks, so much guys really appreciate it.
Thanks, Sean.
Thank you for your question.
Our next question comes from share Patel from Wolfe Research. Please go ahead. Your line is open.
Hey, thanks, so much.
I just wanted to ask about the full year guidance I mean, we've seen really strong demand for evs in the U S and Europe at U S sales were up 100% year to date Europe was up from like 89% and you talked about previously how correlated businesses to the broader EV demand.
<unk>.
Just thinking about.
If we do end up seeing.
Stronger sales I mean is there anything is there anything that we need to think about in terms on like either a lag effect or anything like that that would prevent.
On that upside potential.
If demand does come in stronger.
Okay.
So we definitely believe that we were very nicely correlated to the availability of Evs No question about that as we look at the <unk>.
Second half of the year from our perspective, where we are today.
As I said on our prepared remarks, we.
We're watching reopening here and in Europe, there is on.
What's the possibility that goes really well there's also the possibility that something happens and you step back as you can see what's happening in India for example, so.
As we as we look out and then of course as a spike on champion that we just mentioned so we think it's prudent to be cautious now.
I think we are going to be massively smarter in 90 days when we have our next call because we'll have Q2 behind us and really good visibility into those external factors as we look at Q3 and Q4.
So I think it just made sense to.
To confirm guidance. This time and then we'll take a really hard look at this for the Q3 Q2 call excuse me.
Okay, Great and then.
On on the network gross margin. So it looks like you saw good improvement versus Q4.
That goes up maybe 140 basis points, and obviously up meaningfully year over year.
How should we think about the main drivers.
Margin improvement on the network side, and and you know where do you see margins eventually reaching.
So so clearly is as we said in our prepared remarks.
There is a meaningful mix component in our business so with the advent of the endemic.
Workplace has been has been solid then it hasnt had the growth that has had historically over the last I don't know X number of quarters.
Dcs performed excuse me fleece performed very well, which includes DC theres also fast fill in.
On our home business has been growing extremely strongly over the last.
Last 2 quarters those are on the lower end of the gross margin curve for us.
Individually, we don't give out gross margin by product.
Understand mix, you could tell us or this to do such a guard rails.
Look we did have a good a good performance internally I think this quarter. So the biggest drivers on gross margin are mix and then as we go up both the operational improvement curve the cost reduction efforts that we're doing on components.
And then obviously growth in workplace on commercial.
They are all very very positive influences on gross margin as we look out.
I still believe that we should be comfortably in the <unk>.
Mid to high Thirty's.
As we look out.
3 years from now.
We have steady improvements ahead of us.
Of us for this year.
Okay, great and if I could just sneak 1 last 1 is just.
Obviously, you talked about fleet earlier in the call.
It's something that we've seen a number of companies talking about the fleet charging opportunity and.
That even includes a forward, which talked about it last week at their at the Investor Day. So just trying to think about how what are some of the areas that differentiate chart pointed in the fleet space.
And how you think about positioning there.
Yeah.
Well I think I think there are 2 main drivers too.
Our our advantage in the fleet space first.
We charge anything rules.
So there is there's no OEM specifics and our solution is completely OEM neutral so.
Also we're a very complete solution on the fleet space it's on.
All encompassing a broad product line.
On the software side.
And both the charter control energy management, and the vehicle scheduling as well as a full.
Complementary line of hardware products. So all of the all the different speeds and feeds necessary to adequately service our fleet customer most fleets.
Have a good mix of vehicle types and vehicles sizes and vehicle charging needs and we can we can do that.
All with 1 solution. So we're bullish on our on our on our fleet products and we're not sitting still either there is a tremendous amount going into R&D there.
Okay, great. Thanks, so much.
Thank you for your question.
Yes.
Our next question comes from Cowen.
Kevin K Irwin from Cowen. Please go ahead your line is open.
Hey, good afternoon guys.
I was wondering if you can maybe give us a little color around R&D spend.
On a run rate basis $25 million this quarter, how does that trend as we move throughout the balance of this year.
So I would answer that both on R&D and more broadly we are definitely looking at the trends in the market right now on where we think.
Investments need to go to.
We will take advantage of higher vehicle availability not only in the passenger but on the fleet space. So.
So we've made an affirmative decision on the company too.
Additional energy behind our efforts. So it has gone up and I would expect.
Our FX opex generally the trend on the lower this year.
And again is because with that a lot of.
Product introductions that we want to do in the not too distant future. There's a lot of customer support touches both R&D and operations and customer support.
Sales and marketing side, we're going heavier there generally and particularly in Europe, because our land and expand model is proves itself every quarter with the customer additions we share this quarter and also a very consistent 60 plus percent organically by business. So.
As we look at the environment externally and given the fact that we have the scale we have already it just makes all sense in the world to us too.
