Q2 2024 ChargePoint Holdings Inc Earnings Call

Please standby were about to begin.

Good afternoon, ladies and gentlemen, my name is slow and I will be your conference operator for today at this time I would like to welcome everyone to the charge <unk> second quarter fiscal 2024 earnings conference call and webcast. All participant phone lines have been placed in a listen only mode to prevent any background noise. After the speakers' remarks there.

Will be a question and answer session I would now like to turn the call over to Mr. Patrick Tamar charge points, 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 <unk> second quarter fiscal 2024 earnings results. This call is being webcast and can be accessed on the investors section of our website at investors Dot chart Dot Com with me on today's call are Pasquale Romano, our Chief Executive Officer, and Rex Jackson, Our Chief Financial Officer.

Afternoon, we issued a press release announcing results for the quarter ended July 31, 2023, which can also be found on the investors section of our website.

Like to remind you that during the conference call management will be making forward looking statements, including our outlook for our third quarter and full fiscal year 2020 for these.

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. Please.

Forward looking statements apply as of today and we undertake no obligation to update these statements. After the call for a more detailed description of certain factors that could cause actual results to differ please refer to our Form 10-Q filed with the SEC on June eight 2023, and our earnings release, which posted today on our website as well as filed with the SEC.

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 certain historical periods and the Investor presentation posted on the investors section of our website.

Finally, we will be posting the transcript of this call to our Investor Relations website within the quarterly results section with that I'll turn it over to first quality.

Thank you Patrick and thank you all for joining us today.

Before we get to the results for the quarter.

To address four key points that are likely top of mind.

First we've announced the strategic corporate reorganization that we've been working on for months with a goal of achieving higher operational efficiency as we scale, while reducing our operating expenses by an estimated $30 million on an annualized basis as part of this reorganization, we have reduced our head count by 10% and are reducing our non personnel.

<unk> expenses as well.

Second we've taken an inventory impairment charge in our first generation DC charging products.

During the supply chain crisis, we saw the assurance of supply versus cost and are now adjusting our stranded costs to current values given inventory levels.

Third let me address growth.

We believe conversion of the world's vehicle fleet to Evs remains inevitable as does the need for infrastructure to charge them.

<unk> sales were up 48% year over year in Q2, a record for any quarter.

And Europe is experiencing a similar pace of adoption of correspondingly usage of our existing charters on our network is up significantly in short this puts utilization pressure on infrastructure and we believe that will turn into demand for our products.

Fourth I would like to underscore our continued commitment to positive adjusted EBITDA in Q4 of calendar 2024, and we believe we have sufficient cash to reach to achieve that core objectives.

Please stand by. We're about to begin.

Operator: Good afternoon, ladies and gentlemen, my name is Bo, and I will be your conference operator for today. At this time, I would like to welcome everyone to the ChargePoint second quarter fiscal 2024 earnings conference call and webcast. All participants, phone lines have been placed in a listen only mode to prevent any background noise.

Operator: After the speakers remarks, there will be a question and answer session.

Moving on to Q2, we.

We delivered revenue within our guidance range of $150 million up 39% year over year, and 16% sequentially all done in an environment, where many businesses are delaying discretionary spend.

Patrick Hamer: I would now like to turn the call over to Mr. Patrick Hamer, ChargePoint Spice President of Capital Markets and Investor Relations. Patrick, please go ahead.

In the U S. We continued delivering on several major projects we've mentioned during previous calls.

We're finishing construction of the Volvo Starbucks project, a 1300 mile corridor from Seattle and Denver.

Patrick Hamer: Good afternoon, and thank you for joining us on today's conference call to discuss ChargePoint's second quarter fiscal 2024 earnings results. This call is being webcast and can be accessed on the investor section of our website at investors.chargepoint.com.

Connected by chart <unk> DC fast charging solution at Starbucks locations along the route.

We also began shipping our charging stations for a much larger project is a Mercedes Benz fast charging network, which we announced at CES in January .

Patrick Hamer: With me on today's call or fiscal Romano or chief executive officer and Rex Jackson or chief financial officer.

Patrick Hamer: This afternoon, we issued a press release announcing results for the quarter ended July 31, 2023. Which can also be found on the investor section of our website. We'd like to remind you that during the conference call management, we'll be making forward-looking statements, including our outlook for our third quarter and full fiscal year of 2024. 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.

As Mercedes recently stated the first of these 400 plus charging hubs will open in the fall.

In Q2, we also delivered a large amount of product to the United States Postal service with our partner <unk> energy solutions supporting the ongoing growth of our fleet business.

Patrick Hamer: These forward-looking statements supply as of today, and we undertake no obligation to update these statements after the call for a more detailed description of certain factors that could cause actual results to differ. Please refer to our form 10Q file of the SEC on June 8, 2023, and our earnings release, which posted today on our website, as well as file with the SEC on form 8K. Also, please note that we use certain non-gap financial measures on this call.

Transit deployment scaled nicely in the quarter, including a project with the MTA in San Francisco among others.

We have now over 18 excuse me 8000 electric buses served by our charging management software and our telematic solutions.

Just last week, we received a fed ramp unique entity from the U S government designation achieved after a long process.

This permits us to bid for tens of millions of dollars in potential U S government rfps.

I'd also like to reiterate our commentary on what is perceived as a major market development adoption of the next connector seeing.

Patrick Hamer: Which we reconcile the gap in our earnings release. And for certain historical periods in the investor presentation post on the investor section of our website, and finally, we will be posting the transcript of this call to our investor relations website within the quarterly result section with that alternative quality.

Seeing the market need to support this connector type we began product development well ahead of the recent OEM announcements and are finalizing our <unk> connector solutions to begin shipping in November .

That being said, we remain committed to maintain to making sure our customers do not need to dedicate parking spaces to cars equipped with a specific connector types.

Patrick Hamer: Thank you, Patrick, and thank you all for joining us today.

Pasquale Romano: Before we get to the results for the quarter, I'd like to address four key points that are likely top of mind. First, we have announced a strategic corporate reorganization that we've been working on for months with a goal of achieving higher operational efficiency as we scale while reducing our operating expenses by an estimated 30 million on an annualized basis. As part of this reorganization, we have reduced our head count by 10% and are reducing our non-personnel expenses as well.

Customers existing investments in charge point technology are protected and will remain so into the future optional cost effective upgrade program <unk> cables for their Chargers. Our goal is to enable drivers to charge any vehicle anywhere at anytime.

Turning to Europe , our business continues to expand with a clear highlight being our collaboration with leasing companies for those unfamiliar with the European car market. The majority of new vehicles sold are delivered as a leased company car benefits.

Pasquale Romano: Second, we've taken an inventory impairment charge on our first generation DC charging products. During the supply chain crisis, we saw the assurance of supply versus cost and are now adjusting our standard costs to current values given inventory levels.

During the quarter, we added our ball part of the BMP group and a European leader in full service vehicle leasing to the list of these.

He was in charge of a point.

With the same strategic lens through which we approach leasing company relationships. We also are fostering our partnerships with fuel card providers like works UTI Voyager and others.

Pasquale Romano: Third, let me address growth. We believe conversion of the world's vehicle fleet to EVs remains inevitable as does the need for infrastructure to charge them. US EV sales were up 48% year over year in Q2, record for any quarter, and Europe is experiencing a similar pace of adoption correspondingly usage of our existing chargers on our network is up significantly. In short, this puts utilization pressure on infrastructure and we believe that will turn into demand for our product.

These customers are building substantial charging businesses based on charge point software.

Overall, our European revenue grew 78% year over year, and we have now surpassed 500000 roaming ports for drivers. There in addition to our own installations.

Globally, we are progressing our fortified contract manufacturing strategy. We expect these changes to give us increased capacity and improved cost structure and reliable supply.

Pasquale Romano: 4th, I'd like to underscore our continued commitment to positive adjusted EBITDA in Q4 of calendar 2024 and we believe we have sufficient cash for each to achieve that core objective. Moving on to Q2, we delivered revenue within our guidance range at $150 million of 39% year over year and 16% sequentially all done in an environment where many businesses are delaying discretionary spend. In the US, we continued delivering on several major projects we have mentioned during previous calls.

Finally to give you a snapshot of charge points global momentum here, our latest network customer and environmental statistics we.

We finished the quarter with over 225000 active ports under management, including more than 22000, DC fast sports.

Approximately one third of our managed ports are in Europe , and we now provide drivers access to more than 532000 roaming ports globally.

Pasquale Romano: We are finishing construction of the Volvo Starbucks project, a 1,300 mile corridor from Seattle to Denver connected by ChargePoint DC fast charging solutions at Starbucks locations along the route. We also began shipping our charging stations for a much larger project is a Mercedes Benz fast charging network, which we announced at the TES in January. As Mercedes recently stated, the first of these 400 plus charge charging hubs will open in the fall.

We count 76% of the 2022 Fortune 50, and 57% of the 2022 Fortune 500 as our customers.

Environmental perspective as of the end of the quarter, we estimate that our network is now fueled approximately 7 billion electric miles avoiding approximately $280 million cumulative gallons of gasoline and over one 4 million metric tons of greenhouse gas emissions.

Pasquale Romano: In Q2, we also delivered a large amount of product to the United States Postal Service with our partner Rex Health Energy Solutions supporting the ungrowing growth of our fleet business. Transit deployment scaled nicely in the quarter, including a project with the MTA and San Francisco among others. We've now over 18,000 electric buses served by our charging management software and our telematic solutions. Just last week, we received a FedRAMP unique entity ID from the US government designation achieved after a long process. This permits us to bid for tens of millions of dollars in potential US government RFPs.

And before I hand, it over to Rex I, just want to correct one thing.

I may have misspoken, we finished the quarter with 255000 active portfolio management I apologize for the mistake.

Over to you.

Thanks, Pasquale and good afternoon, everyone.

