Q3 2023 Blink Charging Co Earnings Call
Greetings and welcome to the Bloom charging co third quarter 2023 earnings call.
At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Please note that this conference is being recorded.
I will now turn the conference over to your host Vitale used to live V. P of Investor Relations you may begin.
Thank you Kelly.
Welcome to Blake's third quarter 2023 earnings call.
On the line today, we have Brendan Jones, President and CEO, and Michael Rama Chief Financial Officer.
The discussions today will include non-GAAP references these.
These are reconciled to the most comparable U S. GAAP measures in the appendix of the appendix of our earnings deck.
I find the deck along with the rest of our earnings materials and other important content on Blake's Investor Relations website.
These discussions May also include forward looking statements about our expectations.
Actual results may be different from those stated and the most significant factors that could cause actual results to differ are included on page two of the third quarter 2023 earnings deck.
Unless otherwise noted all comparisons are year over year.
Now regarding the Investor Relations calendar.
Blake will attempt to UBS industrial summit on the 20 <unk> of November in Palm Beach, Florida.
Needham 26th annual growth conference on the 16th of January of 2024.
Please follow or announcements for additional investor events in the future.
I will now turn the call over to Brendan Jones, President and CEO Blake charging.
Brendan Please go ahead.
Thanks, Vitale and good afternoon, everyone.
Thanks for joining us today, we're going to just jump right into the presentation.
So.
Our third quarter performance, well surpassed our second quarter results.
You can take over the title of the best quarter.
In the history of Black now, let's put that in the context of third quarter 2020, sorry, consolidated revenue increased more than 150% to $43.4 million as compared to $17 2 million in the third quarter of 2022 now.
This was driven by increased demand for both our products and services as well as blinks ability to cater to our customers' needs and timelines. We also wanted to note that in the first nine one months link has already generated $98 million in red.
<unk>, putting us significantly or ahead of our full year 2022 revenue that was $61 1 million.
And we still have another quarter of revenues yet to get to so these are quite impressive results and we actually significantly beat a quarter that was our best quarter in their history. So you know great job to the team now when we shift and look at our service revenue increased by 119 to $6 7 million.
Charging service, rather than increased 207% to $3 9 million compared to $1 3 million in the third quarter of 2022 now that represents a $2.6 million increase in charging revenue revenue at a 62.
Percent gross margin. We also recorded a 36% increase in network fees to $2 million for the quarter are network fees are worth carrying by nature and represent a reliable high margin revenue stream as we continue to build the foundation for our continued growth.
Blake company wide margin in the third quarter of 'twenty twenty-three was 29.5 or $12 $8 million.
On a year over year basis in India and in absolute dollar terms. This represents an increase of $8.3 million and gross profit in Q3. This gross margin and profit increase demonstrates our success in increasing service revenues, managing our manufacturing costs and expenses.
That of course, you're selling more charges.
Scaling our business is key to unlocking further margin expansion.
And as we move forward.
We contracted sold or deployed 5000.
965 charges globally in the third quarter, notably Youre seeing a long term trend with increased sales of our DC fast Chargers as they grow to a larger proportion of our met all of our revenue mix.
He gave you some additional context around that Blaine Chargers dispersed approximately 16.2 gigawatts of energy across all blinks networks globally now as a reminder, when we look at the blank network Gigawatts dispersed via blinks owned and operated network model comes at a lower.
Cost versus our competitors due to the predominant elle teen nature of these installations, which require significantly lower capex investment in the operating expense is greatly reduced as well.
Date in 'twenty, two 'twenty three we have to record breaking quarters with Q3 2023, representing blank strongest revenue quarter in the history of the company last quarter, we used the word momentum to describe our tremendous progress in 2023 and that description of our business.
[noise] trajectory remains on point as we move through the close of this year, we are focused on increasing that momentum and the pace. We've gathered to drive our continued growth and financial progress now.
Now, let's jump over to slide five you will see on slide five that we are increasing our revenue target.
For the end of the year, we're now targeting revenue between $128 million and $133 million versus our previous target of 102 hundred $20 million. This new target is based on our current marketplace visibility our pop line in our backlog.
Of sales.
Additionally, we would like to reiterate our full 2023 gross margin.
Target up 30, plus percent with some expected margin accretion into 2024.
If we jump to slide six now.
With our second consecutive quarter of record results. We have we are confirming our commitment to targeting a positive adjusted EBITDA run rate by December 2024.
We believe our achievements this quarter directly reflect the success of synergies the vertical integration, we have been doing proactive cost saving actions taught prehensile product portfolio and positive trends in our revenue backlog importantly, these factors will continue to provide us with.
<unk> as we go into 'twenty 'twenty four.
On slide seven we are able to scale, our revenue and cheese high.
Higher gross margin and he says Blake is the only full.
Fully verdict rated U S based full service EV infrastructure provider and we said this many many times.
As such we design and manufacture our charging equipment and we manage our own networks. This allows us to provide a full suite of capabilities to customers, who want either own their own Chargers and subscribe to our network and also to cite OS that want us to own.
And operate the Chargers on their land and hybrids in between that with our hybrid model.
Our ability to provide flexible models is a unique component of our business and it provides us with a competitive advantage over other companies.