Put energy behind this what youll see longer term is that are on.
Operating expenses as a percentage of revenue will trend down.
In the very short run from a dollars perspective, I expect it to trend up.
Thanks, Ron that's helpful I guess its under contract.
Got it got it Okay. That's helpful and then as a follow up you kind of hit on it but last.
Last quarter, you'd also mentioned the potential rollout of a new product offering.
Focus on Europe is there any update there or anything you could talk to around that.
Now just stay tuned for general product updates in the future in a minute.
We're ready to announce you'll be 1 of the first half.
Great. Okay. Thanks, guys.
Thank you.
Thank you for your question. Our next question comes from Craig Irwin from Roth Capital Partners. Please go ahead. Your line is open.
Hi, good evening.
I wanted to ask.
What about the DC fast charging products can you maybe update us on the margin plan, there where you are as far as your longer term plan for increasing margins do we need to see some of these product introductions for fleets and other markets.
Year to beat your longer term targets here.
So as Rex mentioned meter.
<unk> talked about.
On the particulars of gross margin byproduct, we don't break that out what I can say is that the quarter saw this past quarter.
Saw some great work in margin improvement specifically on the existing product lines. So to your question are we waiting for a breakthrough on our new product line or are we.
Continuing to make improvements on the existing product line as it matures, it's definitely the latter we're seeing.
Planned.
As we execute margin margin improvements.
Not just in the fast charge products, but across the board I will repeat 1 point that Rex me because I think it's I think it's pretty indicative.
We've.
Improving margin.
Quarter over quarter as Rex mentioned.
And that was in the face of having to expand a little bit more on Cogs because of some of the supply chain mitigation, we had to put in place. So we outperformed.
And only had that outperformance dragged down a little but not not but still outperformed.
It was only dragged down a little by the mitigation cost on our supply chain.
We're comfortable.
Okay.
So.
Most investors really want to pick through the margin discussion fairly.
And fairly detailed manner. So 1 of the things that has been said in the past is that the mix of products.
Into the end of the year and obviously the revenue or a large part of the expectations for a strong margin rebound.
On particularly is back to work.
It's commercial market really moving again as I understand those are your highest margin products can.
Can you maybe walk us through what we should be looking at there to see something in the 30% or 30% plus range is achievable as we exit your fiscal year.
That sounds a lot like a question for annual gross margin guidance, but what I can tell you is take it to amplify 1 thing that Pat said.
We really had some very very good improvements this past quarter.
Across the board and particularly in a couple of places where it was very impactful and very much needed.
I think the.
If you look at this in the second half of the year clearly if we get back to work in the mix starts to shift back to a more normalized mix from the company.
That's going to have a very positive impact on the resulting gross margin.
I would say with that interestingly enough, we think commercial should come back but that doesn't mean that the other products are going to roll off. So we're not we're not we're not we feel like the trends for those.
On the part of the.
Part of the businesses sales on lower margin side is going to continue.
But net net.
Feel very good about continued improvement in gross margin throughout the balance of this year hesitate to call a number at the end of the year, just because that would be guidance.
Understood and last question if I may on this 1 so you guys are doing exactly what you said you would do executing well both in North America and Europe.
<unk> got fleet handled you've got a roadmap with new products.
That's expected.
Many of the stacked ipos are looking at the competitive environment and trying to pull forward.
The opportunity.
The biggest opportunity for charge points.
With the Europe.
The new products for Europe, and got more aggressive.
Market positioning there is there a possibility we could see you.
It <unk> take a more aggressive stance as far as expansion in Europe or are you.
Moving at a measured rate based on our pre existing plan to ensure no.
Unforeseen challenges.
I think philosophically.
We've been actually in an aggressive posture with respect to our investment in Europe for quite some time now because we believe in the geography.
As being incredibly.
Incredibly relevant for.
For us globally. So I don't think we need to change our posture there, but again I don't think that's that's that's not that's not an indication that we're not being aggressive already I think were being adequately aggressive right.
And the only other thing I would add is.
We have an effect doubled almost doubled our head count in Europe over the last 2 to 3 quarters.
And we're not finished with the hiring plan that we have there for this year. So we're really putting a lot of a lot of players in the field.
1 of the things I've said internally is from a head count perspective, and our reach perspective in Europe.
We're 1 of the largest customer companies in our space in Europe. When it comes to the number of people that we have attacking that market and that doesn't count any of the incredibly long list of things that they get from our operations in North America. So, it's an extension and yet it still larger so I think I think our coverage theirs is.
And it has improved markedly and will be a competitive advantage and I think.
The things that we've done on the roaming front are excellent.
Our focus on network on software, we think is the right strategy and then obviously as you referenced there's a lot of.
Additional solutions that will be providing attached to that over the next.