As a reminder, please see our earnings release, where we reconcile our non-GAAP results to GAAP and recall that we continue to report revenue along three lines.

Network charging systems subscriptions and other network charging systems refer to our connected hardware.

Descriptions include our cloud services connecting at hardware sure.

Sure Warranties warranties and are charged alright take.

That hardware sure warranties and our charge point as a service offerings, where we bundled hardware software and warranty coverage into recurring subscriptions.

Pasquale Romano: I'd also like to reiterate our commentary on what is perceived as a major market development adoption of the next connector. Seeing the market need to support this connector type, we began product development well ahead of the recent OEM announcements and are finalizing our next connector solutions to begin shipping in November. That being said, we remain committed to making sure our customers do not need to dedicate parking spaces to cars equipped with a specific connector type.

Other consists of professional services and certain non material revenue items.

For Q2 revenue was $150 million up 39% year on year, and 16% sequentially within our guidance range of $1 $48 million to $158 million.

Network charging systems at $115 million was 76% of Q2 revenue up 36% year on year subscription.

Pasquale Romano: Customers existing investments in charge point technology are protected and will remain so into the future via an optional cost effective upgrade program to axe cables for their chargers. Our goal is to enable drivers to charge any vehicle anywhere at any time.

Revenue at $30 million was 20% of total revenue.

48% year on year.

Other revenue was $6 million and 4% of total revenue.

Increased 51% year on year.

Our deferred revenue continues to grow this is future recurring subscription revenue from existing customer commitments and payments.

Pasquale Romano: Turning to Europe, our business continues to expand with a clear highlight being our collaboration with leasing companies. For those unfamiliar with the European car market, the majority of new vehicle sold are delivered as a least company car benefits. During the quarter, we added our vol, part of the BMP group and a European leader in full service vehicle leasing to the list of these companies that have chosen charge points. With the same strategic lens through which we approach leasing company relationships, we also are fostering our partnerships with fuel car providers like Wex, UTI, Voyager and others. These customers are building substantial charging businesses based on charge points software.

<unk> finished the quarter at $220 million up from $205 million at the end of Q1.

Turning to verticals as you know we report them from a billings perspective, which approximates the revenue split Q2 billings percentages.

Our commercial 75% fleet, 16% residential.

Residential 7% and other 1%.

Commercial was healthy and fleet continued execution against large programs. Despite the smaller contribution to Q2 billings relative to 24% in Q1.

Fleet grew over 50% year on year.

In residential we saw demand building for our home products through dealer retailer and utility programs the.

Pasquale Romano: Overall, our European revenue grew 78% year-to-year and we have now surpassed 500,000 roaming ports for drivers there in addition to our own installation.

The shipments were slower than expected.

From a geographic perspective, North Americas Q2 revenue was 79%.

And Europe was 21% consistent with our first quarter of this year.

Pasquale Romano: Globally, we are progressing our fortified contract manufacturing strategy. We expect these changes to give us increased capacity and improved cost structure and reliable supply.

In the second quarter, Europe delivered $32 million in revenue grew 78% year on year and sequentially increased 17%.

Turning to gross margin non-GAAP gross margin for Q2 was 3% as Pasquale indicated this reflects a $28 million or 19 margin point impairment to cost of goods sold.

Pasquale Romano: Finally, to give you a snapshot of ChargePoint's global momentum, here are our latest network, customer and environmental statistics. We finished the quarter with over 225,000 active ports under management, including more than 22,000 DC fast ports. Approximately one-third of our managed ports are in Europe, and we now provide drivers access more than 532,000 roaming ports globally. We count 76% of the 2022 Fortune 50 and 57% of the 2022 Fortune 500 is our customers.

This was taken to address supply chain related higher component costs and supply overruns for a first generation DC charging products.

In addition to this quarter and impairments our non-GAAP gross margin for the quarter also included three points of headwind from selling this first generation product at the pre impairment cost structure.

See continued demand for this product.

non-GAAP operating expenses for Q2 were $89 million a year on year increase of 11% and a sequential increase of 4% from an operating leverage perspective. This represents a six point improvement against the first quarter.

Pasquale Romano: From an environmental perspective, as at the end of the quarter, we estimate that our network is now fuel the approximately 7,000,000 electric models, avoiding approximately 280,000 cumulative gallons of gasoline and over 1.4 million metric tons of greenhouse gas emissions. And before I hand it over to Rex, I just want to correct one thing that I may have misspoke in. We finished the quarter with 255,000 active ports under management. Fall just for the mistake.

The reasons for Skol I mentioned today, we took actions reducing our operating expenses I will speak to the implications when I give guidance shortly.

Stock based compensation in Q2 was $35 million up from $24 million in Q1.

We typically do our annual refresh grants in Q2, which explains the stair step.

Rex Jackson: Rex, over to you. Thanks, Ms. Kualaing.

Q2, non-GAAP adjusted EBIT loss pre impairment was 53 million. This was a 5% improvement year on year, but higher than our expectations due to revenue landing towards the low end of our range.

Rex Jackson: Good afternoon, everyone. As reminders, please see our earnings release where we reconcile or non-gap results to gap and recall that we continue to report revenue along free lines, network charging systems, subscriptions and other network charging systems refer to our connected hardware subscriptions include our cloud services connecting that hardware. Sure warranties and our charge point sorry. Okay, that hardware sure warranties in our charge point is a service offerings where we bundle hardware software and warranty coverage into recurring subscriptions.

Our lower than expected gross margin.

Our non-GAAP adjusted EBITDA inclusive of the impairment was a loss of 81 million, 44% higher than last year's second quarter.

We continue to build inventory during the quarter.

As mentioned last quarter, we are working through inventory associated with earlier supply commitments we.

We finished the quarter with $144 million in inventory, which is net of the Q2 impairment discussed earlier and up from $115 million at the end of Q1.

Rex Jackson: Other consists of professional services and certain non-material revenue items. For Q2, revenue was 150 million up 39% year on year and 16% sequentially within our guidance range of 148 to 158 million. Network charging systems at 115 million was 76% of Q2 revenue of 36% year on year subscription revenue at 30 million was 20% of total revenue of 48% year on year. Other revenue at 6 million and 4% of total revenue increased 51% year on year. Our deferred revenue continues to grow. This is future recurring subscription revenue from existing customer commitments and payments. And finished the quarter at 220 million up from 205 million at the end of few on.

We do not expect this level to increase significantly over the rest of this year, we are managing through these commitments and vectoring in on our turns goals.

Looking at cash we finished the quarter with $264 million in hand this.

This balance includes $38 million raised through our ATM program, which has generated a total of $105 million over the past three quarters.

During Q2, we also entered into a $150 million revolving credit facility with four leading global banks.

This facility is currently Undrawn and provides non dilutive liquidity it will be strategically deployed alongside our at the market program to maintain a strong balance sheet as we drive towards becoming cash flow positive next year.

Rex Jackson: Turning to verticals, as you know, we report them from a billings perspective, which approximates the revenue split. Q2 billings percentages were commercial 75% fleet 16% residential 7% and other 1% commercial was healthy and fleet contingent execution against large programs. Despite the smaller contribution to Q2 billings relative to 24% in Q1, fleet grew over 50% year on year. In residential, we saw demand building for our home products, your dealer, retailer and utility programs.

This is our capital plan.

We had approximately 360 million shares outstanding as of July 31, 2023.

Turning to guidance for the third quarter of fiscal 2023, we expect revenue.

To be $1 $50 million to $165 million up 26% year on year and up 5% sequentially at the midpoint for the full fiscal year, we are guiding to $605 million to $630 million up 32% year on year.

The midpoint rigor.

Rex Jackson: From a geographic perspective, North America's Q2 revenue was 79%, and Europe was 21%, consistent with our first quarter of this year. In the second quarter, Europe delivered 32 million in revenue, grew 78% year on year, and sequentially increased 17%. Turning to gross margin, non-gap gross margin for Q2 was 3%. As Pasquale indicated, this reflects a 28 million or 19 margin point impairment to cost a good soul. This was taken to address supply chain related higher component costs and supply overruns for a first generation DC charging product.

Regarding gross margin for the third quarter, we expect to be between 22% and 25% on a non-GAAP basis as we work through the inventory levels discussed earlier.

With the inventory issue behind us and aggressive programs for improving our cost structure on supply and manufacturing.

We would expect to resume continued improvement in gross margin next year.

So we don't typically guide on operating expenses, given the reorganization, we announced today, we want to help reset everyone on a new level for the remainder of this year. Therefore, we expect non-GAAP operating expenses to be $81 million to $84 million in Q3.

$79 million to $82 million in Q4.

Finally regarding our goal of reducing our non-GAAP adjusted EBITDA by two thirds from our Q1 level. This year of $49 million were being prudent in our revenue guidance, while managing gross margin and operating expenses. Accordingly, we are targeting to have.

Rex Jackson: In addition to this quarter end impairments, our non-gap gross margin for the quarter also included three points of headwind from selling this first generation product at the pre impairment cost structure. We see continued demand for this product. Non-gap operating expenses for Q2 or 89 million, a year on year increase of 11%, and a sequential increase of 4%. From an operating leverage perspective, this represents a six point improvement against the first quarter. For reasons Pasquale mentioned, today we took actions reducing our operating expenses.

Q1, adjusted EBITDA loss in Q4.

And with that I'll turn it back to Scott for closing remarks.

Thanks Rex.

In summary, we delivered on our revenue guidance for the quarter and expanded operating leverage.

Clear leader in EV charging infrastructure across two continents and recognize.

That to be successful our solutions need to be everywhere easy to find easy to use.

And highly reliable.

Rex Jackson: I will speak to the implications when I give guidance shortly. Stock based compensation in Q2 was 35 million, up from 24 million in Q1. We typically do our annual refresh grants in Q2, which explains the stair step. Q2 non-gap adjusted EBITDA loss pre impairment was 53 million. This was a 5% improvement year on year, but higher than our expectations due to revenue landing towards the low end of our range and a lower than expected gross margin.

Charge point is at the front.

Of a long term growth cycle, we are well positioned and well capitalized for the future, leaving US confident we will hit our goal of profitability on an adjusted EBITDA basis by the end of next year. Thank you for tuning in today operator, let's proceed to questions.

Thank you ladies and gentlemen at this time, if you have any questions sent progressive 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.

Rex Jackson: Our non-gap adjusted EBITDA inclusive of the impairment was a loss of 81 million 44% higher than last year's second quarter. We continue to build inventory during the quarter. As mentioned last quarter, we are working through inventory associated with earlier supply commitments. We finished the quarter with 144 million in inventory, which is net of the Q2 impairment discussed earlier and up from 115 million at the end of Q1. We do not expect this level to increase significantly over the rest of this year.

We'll take our first question this afternoon from James West of Evercore ISI.

Hey, good afternoon guys.

Hey, Joe Hey, Dan.

Okay.

You will be shipping the new products here.

Couple of months.

I know that you had already started to do engineering work and things like that is it going to cause a change at all in kind of the asps for for your products or is it a relatively minor kind of adjustment just add next to the existing.

Rex Jackson: We are managing through these commitments and vectoring in on our turn's goals. Looking at cash, we finished the quarter with 264 million in hand. This balance includes 38 million raised through our ATM program, which is generated a total of 105 million over the past three quarters. During Q2, we also entered into a 150 million revolving credit facility with four leading global banks. This facility is currently undrawn and provides non-deluted liquidity. It will be strategically deployed alongside or at the market program to maintain a strong balance sheet as we drive towards becoming cashless positive next year.

Portfolio.

It doesn't it doesn't have an.

On AFC effects.

Okay. Okay got it thanks, and then maybe for Rex on the <unk>.

Three points of headwind on the margin is that.

Guess what are the main drivers of that I believe it's just the new getting ready for the new sales, but are those just a this quarter issue do they go away in the next couple of quarters or the year for the rest of the fiscal year.

So James those should go away going forward it was a quarter.

And quarter item that we only flag it just because we did the impairment.

Rex Jackson: This is our capital plan. We had approximately 360 million shares outstanding as of July 31, 2023.

Effective as of the end of the quarter and therefore, it didn't affect any of the any of the.

Underlying margin for that product during the quarter. We just wanted people to understand what the impact was but with the impairment that goes away.

Rex Jackson: Turning to guidance. For the third quarter of fiscal 2023, we expect revenue to be 150 to 165 million of 26% year on year and up 5% sequentially at the midpoint. For the full fiscal year, we are guiding to 605 to 630 million up 32% year on year, at the midpoint. Regarding Chris Margin, for the third quarter we expect to be between 22 and 25% on a non-gap basis as we work through the inventory levels discussed earlier. With the inventory issue behind us and aggressive programs for improving our cost structure on supply and manufacturing, we would expect to resume continued improvement across Margin next year.

Alright got it okay. Thanks, guys.

Thank you we'll go next to Colin Rusch Oppenheimer.

Thanks, So much guys with the restructuring can you talk about areas, where you're trying to focus some of those cuts or is it really just generally across the board and then the follow up question is really about.

The pathway to the cash flow break even if you could walk us through that.

At this time.

A question here.

I'll take the first part Colin.

So I want to I, just want to make sure that something is well understood we have been.

Working on this restructuring for months and it's quite distinct from.

Rex Jackson: So we don't typically guide on operating expenses given the reorganization we announced today. We want to help reset everyone on a new level for the remainder of this year. Therefore we expect non-gap operating expenses to be 81 to 84 million in Q3 and 79 to 82 million in Q4. Finally, regarding our goal of reducing our non-gap adjusted EBIT by two thirds from our Q1 level this year of 49 million. We are being prudent in our revenue guidance while managing gross Margin and operating expenses. Accordingly, we are targeting to have the Q1 adjusted EBIT laws in Q4.

Many of the other financial parameters in the company. It does have some bearing on the back half of the year, but it's largely something we've done is we've.

Continue to optimize how we execute internally.

I will point out.

Over the last eight quarters or so operating expenses have been operating in a fairly tight band and we have been improving operating leverage over that period of time and so to specifically answer your question.

Pasquale Romano: And with that, I will turn it back to the squally for closing remarks. Thanks, Rex. In summary, we delivered on our revenue guidance for the quarter and expanded operating leverage, where the clear leader in EV charging infrastructure across two continents and recognize that to be successful, our solutions need to be everywhere easy to find, easy to use and highly reliable. Charge point is at the front of a long-term growth cycle. We are well-positioned and well-capitalized for the future. Leaving as confident, we will hit our goal of profitability on an adjusted EBIT basis by the end of next year.

<unk> made.

<unk> made a restructuring a few weeks ago as phase one of this where we changed.

How we organize to go to market organizations with respect to North America, and Europe due to scale just to improve our execution and velocity and move some of the product portfolio.

Sure.

[noise] organization closer to the regions to enable them to operate faster today.

We added to that.

Restructuring with respect to how we are organized in the R&D operations.

And product management organizations, we got quite a bit of consolidation and reorganization in those areas again from an execution perspective, it will improve our velocity.

Operator: Thank you for tuning in today, operator. Let's proceed to questions. Thank you, ladies and gentlemen, at this time, if you have any questions, simply press the star one. And if you find that your question has already been addressed, you can remove yourself from the Q by pressing star one again.

And then we also did.

Some things in other areas of the company across sales and marketing and G&A. In addition to those.

James West: With that, our first question is afternoon from James West of Evercore ISI. Hey, good afternoon, guys. Hey, James. Hey, hey. So, Pat, I'm going to be shipping the new products here in a couple of months. I know you had already started to do engineering work and things like that. Is it going to cause a change at all in the ASP for your products or is it a relatively minor kind of adjustment just to add next to the existing portfolio?

Where we did address reducing some of the opex on a go forward basis. So it's really a combination of all of the above hope that answers your question.

That's super helpful. And then the follow up question is is really just what I asked.

Yes, the pathway to get into the cash flow breakeven.

It looks like kind of a midpoint or about $108 million in revenue for the fourth quarter.

Plus or minus.

So thinking about a 30% to 35% growth rate.

Pasquale Romano: It doesn't have an ASP in fact. Okay. Okay, got it.

And it would require a substantial margin expansion. So I just wanted to get a sense of how you guys see that path moving forward to getting into the 30% to 35% gross margin range.

Rex Jackson: Thanks. And then maybe for Rex on the free points of headwind on the margin, is that, I guess, one of the main drivers of that, I believe, it's just the new, the new sales, but are those just a, this quarter issued, they go away in the next couple quarters, or are they here for the rest of this year? So, James, those should go away going forward. It was a in-quarter item. We only flag it just because we did the impairment.

Yes so.

Good work on the model Bottomline as we.

Declared again today that we are bound and determined to get to that results, but by Q4 of next year.

So I think the reorganization we did today is a indication of our commitment to that target. If you run the numbers, yes, there needs to be some gross margin improvement I think I alluded to that in my commentary.

Rex Jackson: The fact is about at the end of the quarter, and therefore it didn't affect any of the price, any of the underlying margin for that product during the quarter, which one of people didn't understand what the impact was, but with the impairment that goes away.

James West: All right. Got it. Okay.

We've got some short term things that we need to grind through from.

So call it the supply chain supply chain hangover standpoint, which we will do.

But again I think I think we've shown consistently.

James West: Thanks, guys.

Operator: Thank you.

From an execution standpoint that we.

We can generally hit our topline guidance and we're bound and determined to hit that target in Q4.

Colin Rush: We go next now to Colin Rush at Oppenheim. Thanks so much, you know, with the restructuring, can you talk about areas where you're going to focus some of those cuts, or is it really just generally across the board, and then the follow up questions really about, you know, the pathway to the, the casual breaking, you could walk us through that, you know, as a secondary question here. I'll take the first part, Colin, so I want to, I just want to make sure that something is well understood.

Okay. Thanks, so much guys.

We'll go next to Matt Summerville at da Davidson.

Thanks couple of questions.

Pat in your prepared remarks, you mentioned the qualification we received from the U S government.

What's involved in that qualification and what distinguishes your ability to compete.

Pasquale Romano: We've been working on this restructuring for months, and it's quite distinct from many of the other financial primers in the company. It does have some bearing on the back half of the year, but it's largely something we've done as we've continued to optimize how we execute internally, and I'll, I'll point out that over the last eight quarters or so operating expenses that have been operating in a fairly tight ban, and we've been improving operating, and we've been working on that.

Some of these deals versus others in the market.

Yes.

As a point of clarification that is.

A.

Fed ramp is largely centered around the federal governments.

Internal or controls requirements on software systems that are controlling assets that are sold to the federal government and certain agencies. It's one of the qualification programs.

Pasquale Romano: We've been working on leverage over that period of time. And so to specifically answer your question, we made a restructuring a few weeks ago as phase one of this, where we changed how we organized the go to market organizations with respect to North American Europe due to scale, just to improve our execution velocity and move some of the product portfolio. So organization closer to the regions to enable them to operate faster today.

Receiving that.

He is.

And being listed on the website.

Basically is the milestone.

That effectively says we've been through all of the.

Process at the federal government with respect to meeting the controls and audit requirements that they have.

Across the board, so think about it as kantar.

Controls security and other things associated largely with software and remember for US we always lead with those.

Pasquale Romano: We added to that some restructuring with respect to how we are organized in the R&D operations and product management organizations, we did quite a bit of consolidation and reorganization in those areas again from an execution perspective, it will improve our velocity. And then we also did some things in other areas of the company across sales marketing and GNA in addition to those where we did address reducing some of the topics on a go forward basis. So it's really a combination of all of the above. What that answers your question.

With.

Our software first approach and that pulls through.