Some quarters and.
1 more thing to note, which I think is a significant issue I think through your modeling is the scale achieving global scale.
Helps tremendously in gross margin.
So on a scale in North America on a market share basis as is great, but it's an overall still relatively small unit volume market.
As compared to where it's going.
As as that continues.
As there is cross regional product line leverage.
In supply chain and support operations and other elements of gross margin we should see.
On advantage there if we can execute on the vision, which is to be significant in Europe significantly on fleet and significant.
In our North American commercial business.
So a point of clarification right significant in the North American business, 70% plus share of the network 10 points.
Is that is that a logical goal for you to chase in Europe is that something that.
The level of investment.
Is sufficient or you'd be happy with a much lower share.
So when we look out.
With our financial lands over a multiyear period and I'm not going to put a number to that but our assumptions are that we get comfortably into the twenty's in Europe.
Like to do better than that but theres not theres not a north America styled assumption and how we view our financials over the next several years.
Net profit out of.
That's a pure planning conservatively in RMB.
Yes.
Understood. Thank you rich thank you Pascal.
Thank you.
Thanks.
Thank you for your question.
Have a question from Mackenzie from Citi. Please go ahead your line is open.
Great. Thanks, everybody. Good afternoon, I apologize if I missed this I did join the call a little bit late but.
In terms of the revenue in the quarter I was hoping you could just dimension.
On the contribution from new customers versus existing customers I'm, just trying to think about kind of is that the land and expand model on the evidence you're seeing of that kind of playing out in your revenue in terms of cash.
Customers have been with you longer versus new customers on how that duck on the seasoning is progressing.
Sure sure it's anthrax happy to help you there. So Q1 revenue was $40.5 million.
1 of the things that we.
We're super pleased about this quarter.
We're a lot of them, but super pleased about was the customer additions that we had this quarter were remarkable.
Decided it was an uptick from last quarter would be an understatement that useful to give you the percentages, but it was a super strong customer in terms of new customer acquisition and then the thing that has been remarkably consistent over every quarter that I looked at it over the last 3 years is about 60% of our business comes from existing customers as a revised so.
The land and expand thing you nailed it is literally the cornerstone of the company and is 1 of the reasons why I have said, we do want to continue with the investments in particular for example on sales and marketing because get it.
Hello on easier to keep a customer than it is to get 1 so we're putting on an enormous amount of energy into.
And the customer acquisition, because it just pays down the road.
That's very helpful.
New customers are you find that the on boarding process is happening even faster I think it was typically on my understanding of the cup with the sort of few months' process, but just given what's happening with <unk> are you seeing that process Stephen.
Quickly on or maybe in other words was the customer adds better than what you had internally expected.
Can you clarify what you mean by on boarding is at most.
Installation or is that or is that.
Time and pipeline.
I'll kind of on pipeline.
Do you want to take that 1 right.
Let's see.
So first of all the nice thing about the land and expand thing that we just discussed is.
A lot of that all of that is that really fast turn business, sometimes you see income and sometimes you don't but that's pretty fast turn if it's a brand new customer.
I think our sales.
Sales process lasts anywhere from <unk>.
Getting a phone call after about 6 months.
And it just depends on what the process looks like on the other side.
I do think it's trending down on getting quicker, but it really depends on the situation with the customer.
<unk>.
The size of what they want to install and the necessary understanding what the make ready and other things that would be necessary in order to put on these solutions.
So I don't know if that answers your questions, but I would say it's.
Anywhere from amongst 2 out outside 6 months and it's.
Getting shorter.
Yes, that's very helpful and just lastly, as a point of clarification from the Q2 revenue guidance.
Should we assume that the revenue mix in Q2 is pretty similar to what you experienced in Q1 in terms of DC in residential.
That's a tougher but I would expect it to be a little better on the commercial side and on less than Q1.
Great. That's all value because we had a really really nice so on a year over year.
Resurgence.
In North America commercial and then we had a great quarter and Europe.
Generally so I think the reopening and people getting back to work in the whole recovery of the commercial side is it really nice signs in Q1, and I would expect that to continue in Q2.
Great. That's very helpful. Thank you.
Thank you for your question. It appears we have Nathan for questions from the audience. So I'll hand back over to the management team for any closing remarks.
First of all thanks, Thanks for attending.
And thank you for all the thoughtful questions.
To summarize I think from accounts that Rexam I made in the prepared remarks, we are heavily focused on execution right. Now we are very pleased with.
The results across all our lines of business and I think we're well positioned to execute on our long term growth plans. So really look forward to the next earning call.
With all of you and have a wonderful afternoon.
Thank you Brian.
Okay.
Ladies and gentlemen that goodbye cool.
Thank you for the management team for joining you may now disconnect your lines.
Okay.
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