Obviously, the hardware that we have that works in conjunction with that software to deliver the entire solution.

Got it and then just as a quick follow up.

I think you guys have been doing some belt tightening ahead of this formal cost out program. So when you think about it holistically is that 30 million number actually higher in terms of Opex Takeouts and when do you expect to hit that $30 million run rate what would be the timing on that thank you.

Pasquale Romano: That's super helpful. And then the follow-up question is really just what I asked, you know, the pathway to getting into the cashflow break even, you know, it looks like kind of midpoint, you're about 180 million in revenue for the fourth quarter, closer minus. And so thinking about a 30 to 35% growth rate, and it would require substantial margin expansion and just want to get a sense of how you guys see that path moving forward to getting into the 30 to 35% growth margin range.

Yes, so the $30 million is an annualized number.

We pulled the trigger today today is the reorder took effect today, what Youll see is in Q3, you will see some impact of that in my guidance for Q3 Opex.

Full impact of it will hit in Q4, because obviously today is September whatever today is September five.

Thank you.

So we don't get the full impact in Q3 with fully back in Q4, and then obviously, that's a gift that keeps on giving.

As we move into next year and I think the main thing that people should focus on it if you look at what we've been doing.

Pasquale Romano: Yeah, so big work on the model, bottom line is we've declared again today that we are bounded and determined to get to that results by Q4 next year. I think the reorganization we did today is a indication of our commitment to that target. You know, if you run the numbers, yeah, there needs to be some growth margin improvement. I think I alluded to that in my commentary. We've got some short term things that we need to grind through from, you know, call it the supply chain hangover standpoint, which we will do.

I think we've been pretty responsible in terms of managing our operating expenses.

We added some acceleration back in <unk>.

Calendar 'twenty, one we leveled out in 'twenty, two it's an acceleration beginning of the year, but.

Recognized to hit some of the profitability targets that we put out we need to ratchet back, but we've actually done a great job I think of.

Significantly expanding the topline while holding the operating expense level really constant.

Pasquale Romano: But again, I think I think we've shown consistently from an execution standpoint that we, you know, we can generally hit our top line guidance and we're bound into the term that they hit that target in Q4.

Net net and so we feel confident that we're going to be.

We're going to get to our targets next year.

Thanks Brooks.

Colin Rush: Okay, thanks so much, guys.

Thank you.

Now to Alex <unk> at Bank of America.

Matt Summerville: We'll go next now to Matt Summerville at DA Davidson. Thanks. A couple of questions. First, Pat, in your prepared remarks, you mentioned the qualification you received from the U.S, government. What's involved in that qualification and what distinguishes your ability to compete on some of these deals versus others in the market? As a point of clarification, that is a Fed ramp is largely centered around the federal governments or controls requirements on software systems that are controlling assets that are sold to the federal government in certain agencies.

Thank you for taking my question guys, maybe just a higher level. One I think you mentioned that the outset.

Talking about sort of utilization on the infrastructure of portends sort of more demand to come.

Just curious right, there's a lot of sort of noise out there about EV sitting on lots I think sleep evs are still relatively.

Later on backlog.

Obviously, you have a broad scope and a broad view. So just curious how you would sort of paint the real picture from what Youre seeing out there.

And how things have evolved.

From the start of the year to today.

Yes, So let me let me take your your two part question kind of backwards on the fleet side definitely vehicle under the no no very consistent with <unk> comment.

Comments that I've made on on previous earnings calls.

Matt Summerville: It's one of the qualification programs. Receiving that ID is being listed on the website basically is the milestone that effectively says we've been through all of the process at the federal government with respect to meeting the controls and audit requirements that they have across the board. So think about it as control, security, other things associated largely with software and remember, for us, we always lead with those with a software first approach and that pulls through obviously the hardware that we have that works in conjunction with that software to deliver the entire solution.

So continuing to win customers just sets us up for an expand later when that.

Darts to decompress and from a customer base perspective, I think if you polled.

Large fleet customers they would they would.

Expressed some frustration with respect to the availability of vehicles on the passenger car side, while there are.

Yes.

There are some makes and models that are moving I think what youre seeing is some price sensitivity in the consumer market with respect to the higher priced.

Syed.

The electric vehicle market in general and probably the vehicle market overall, given where interest rates are.

And then what you're also seeing frankly is <unk>.

<unk> will take up with respect to the models introduced based on consumer preference. So not all cars are winners.

Regardless of their drivetrain technology, so some things well.

Rex Jackson: Got it. And then just is a quick follow-up. I think you guys have been doing some belt tightening ahead of this formal cost-out program. So when you think about it holistically, is that 30 million number actually higher in terms of op-ex takeouts? And when do you expect to hit that 30 million run rate? What would be the timing on that?

We will sit in an oversupply state what you have is.

I believe the number is in my prepared remarks, 48%.

Q2 to Q2 the prior prior year.

Increase in.

Electric vehicle sales and that's I think the more indicative number it's overall.

Rex Jackson: Thank you. Yeah, so the 30 million is an annualized number. We pulled the trigger today. Today is the the reward took effect today. What you'll see is in Q3, you'll see some impact of that. Hence by guidance for Q3 op-ex, the full impact of it will hit in Q4 because obviously today is September, whatever today is September 5th. Sixth, thank you. So we don't get the full impact in Q3, we pull it back in Q4 and then obviously that's again to keep some giving as we move into next year.

There are some hotspots and cold spots, but overall up and I. Just think that's that's just the normal development of what is a very.

Yes.

Vehicle market is not satisfied by two or three models, it's a very large.

Large model base Thats required to cover everything and again not everything is going to win and also not everything is going to be aligned to the economic.

The macroeconomic conditions out there for consumers.

Rex Jackson: And I think that the main thing that people should focus on, if you look at what we've been doing, I think we've been free-responsible in terms of managing our operating expenses. We added some acceleration back in calendar 21. We leveled out in 22. It's an acceleration beginning of the year, but you know, recognized to hit some of the profitability targets that we put out. We need to ratchet back. But we've actually done a great job, I think, of significantly expanding the top line while holding the operating expense level really constant, net net, and so we're confident that we're going to get for our targets next year.

Got it Super helpful. Just a quick clarification on the cash that you guys mentioned sufficient cash position to reach that that EBITDA inflection later in 'twenty four.

Rex Jackson: Thank you.

Curious you guys now have the revolver on top of the ATM any thoughts about why you would use one over the other or timing around sort of your capital sourcing strategy from now until that would be helpful. Thanks.

Yes, I think it's I think it's sort of an either or thing it's not <unk>.

For a or b.

So.

I think what we've said previously is the ATM.

I'd like to do that.

On a consistent low level basis to match very loosely.

Alexander Vrabel: Go next now to Alex Vrabel at Think of America. Thank you for taking my question, guys. Maybe just a higher level one. I think you mentioned at the outset, you know, talking about sort of utilization on the infrastructure, port 10s, sort of more demand to come. I'm just curious, right. There's a lot of sort of noise out there about, you know, EVs sitting on lots that they sleep, you know, EVs are still relatively.

Our adjusted EBITDA loss as we progress into next year, that's not a fixed formula but it is something.

That's aspirational and then as far as the revolving credit facility as it will draw that down when we need to.

We have.

We have numbers in mind that we'd like to maintain on the balance sheet and if we need to we will pull it down but it does depend on how the ATM shakes out.

Alexander Vrabel: Relatively delayed or on backlog, you know, you guys obviously have a broad scope and a broad view. So just curious how you would sort of paint the real picture from what you're seeing out there. And how things have evolved, you know, sort of from the start of the year to today. Thanks.

Got it thanks, guys. Thank you rest offline.

When next Matthew Bill Peterson Jpmorgan.

Yeah. Thanks for taking the question. So if we think about your second half demand outlook can you help us understand how the trends should look across residential commercial including workplace and fleet I mean, we saw here in the second quarter that commercial.

Pasquale Romano: Yes, let me, let me take your, your two part question kind of backwards on the fleet side, definitely vehicle limited. No, no, I'm very consistent with comments that have made on, on previous earnings calls. So continuing to win customers just sets us up for an expand later when that starts to decompress. And from a customer base perspective, I think if you pulled large fleet customers, they would, they would express some frustration with respect to the availability of vehicles.

Some nice growth while in.

In residential kind of took a step back but how should we think about the trends amongst the segments in the second half.

Yes.

Okay.

Perfect.

A copy of the way to answer the previous question is backwards I'll start with the fleet one.

And the fleet side of our businesses.

Our fleet customers are inherently quote unquote lumpy.

Pasquale Romano: On the passenger car side, while there are, you know, you know, there are some makes and models that aren't moving. I think what you're seeing is some price sensitivity in the consumer market with respect to the higher price side of the electric vehicle market in general and probably the vehicle market overall, given where interest rates are. And then what you're also seeing, frankly, is a variable take up with respect to the models introduced based on consumer preference.

With respect to revenue.

And so and that has a lot to do with not only vehicle availability, but their own construction plans for their depots et cetera.

So I would look at our fleet business.

On a more than one quarter trended basis, given the fact that you could get some quarter to quarter variance that overall as an indicative of any specific market change in condition.

Pasquale Romano: So, you know, not all cars are winners regardless of their drippering technology. So some things will sit in an oversupply state. What you have is, I believe the number is in my prepared remarks, 48% Q2 to Q2, the prior prior year increase in, you know, electric vehicle sales. And that's, I think the more indicative number, it's overall up, there are some hotspot and cold spots, but it's overall up. And I just think that's just the normal development of what is a very, you know, the vehicle market is not satisfied by two or three models.

The commercial side.

With respect to growth. While you said there was nice growth there, which there was the growth was not.

Where utilization would say it should be.

So you've got a little bit of a dislocation between.

Where commercial buyers.

General business is effectively when we refer to commercial.

Our our viewing.

The priority of investing in EV charging right now given where their own businesses or in a difficult decision, but all businesses are making in general.

In the current environment. So while the growth that you commented on is good in commercial it should have been better if it werent for the overhang that exists, but the utilization pressure is there. So the response will come because the response has to come to that utilization pressure and on home it's going to go.

Pasquale Romano: It's a very large, large model base that's required to cover everything and, again, not everything is going to win and also not everything's going to be aligned to the economic, the macro economic conditions out there for consumers.

Largely with vehicle sales theres a bit of seasonality will probably see.

Rex Jackson: I've got a super helpful just a quick clarification on the cash that you guys mentioned sufficient cash, but isn't your reach that Evidon collection later in 24. I'm just curious you guys now have the revolver on top of the ATM. Any thoughts about, you know, why you would use one over the other timing around sort of your capital sourcing strategy from now until that of the helpful base. Yeah, I think it's, I think it's sort of an either or thing.

Some some increase take up in the back half of this year.

Due to normal seasonal trends.

Okay. Thanks for that.

Recently, the seven Oems announced that they'd like to build their own charging network.

30000 Chargers, maybe around the summer of 2004, starting on you also mentioned that you started your.

I guess, Mercedes Benz Buildout and they're one of the Oems. That's part of this I guess are there any particular implications of this charging network is just an opportunity for charge point I mean, how would your relationship with Mercedes Benz essentially benefit. This program is this something that you're actively pursuing.

Rex Jackson: It's not preference for a or b. So, you know, I think what we said previously is the ATM. We'd like to do that, you know, on a consistent low level basis to, to match very loosely, you know, or adjust a little loss as we progress into next year. That's not a fixed formula, but it is something that's aspirational. And then as far as the revolving credit facility is you will draw that down when we need to, you know, we have.

So what I can say being fairly close to all the Oems that are involved in that in the broader set in general.

Is that they are sorting theyre sorting out amongst themselves.

How they want it how they want to organize and progress that business to answer your question, specifically regarding an opportunity. We view it is absolutely an opportunity for us.

Rex Jackson: We have, you know, numbers in mind that we'd like to maintain on the balance sheet, and if we need to, we'll call it down, but it does depend on how the ATM checks out. Got it. Thanks, guys.

We're very proud of what we've done on the Mercedes Benz.

William Peterson: Thank you, Russ offline. We're next now to you, Bill Peterson, JP Morgan. Yeah, thanks for taking the questions. So if we think about your second half demand outlook, can you help us understand how the trends should look across, you know, residential, commercial, you know, including workplace and fleet. I mean, we saw here in the second quarter that commercial, you know, had some nice growth while fleet and residential kind of took a step back, but how should we think about the trends amongst the segments in the in the second half.

Project to date, you'll see that as I said in the fall Mercedes made an announcement.

With respect to when they expect sites to go live in the fall.

And we'll be eager to hear.

Customer or customer perception of that project, we've been working very hard at it.

We hope that.

Bodes well for us with respect to any opportunities that the auto consortium would would bring to market and frankly I'll remind you that we've also done a lot more with auto auto Oems historically, we've done a lot with state programs historically.

William Peterson: Yeah, I mean, I, I, I, perfect, kind of copy of the way to answer the previous question is backwards, start with the fleet one. And the fleet side of our business is the fleet customers are inherently quote unquote lumpy with respect to revenue. And so, and that has a lot to do with not only vehicle availability, but their own construction plans for their depots, et cetera. So I would look at our fleet business on a more than one quarter trended basis, given the fact that you could get some quarter to quarter variants that overall is an indicative of any specific market change in condition.

We've done an awful lot of VW appendix D. Statewide programs were rebuilt our corridor as I mentioned in my remarks that we did.

Our project with Volvo and Starbucks 13500 mile corridor from Seattle, Denver. So we've got a lot of a lot of experience building these things out and related to that.

You saw us make some announcements relative to double down on our investment with respect to.

Uptime performance bullet proof.

Availability et cetera.

That's just critical it's critical for this phase of expansion for consumers. It's got to be reliable, it's got to be easy to find it's gotta be easy to use and we're making actually quite large investments relative.

William Peterson: The commercial side with respect to growth, well, you said there was nice growth there, which there was the growth was not where utilization would say it should be. So you got a little bit of a dislocation between where commercial buyers. General businesses effectively when we refer to commercial are viewing the priority of investing any be charging right now given where their own businesses are in the difficult decisions that all businesses are making in general in the current environment.

Relative to where.

Most of these corridor builds out, especially in those areas. So we hope to be well ahead of the curve.

Okay.

Okay. Thanks for that color.

Thank you for the next now to Joseph Osha at Guggenheim.

Thank you Hello, and I apologize I'm in a car.

First.

Obviously some of the intermediate term challenges, you're seeing presumably exist elsewhere in the business also.

William Peterson: So while the growth that you commented on is good in commercial, it should have been better if it weren't for the overhang that exists, but the utilization pressure is there. So the response will come because the response has to come to that utilization pressure. And on home, it's going to go largely with vehicle sales. There's a bit of seasonality will probably see some some increase take up in the back half of this year, due to normal seasonal trends.

Is there any thought around opportunities for inorganic growth through consolidation or is that just not something you would ever think about and then I do have a follow up.

Well.

And frankly, if I told you we would ever enter a period, where we wouldn't think about that.

Robbie question me.

Obviously, if we were to come across something that we're not only the financial parameters that we would we would guardrail deal.

But also the customer acquisition parameters and the talent acquisition parameters, we would certainly do it its just right now managing the business, we have a very high bar.

Pasquale Romano: Okay, thanks for that. And you know, recently, the seven OEMs announced that they'd like to build their own charging network, you know, 30,000 chargers, maybe around the summer of 24 starting. You also mentioned that you started your, I guess, Mercedes Benz build out and they're one of the OEMs that's part of this. I guess, are there any particular implications of this charging network exists an opportunity for charge point. I mean, how would your relationship with Mercedes Benz potentially benefit this program is just something that you're actively pursuing.

Bar with respect to achieving our profitability goals by the end of next year, we've doubled down on that.

On multiple earnings calls and we are held back.

To make that happen so as as as a test with respect to any inorganic growth that would make sense potentially on a go forward basis. It would have to not derail that.

Pasquale Romano: So what I can say, being fairly close to all the OEMs that are involved in the broader set in general, is that they're sorting, they're sorting out amongst themselves. How they want to, how they want to organize and progress that business to answer your question specifically regarding an opportunity, we view it as absolutely an opportunity for us. You know, we're very proud of what we've done on the Mercedes Benz. Project to date, you'll see that, as I said, in the fall Mercedes made an announcement with respect to when they expect sides to go live in the fall.

Okay that makes sense and then my second question speaking to the next issue obviously.

Anticipated this.

But yes, I mean, the competitive landscape in <unk> and by extension.

<unk> has evolved so I'm just wondering.

Since the beginning of the year has your thought.

Around the sort of the optimal mix for charge point in terms of <unk> versus <unk>.

Same store golf at all or is it still just completely what it was.

Well I think I think the question is a valid question to check in with US on do you see any fundamental market driver that would change the proportion of D C versus AC. The next component of your question doesn't really change my answer.

Pasquale Romano: And will be eager to hear customer customer perception of that project we've been working very hard at it. We hope that Bo's well for us with respect to you, any opportunities that the auto consortium would bring to market. And frankly, I remind you that we've also done a lot more with auto, auto Williams historically, we've done a lot with state programs historically. We've done an awful lot of VW Appendix D statewide programs where we built out corridors.

The next component is simply it's a connector it doesn't change functionality whatsoever.

The way, we think about it is it's a different shape, it's something we have to contend with and frankly.

We've made an investment to make sure that we don't put our customers in a position where they have to dedicate some percentage of parking spaces to Max and some percentage to CCF that would be complete failure, because you'll never get that percentage right and if you did get it right today it will change over time and so it will put an undue burden.

Pasquale Romano: I mentioned to my remarks that we did a project with Volvo and Starbucks 1300 mile corridor from Seattle to Denver. So we've got a lot of a lot of experience building these things out and related to that. You saw us make some announcements relative to a double down on our investment with respect to uptime performance, bullet proof availability, et cetera. We think that's just critical. It's critical for this phase of expansion for consumers.

John .

On essentially remodeling risk with respect to.

A charging site, which is not what you want to have happen in the early days of the market.

So because that connector again doesn't change functionality whatsoever or change consumer behavior whatsoever, we see no fundamental split.

Or shift I should say and what would <unk>.

Pasquale Romano: It's got to be reliable. It's got to be easy to find. It's got to be easy to use. And we're making actually quite large investments relative, you know, relative to where most of these corridor bills out, especially in those areas. So we hope to be well ahead of the curve.

AC business moving to DC or back.

It doesn't really affect anything.

Okay.

That's clear thank you.

Well go next to Matthew Stephen can borrow at Stifel.

Pasquale Romano: Okay, thanks for the car.

Thanks, Good afternoon everybody.

Joseph Osha: Thank you for the next now to Joseph Oshar at Guginheim. Thank you.

Two things from me the first.

Maybe maybe for Rex when we think about your target of getting to EBITDA.

Joseph Osha: Hello, and I apologize. I'm in a car to two questions. First, obviously some of the intermediate term challenges you're seeing presumably just elsewhere in the business. Also, is there any thought around opportunities for inorganic growth or control? Or is that just not something you would ever think about? And then I do have a follow up. Well, frankly, if I told you we would ever enter a period where we wouldn't think about that, you'd probably question me because obviously, if we were to come across something that were me, not only the financial parameters that we would, we would out, you know, guard real deal.

Breakeven I know this was asked a little bit earlier, but can you.

Talk us through in a little more detail to maybe increase the comfort level on kind of what type of revenue growth you need I mean, I guess, it's about mid <unk> gross margins and kind of what has to happen on the on the operating cost side of it where we're just trying to get a kind of what's behind this this past this number with a little more detail.

Sure and by the way, it's not EBIT breakeven EBIT positive sorry.

Okay, well thank you.

I couldnt resist sorry.

Joseph Osha: But also the customer acquisition parameters and the talent acquisition parameters, we would certainly do it. It's just that right now, managing the business, we have a very high bar with respect to achieving our profitability goals. By the end of next year, we've doubled down on that on multiple earnings calls and we are helping to make that happen. So as a, as a test with respect to any inorganic growth that would make sense potential in a go forward basis, you would have to not the rail that.

Sorry, Stephen.

Dana we're definitely Sigma so I think the I think the best way for you to progress on that is.

What we do which is we obviously model things out.

We clearly have a lot more visibility than you do from a pipeline and big deal perspective, as we go into next year, but.

As a certain revenue level associated with a certain gross margin level. You know we have the levers to control from an opex perspective, which obviously we demonstrated today.

Is there a set of assumptions I think are realistic that are very doable by the next year.

If for some reason the industry.

Pasquale Romano: Okay, that makes sense. And then my second question, speaking to the next issue, obviously you anticipated this. But, you know, I mean, the competitive landscape in Naxon by extension, you know, has evolved. So I'm just wondering, since the beginning of the year has your thoughts around the sort of the optimum mix for charge point in terms of L2 versus D. James, to revolved it all, or is it still just completely what it was?

Slows down considerably, which we wouldn't expect that.

Just a thought experiment that could happen, yes, it can be a problem, but we think that we think we're on the front end of it.

The big wave and we're going to move into.

Continued growth next year God forbid fleet vehicles should actually show up.

<unk> is a good thing.

Hopefully that happens.

And we'll have a strong year and in the gross margin challenges that we've seen over the last.

Pasquale Romano: Well, I think the question is a valid question to check in with us on. Do you see any fundamental market driver that would change the proportion of DC versus AC, the next component of your question doesn't really change my answer. The next component is simply, it's a connector. It doesn't change functionality whatsoever. It's just the way we think about it as it's a different shape. It's something we have to contend with.

Quarter, so will be behind us. So I think it's really that's all let's say I can't really guide you more to it I think that would be inappropriate.

Okay alright. Thanks. The other question one of the things we get from investors a bit.

When we think about nervy funding right.

What the brain goes towards like the owner operators and.

So then when we think about your exposure to never be funding and how that kind of impacts charge point, what should we be looking for it should it be certain.

Pasquale Romano: And frankly, we've made an investment to make sure that we don't put our customers in a position where they have to dedicate some percentage of parking spaces to nacks and some percentage to CCF. That would be complete failure because you'll never get that percentage right. And if you did get it right today, it'll change over time. And so it'll put an undue burden on, on essentially, remodeling risk with respect to a charging site, which is not what you want to have happen in the early days of the market.

Certain customers of yours, who are who are basically utilized <unk> to put that in every dollar to work like how should we think about.

Exactly how charge point.

Pasquale Romano: So because that connector, again, doesn't change functionality whatsoever or change consumer behavior whatsoever. We see no fundamental split or shift, I should say, in what would an AC business moving to DC or back? It doesn't really affect anything.

Gets the benefit from as leverage too.

Pasquale Romano: Okay, that's clear.

<unk> funding and when do you think we start to see that in the numbers.

So there is.

There is.

I'll give you some hints as to how to process.

Thats.

We are not directly on asset owner.

In many cases much like we did in the VW appendix three days.

Heavy bids are structured at a very high level in a very similar vein.

We may organize a collection of our customers.

To ultimately own in house, the assets and continue to care for them on an ongoing basis and integrate them with their business and in some cases. Our name is on the particular nervy proposal into a stake.

Steven Jim Barrow: Thank you. Well, that's now to Steven Jim borrow at cycle. Thanks.

In many cases.

Rex Jackson: Good afternoon, everybody. Two things for me, the first maybe, maybe for Rex, when we think about your target of getting to even break even, I know this was asked a little bit earlier, but can you talk us through in a little more detail to maybe increase the comfort level on the kind of what type of review growth you need. I mean, I guess it's about mid 30s, gross margins, and kind of what has to happen on the operating class side in work.

Our name is not on the on the proposal.

Rex Jackson: We're just trying to get a kind of what's behind this path to this number with a little more detail. Sure. And by the way, it's not even to break even it's even deposit. Sorry. Okay. I couldn't resist. Sorry, Steven. Nana, but we're definitely sigma the target. So I think the best way for you to progress on that is do what we do, which is, you know, we obviously model things out. We clearly have a lot more visibility than you do from a pipeline and big deal perspective as we go into next year, but, you know, there's a certain revenue level associated with a certain gross margin level, you know, we had a levers to control from an op x perspective, which obviously demonstrated today.

And then also many cases there are multiple proposals from multiple parties at all are based on our technology, because they've selected us as the technology partner.

Their bid.

So when you look at the results from a win.

When a state finally decides how they're going to allocate their funds across the different bidders you have the doubleclick one step deeper into the awards to.

To check because we may be the awardee on multiple.

Which has been the case, even recently there are four states.

That half.

Decided how they want to allocate the phase one and in Pennsylvania. For example were named in one of them, but we're also.

The technology supplier for 12, right. So on the surface. It looks like we didn't do very well, but when you Peel the onion, one more layer, we did quite well and just to give you a data point and again, you've got only four states that have made.

Made decisions and this is only relevant to the first phase we've got about a third or so win rate.

Rex Jackson: It is, there are a set of assumptions, I think are realistic that are very doable by the next year. If for some reason the, you know, the industry, you know, slows down considerably, which we wouldn't expect, but, you know, the thought experiment that could happen, yes, can be a problem. But, you know, we think that we think we're in the front end of a big wave and we're going to move into, you know, continue growth next year.

They're on the on the monies that have been.

Appropriated.

By the states so the win rate.

It's pretty good.

It's pretty consistent with what we've seen.

And other programs.

And again.

We're getting behind businesses that want to build their charging presence on charge point, that's the way to think about some of these companies even branded themselves with us as an ingredient brand. So in many cases when they make announcements they make announcements about their charging service because of the investments that they're making that's a very I would do.

Rex Jackson: God forbid, fleet vehicles should actually show up. You know, you know, prayer is a good thing. Hopefully that happens. And, you know, we'll, we'll have a strong year and in the gross margin challenges that we've seen over the last quarter, so we'll be behind this. So I think it's very, that's all I think I can't really guide you more to it. I think that would be it.

Steven Jim Barrow: Okay, thanks.

The same thing we're very proud of that.

Being being kind of a leading edge company, making those investments we are the technology behind a lot of businesses that are building their charging business.

Steven Jim Barrow: And the other question, one of the things we get from investors a bit is when we think about Navi funding, right? What the brain goes to is like the owner operators and so then when we think about your exposure to Navi funding, how that kind of impacts charge point, what should we be looking for? Should it be certain certain customers of yours who are who are basically utilized you to put their Navi dollars to work like, how is do we think about exactly how charge point gets the benefit from as leverage to the Navi funding and when do you think we start to see that in the numbers?

And I think it's very easy to overlook that.

Right.

Okay.

I ask the question that's good color. Thank you.

Okay.

Thank you and the next now to say at the till at Wolfe Research.

Okay. Thanks, a lot for taking my question maybe.

Maybe just following up on an earlier on an earlier question.

And if I were to rephrase it.

If you think about getting to positive EBITDA.

Do you need to see a re acceleration in the top line growth and I ask because we've now seen three quarters of decelerating top line growth and the guidance for Q3's to decelerate further so I'm just trying to think about that trajectory of revenue.

Steven Jim Barrow: So there's, there's, I'll give you some hint as to how to process that we are not directly an asset owner. In many cases, much like we did in the VW Appendix D days, the Navi bids are structured at a very high level, in a very similar vein. We may organize a collection of our customers to ultimately own and house the assets and continue to care for them on an ongoing basis and integrate them with their business.

Yes, so two things want to clarify because I wasn't sure Steven.

We're 100% aligned on this.

Part of me says he is he talking full year as you're talking just Q4, our target is to get there for the fourth quarter. If we can do a sooner obviously that'd be nice.

And as for the fourth quarter is not for the full year separately from a revenue perspective.

I think when you say acceleration.

I think if we do sort of as well as we're doing now.

Steven Jim Barrow: And in some cases, our name is on the particular Navi proposal into a state. In many cases, our name is not on the on the proposal. And in also many cases, there are multiple proposals from multiple parties that all are based on our technology because they've selected us as the technology partner for their bid. So when you look at the results from a when it went a state finally decides how they're going to allocate their funds across the different bidders, you have to double click one step deeper into the awards to check because we may be the awardee on multiple, which has been the case even recently.

You could be in the gun sites. So I don't think we need to see and last year were what 94% to 96% I forget the exact number 94% year on year growth. This year, we're going to be in the mid high end of the mid thirties.

If we can keep that going off of what should be a much bigger base as we exit the year.

That's a good pretty good spot to be I don't think we have to get to.

Back with 60% growth rate I don't think thats necessary.

Okay, that's really helpful and then.

Just.

If I.

I guess just to clarify.

If I, if I adjust out the entire impact of the legacy DC charger, both inventory charge and also the.

The impact to margin ex that it looks like gross margins would have been about 25% in the quarter.

Steven Jim Barrow: There are four states that have decided how they want to allocate. The phase one and in Pennsylvania, for example, we're named in one of them, but we're also the technology supplier for 12, right. So on the surface, it looks like we did do very well. But when you feel the onion one more layer, we did quite well. And just to give you a data point, and again, you've got only four states that have made decisions, and this is only relevant to the first phase.

I just want to make sure I'm thinking about that right and then.

When I think about the Q3 guide, which would be implying flat to maybe down margin sequentially.

How would I think about that.

That bridge, excluding the impact of this.

Of this legacy DC charger.

Yes, so as rates I think thank you or your view of Q2 is accurate.

Obviously with a charge of 3%.

Steven Jim Barrow: We've got about a third or so win rate there on the on the monies that have been appropriated, you know, by the state. So the win rate, you know, we think it's pretty good. It's pretty consistent with what we've seen in in other in other programs. And again, we're getting behind businesses that want to build their charging presence on charge point. That's the way to think about us. Some of these companies even branded themselves with us as an ingredient brand.

Even without the charges 22. This is the 19th hit.

And then if you eliminated the headwind on the product because obviously.

The old cost structure in quarter, you'd be looking more like 25% and thats consistent with what we did in Q1.

So that's when we talk about the underlying health of the business I think.

That's where that's the explanation on that as you look forward.

We said we gave you a range.

On gross margin and frankly.

<unk> been with us for a while.

Steven Jim Barrow: So in many cases, when they make announcements, they make announcements about their charging service because of the investments that they're making. That's a very, you know, I would do the same thing, very proud of the, you know, being, you know, kind of a leading edge company making those investments. We are the technology behind a lot of businesses that built, they're building their charging business. And I think it's very easy to overlook.

Our mix sensitive I hate to admit that but it's true.

We have.

Operator: Thank you.

Historically had more AC and DC and Thats at 50, 50, and maybe crossing over to D. C, which is a lower margin product for us. So I wanted to put a big range on meaningful range on Q3.

And we got we got a bang through the.

The product availability, because we had a supply of a run as we indicated under our prepared remarks we.

We need to bank through that and so it makes.

Shreyas Patil: It was the next now to Shreyas Patil at Wolf Research. Hey, thanks a lot for taking my question. Maybe just following up on an earlier question, and if I were to rephrase it, you know, so do you think about getting to positive EBITDA? Do you need to see a re-acceleration in the top line growth? And I ask because, you know, we've now seen three quarters of decelerating top line growth, and the guidance for Q3 is to decelerate further.

It makes it a little unpredictable because are you going to do that Onesies twosies of Unicredit deal for 50 to 100 hard to say so I tried to lead that leave that open but.

As I said I do think as we look into next year and we cleaned through these issues in the next six months, we should have a clear line of sight to steadily improve the gross margin next year.

Okay, great. Thanks, so much alright.

Alright.

Okay.

Yes.

Thank you we have enough now to Chris <unk> at Needham.

Shreyas Patil: So just trying to think about that trajectory of revenue. Yeah, so two things. One, I did clarify Shreyas because I wasn't sure Steven, and I were 100% aligned on this. Part of me said, is he talking full year? Is he talking just Q4 or targeted to get there for the fourth quarter? We can do it sooner, obviously, that be nice, but it is for the fourth quarter. It's not for the full year separately from a revenue perspective.

Hey, good afternoon guys.

Talking about commercial customers say utilization was 20% and then that would lead them to order new charge here.

Like where are we seeing it now where can you kind of frame. It out are they waiting to get to 30% or is it still a TBD and is there anything you can do to kind of incentivize them to move sooner rather than later.

It depends on.

Shreyas Patil: You know, I think when you say acceleration, you know, I think if we do sort of as well as we're doing now, you could be in the gun sites. So I don't think we need to see in last year or what 94, 96% I forget the exact number or 94% you're on your growth this year, we're going to be in the mid high end of the mid 30s. You know, if we can keep that going off of what should be a much bigger base as we exit the year, that's a pretty good spot to be. I don't think we have to get to back with 60% growth rate. I don't think that's necessary.

It depends on the segment. So if you would if you look at the utilization.

Your numbers are pretty consistent with utilization thresholds for passenger car long haul trip fast charge and.

That's just because humans are synchronized so the times of day that fast charge sites tend to see congestion are synchronized and then there are broad swaths of the day.

They are underutilized so youre numbers generally correct for that segment. If you look at I'll take workplace for example, workplace measured over the hours of operation of the work.

Rex Jackson: Okay, that's really helpful. And then just, you know, if I, I guess just to clarify, you know, if I, if I adjust out the entire impact of the legacy DC charger, both the inventory charge and also the, the impact to margin X that it looks like gross margins would have been about 25% in the quarter. I don't want to make sure I'm thinking about that right. And then when I think about the Q3 guide which would be in fine, you know, flat, maybe down margin sequentially just how, how would I think about that bridge excluding the impact of this of this legacy DC charger.

Self for days in office now we have to adjust that post COVID-19 for the synchronized days in office, we are seeing utilization utilization rates adjusted for.

The session gap in time between.

If they're if they're using our waitlist feature one car, leaving in the next car.

Arriving to takeover that charging point, we're seeing them approach effectively the theoretical Max cap.

So multiple of our large largest workplace customers.

Come to US and said can we think of a creative way of Decompressing. This because we effectively don't have discretionary spend capability on things that are non core to their business to their customers.

Rex Jackson: So it's raised. I think you, I think your, your view of Q2 is accurate. You know, obviously with the charge of 3% without the charge is 22. This is a 19 point hit. And then if you eliminate the headwind on the product because obviously carry the old cost structure in quarter, you'd be looking more like 25% and that's consistent with what we did in Q1. You know, so that's that's that's that's that's that's that's that's that's that's where that's the explanation on that as you look forward.

And so again, that's an indicator that we're.

Where.

Kind of.

Beyond the point of over utilization and a lot of commercial settings and on mass what they're telling US is they are waiting for budget relief to be able to adjust that.

So it really depends on the segment.

Okay, and just to clarify we're talking about budget flush into year end or budget released where you haven't gotten that deep with them.

Rex Jackson: You know, we said we gave you a range on gross margin. And frankly, and I, you've been with us for a while. We are a mixed sensitive hate to admit that it's true. We have historically had more AC than DC and that's at 50 50 and indeed maybe cross together to DC, which is a lower marketing product for us. So I wanted to put a big range on meaningful range on Q3.

Yes.

I haven't personally had the conversation in specific detail, but my sense from talking to our sales force broadly is that it is less of a budget flush in more of a.

Restricted spend policy.

<unk>.

On discretionary items within many companies that are.

Sitting here in a hesitant macro economic environment deciding how they want to basically put assurance assurances around their balance sheet.

Rex Jackson: And we got we know we got a bang through the product availability because we had a supply of a run as we indicated on our prepared remarks. We need to bang through that. And so it makes makes a little unpredictable because you're going to do that one just to these are going to cut it the over 50 to 100 hard to say. So I've tried to leave that open. But as I said, I do think as we look into next year and we clean through these issues in the next six months, we should have clear line of sight to steadily improve the gross margin next year.

Okay can we just go one deeper then is it right to think of that as California based large tech companies.

Is that the right way to think about it in that sort of in India.

Okay.

No I mean thats component.

California being the state with the highest TV penetration is certainly going to be the poster child for impaction.

When it comes to most things associated with charging infrastructure, but other other other states have have a similar profile.

Shreyas Patil: Okay, great. Thanks so much. All right. Thank you.

I don't I don't think it's related to a particular, a particular geography. It has more to do with how penetrated <unk> into the geography.

Christopher Pierce: We can now take Chris Pierce at Needle.

Christopher Pierce: Hey, good afternoon. You talked about commercial customers say utilization was 20% and then that would lead them to order a new charger. Like where are we seeing it now? Like working kind of frame it at, are they waiting to get to 30% or is it still TBD? And is there anything you can do to kind of incentivize them to move sooner rather than later? It depends on, it depends on the segment.

Okay and then just last question for me.

Just kind of highlighted the gross margin guidance in Q3. It was around mixed AC to D. C. That's sort of assumes that these customers are on a hole you're planning for them to still be on hold the next three months is the right way to think about it.

The next time.

Not quite.

If you look at the percent.

Christopher Pierce: So if you would, if you look at the utilization, your numbers are pretty consistent with utilization thresholds for passenger car, long haul trip fast charge. And that's just because humans are synchronized. So the times of day that fast charge sites tend to see congestion in our synchronized and then there are broad swaths of the day that they're underutilized. So your numbers generally correct for that segment. If you look at, I'll take workplace, for example, workplace measured over the hours of operation of the workplace itself for days in office.

Of total ports.

Do you see if you look at it on.

On a on a technology basis and not on a segment basis, but you just look at D. C ports AC towards and then we always break home out because it is on a on a different kind of volumetric scale because it's much more one to one with vehicles.

Whether single family residence anyway, the percentages haven't moved around that much in a long term trend. The difference is the ASP on.

On the DC products grid.

And the reason the Asps have risen is not because we are getting more expensive is that the power levels that are being delivered on average per parking stall have gone up.

Christopher Pierce: Now we have to adjust that post COVID for the synchronized days in office. Because we are seeing utilization rates adjusted for the session gap in time between, if they're using our weightless feature, one car leaving in the next car, arriving to take over that charging point, we're seeing them approach effectively the theoretical max cap. So multiple of our largest workplace customers come to come to us and think, can we think of a creative way of decompressing this because we effectively don't have discretionary spend capability on things that are non core to their business to their customers.

From from early days, so the cents per watt delivered if you want to reduce it to its most basic metric, although I would argue that that's not the only metric you should look at.

That has clearly come down with efficiency, but the overall kilowatts delivered has gone up significantly with respect to that technology. So that causes a mix shift in dollars.

And then if you look at the fleet business, which is growing quite nicely for us. It also in the early days, especially associated with transit I made some comments with respect to transit medium and heavy et cetera. Those are much more DC heavy businesses. So when you add that mix and.

Christopher Pierce: And so, again, that's an indicator that we're kind of beyond the point of over utilization in a lot of commercial settings and on mass what they're telling us is they're waiting for budget relief to be able to adjust that. So it really depends on the segment. And just to clarify, we're talking about budget flush and the year end or budget relief, or you haven't gotten that deep with them. Yeah, I mean, I, you know, I, you know, I haven't personally had the conversation in specific detail, but my sense from talking to ourselves for broadly, is that it is less of a budget flush and more of a restricted spend policy on, on discretionary items.

That's what's behind <unk> comments on mix sensitivity.

Okay.

Sure.

Yeah.

Yeah.

Thank you the next now to Steven Fox with Fox Advisors.

Hey, good afternoon.

Just one big picture question from me, if we step back.

I know you guys aren't providing guidance for the second half, but I mean, you've implied that the revenues are lower than you would've thought.

Christopher Pierce: Within many companies that are, you know, kind of sitting here in a hesitant macro economic environment, deciding how they want to basically put assurance, assurances around their, their balance sheet. Okay, can we just go one deeper than is it right to think of that as California based large tech companies is that the right way to think about it and that's sort of an indicator of. Okay, no, it's, I mean, that's component, I may be a California being the state with the highest ev penetration is certainly going to be the poster trial for impaction.

Andy days ago, So can you sort of.

Hello.

Frank why the disappointment in the top line and then as a follow up to that can you talk about why you would think about a reacceleration in revenues for next year, because I do the math here.

Revenues are decelerating to 10% to 20% sales growth, which obviously is not a bad number in this environment, but youre talking about getting back to like 30% for next year. So I don't know.

Love to understand like the biggest drivers of the down and then the backup.

Yes, so first of all just to.

Emphasize.

Q2, we were within our guidance range nice year over year growth.

Sure.

So strong performance there 910 from a guidance perspective, I think we're doing pretty well.

Looking forward to the second half as I said in my prepared remarks.

Christopher Pierce: When it comes to, you know, most things associated with charging infrastructure, but, you know, other, other, other states have have a similar profile, so I don't, I don't think it's related to a particular particular geography. It has more to do with how penetrated EVs are into the geography. Okay, and then just last question for me, Rex just kind of highlighted the gross margin guidance in Q3 was around next AC to DC.

We wanted to be prudent in terms of our guide.

We've just implemented a reorganization.

We had the impairment charge that we referenced.

Things are interesting and choppy.

In the real world out there so.

We want people, we want to say, we're going to do and then do it so.

We're being very prudent from a Q3 perspective, obviously, there's an implied number from a Q4 perspective same prudent supplies.

Do we think next year will be better as I said earlier.

Christopher Pierce: That sort of assumes that these customers around hold your plan to still be on hold the next three months is the right way to think about it. Well, the next two. No, I'm not not quite. If you look at the percent of total ports, AC DC, if you look at it on a on a technology basis and not on a segment basis, but you just look at DC ports, AC ports, and then we've always break home out because it is on a different kind of volumetric scale because it's much more one to one with with vehicles.

We're looking at mid <unk> in terms of percentage year over year this year versus last year and.

Yeah, Theres no reason to expect that Thats going to decelerate next year it doesn't need to accelerate as I said in terms of getting to our Q4 goals. So.

I think we feel pretty good about where we are.

And Europe is performing beautifully.

I mentioned, a nice conversation, Dave if I told you two years ago that this is what Europe would be doing today would you bleed band people.

Maybe not.

So Europe is doing a really great job, we do need to get home strengthened again relative to what its performance was 7%. It's usually 10 to 12 so.

Christopher Pierce: Where there's single family residents anyway, the percentages haven't moved around that much in a long term trend. The difference is the ASPs on the DC products of rhythm. And the reason the ASPs of risen is not because they're getting more expensive is that the power levels that are being delivered on average per parking stall have gone up. From from early days, so the the sense for what delivered if you want to reduce it to its most basic metric, although I would argue that that's not the only metric you should look at.

So we see that picking up in Q3, Q4 people people need to get back to work.

We do see pressure building on the infrastructure, we have in the commercial side, just workplace with everywhere else and fleet, it's chunky and as the vehicle show I think I think.

We're down to our benefit so I remain very optimistic about next year I can't put numbers on it but.

I don't see us is talking about slowdowns and challenges.

It's a prudent finished at the end of the year end.

The outlook for next year, and we'll guide when we get there.

Christopher Pierce: That has clearly come down with efficiency, but the overall kilowatt delivered has gone up significantly with respect to that technology, so that causes a mixed shift in dollars. And then if you look at the fleet business, which is growing quite nicely for us, it also in the early days, especially associated with tram, but I made some comments with respect to transit, medium and heavy, etc. Those are much more DC heavy businesses. So when you add that mix in, that's what's behind Rex's comments on mix sensitivity. Okay.

Okay. Thank you.

And we'll go next now to Castelli at Morningstar.

Hi, Thank you I just wanted to ask around the sales pipeline of larger fleet opportunities or what you're seeing there.

Sort of deals like the USPS type of type of deal.

I mean as I made comments earlier.

Earlier I think in response to a question. There is there is certainly a pipeline.

Of large deals.

<unk>.

As Rex put it the prudence, we're trying to apply.

Steven Fox: Thank you for the next now to Steven Fox that box advisors. Hey, good afternoon. Just one big picture question from me if we step back, I know you guys want to provide and guys for a second half, but I mean you've implied that the revenues are lower than you would have thought. You know, 90 days ago, so can you sort of, you know, forced rank, you know, why the disappointment in the top line.

To the color we gave you on that is.

Frankly until we.

See all the ducks in a row with respect to both vehicle availability.

All of the construction.

<unk> remarks associated with the deal.

Being fairly conservative as to where we expect things to show up we can.

Steven Fox: And then as a follow up to that, can you talk about why you would think about a re acceleration and revenues for next year, because I do the math here, you're revenues at decelerating to 10 to 20%. That was gross, which obviously is not a number in this environment, but you're talking about getting back to like 30% for next year. So I don't love to understand like the biggest drivers of the down and then the backup. Thanks.

Thanks to the supply chain crisis, not being upon us anymore whatsoever, we are not supply constrained. So we will have plenty of response runway as we see see things firming up.

So the summary is yes, there is much bigger deals much like USPS etcetera.

In the pipe.

Timing is hard to call.

And so we are just being.

Pasquale Romano: Yeah, so first of all, just to emphasize Q2, we were within our guidance range, nice year over year growth. So strong performance there, 9 to 10 from a guidance perspective, I think we're doing pretty well. Looking forward to the second half, as I said in my prepared remarks, you know, we wanted to be prudent in terms of our guide. We were just implemented a reorganization. We had the impairment jars that we referenced things are interesting and choppy in the real world out there.

We are just trying to be measured with respect to that.

As I said in my closing remarks.

Getting to that profitability number at the end of next year. It cant include it can include wishful thinking on our part it's got to include stuff that we have visibility into.

So while we're pretty confident that that fleet number is going to continue to.

Continue to surprise us all those are positive as a long term trend in the short term, calling the timing just too dangerous.

Okay.

Pasquale Romano: So we want people, we want to say we're going to do it. So we're being very prudent from a Q3 perspective. Obviously, there's an implied number from a Q4 perspective, same prudent supplies. Do we think next year will be better as I said earlier, you know, we're looking at mid 30s in terms of percentage year over year this year versus last year. And, you know, there's the reason to expect that that's going to decelerate next year doesn't need to accelerate as I said in terms of getting to our Q4 goals.

Okay.

Yes. Thank.

Thank you that's all I had.

Thank you and ladies and gentlemen that will bring us to the conclusion of the charge <unk> second quarter fiscal 2024 earnings conference call.

You all so much for joining us this afternoon and wish you all a great remainder of your day Goodbye.

Yeah.

Conference call I'd like to thank you all so much.

Pasquale Romano: So I think we feel pretty good about where we are. You know, Europe is performing beautifully. I mentioned a nice conversation day about if I told you two years ago, this is what Europe would be doing today, would you have believed me and people were like, maybe not. So Europe's doing a really great job. You know, we do need to get home, strengthened again relative to what it's performance was, it's 7%, it's usually 10 to 12.

Pasquale Romano: So we see that picking up a Q3, Q4 people, people need to get back to work. We do see pressure building on the infrastructure we have on the commercial side, not just workplace but everywhere else. And then inflate is chunky and as the vehicle show, I think I think that we're down to our benefits. So I remain very optimistic about next year I can put numbers on it, but I don't see us as, you know, talking about, you know, slowdowns and challenges. It's a, it's a, it's a prudent finish to the end of the year and good outlook for next year, and we'll go ahead and get there.

Steven Fox: Okay, thank you.

Brett Castelli: And we'll go next now to Brett Castelli at Morton Star. Hi, thank you. I just want to ask around the sales pipeline of larger fleet opportunities and interesting bear sort of feels like the USPS type of deal. Yeah, I mean, as I made comments earlier, I'm not sure if I'm going to be able to do that. I think in response to a question, there is certainly a pipeline of large deals. The, as Rex put, it's a prudence we're trying to apply to the color we give you on that is, frankly, until we see all the ducks in a row with respect to both vehicle availability and all of the construction.

Brett Castelli: We're being fairly conservative as to where we expect things to show up. We can, thanks to the supply chain crisis, not being upon us anymore whatsoever. We are not supply constrained. So we'll have plenty of response runway as we see, see things firming up so the summary is, yeah, there's much bigger deals much like USPS, etc. In the pipe timing is hard to call. And so we are just being, we are, we are just trying to be measured with respect to that because as I said in my closing remarks, you know, getting to that profitability number at the end of next year, it can't include, it can't include wishful thinking on our part.

Brett Castelli: It's got to include stuff that we have visibility into. So I will pretty confident that that fleet number is going to continue to continue to to surprise us all as a positive as a long term trend in the short term call on the timing, just so dangerous. Yes, thank you. That's all I had. Thank you.

Operator: And we've given that will bring us to the conclusion of the charge point second quarter fiscal 2024 earning Scotland's call. But thank you all so much for joining us this afternoon and wish you all a great remainder of the day. Goodbye.

Operator: Thank you all so much for.