Ongoing network, we've upgraded it last year and then upgrade continues to drive growth for the company in the third quarter, we saw a lower maintenance requirements and lower ongoing cost when compared to legacy networks and other competing networks.
That are more fragment it during the last couple of months of 'twenty to 'twenty. Three we will continue to integrate the remaining networks in the U K and Europe generating additional operating savings as we move through 2024.
Our record quarter is evident that our business model and our disciplined plan to achieve continuous improvement are working.
We employ what we call a holistic approach to executing our growth initiatives by combining market analysis with a careful evaluation of industry data and EV charging trends to identify our path forward as we drive towards profitability.
Next on slide eight slide eight you can see the long term forecast of growth for electric vehicles, and EV Chargers globally.
As we stated before we believe that the charging landscape is tremendously underserved. It is anticipated that there will be a need for up to 490 million Chargers by 'twenty 40 globally.
Representing growth over 30 times the current level today.
Blink has the team and technology to play a significant role in leading this expansion and gaining our fair share of them, our unfair share I should say of the market.
If you move now to slide nine we provide some context here around the significant opportunity.
The ongoing transition to Evs globally.
Through September of 2023 Evs grew two 8% of new car sales sold in the United States in California, 22% of all new cars, where E vs with Washington, and Oregon trailing right behind that.
In October the percentage of new vehicles shoppers very likely to consider a full battery electric vehicle reached an all time high of 29, 2%.
On a worldwide basis consumers spent approximately 400 billion on evs in 2020 two.
There are over 40 EV models available in the U S. Currently with 75 more coming to the market between 'twenty 'twenty four and 2030.
The United States alone is expected to add 1 million new Evs towards road by the end of this year and thus far they're on target.
And many fleets prefer E vs over internal combustion engines, because they save about 30% on the total cost of ownership.
Globally and this is a big number here oem's committed to over 600 billion in total EV investments from 'twenty to 'twenty three 'twenty twenty-seven with most of those investments made five years in advance of production.
So despite various industry reports, we expect the easy market to continue to grow and we view competition as a positive catalyst for consumers in the U S and globally. It's simple the more evs that are produced and deployed the cheaper they become to own and operate significantly.
Sending blink and the entire EV infrastructure market.
Moving on now to slide 10, charger installations are predicted to grow to over 30 million charges by 2030 and to over 90 million charges by 2040 equating to approximately 100 billion investment by 2040. It's also important to note that 30 million number is based on a 35%.
The penetration rate, especially notable according to Mckinsey price Waterhouse Cooper, Bloomberg, New energy finance over 90% of new Chargers are forecasted to be level two charges, creating another immense opportunity for Blake.
And to remind you blinked can provide and support both Ccs and next charging standards Tesla customers are already our largest segment by brand for L. T charging and we see the transition to next as an opportunity to expand our addressable market for D C fast charging.
Significantly.
You can see on slide 11 that D. C. Fast started has continued to be a growing part of our business with 1435 D. C. Thats starting to contracted and sold in the first nine months of 2023, approximately $27 million in revenue. So far this year can be attributed to.
DC fast Chargers sales now why do we expect that L. Two charges will continue to represent the majority of our install chargers in the near term. We are pleased to see the growth in D. C fast start your sales on.
On slide 12, you can see our innovative product portfolio, which has advanced and flexible solutions for both level two charging and high powered DC fast charging the variety of products, we offer appeals to a broad and diverse range of customers ensuring that we are prepared for the global Inc.
Kris and EV demand.
On slide 13.
In the third quarter, Blink contracted sold or deployed or acquired 5956 charges, both domestically and internationally, bringing.
Bringing the total charges account for the company to nearly 85000 Chargers since inception.
As we've said, but giving you is percentages so right now 78% of the company wide number is attributed to North America and 22 is to.
International locations predominantly in Europe, England, Ireland, the Netherlands, Belgium, and and and several others.
14 shows a representative group of our customer base, including many recognizable names across commercial entities multifamily complexes planned community health care facilities fleets and municipalities around the world.
Just a name a couple during the quarter, we were pleased to announce partnerships with Royal farms convenience stores with Parker P. D. A leading global connected car and parking service provider and with Archos Dorado as the largest independent Mcdonald's franchise in the world.
We also increased our geographic density by adding our first charges in El Salvador and in Puerto Rico. So with this in a lot of data we provided I will now pass the problem presentation onto Michael Rama our CFO.
Thank you Brendan and good afternoon, everyone turning to slide 16 total revenue in the third quarter of 2023.
<unk> grew 152% year over year to $43 $4 million in the nine months ended September 32023, total revenue grew 154% to 97.9 million product sales in the third quarter of 2023 or $35 1 million.
An increase of 162% over the same period in 2022 and the nine months ended September 32023 product sales were $76 million a growth of 151% over the same period. In 2022. This is due to customers purchasing greater volumes of our commercial.
So L two and DC fast Chargers.
Third quarter, 2012, 23 service revenues, which consist of charging service revenues network fees and car sharing revenues were $6 $7 million, an increase of 119% compared to the third quarter of 2022.
For the nine months ended September 32023 service revenues were $18 $5 million, an increase of 171% the year over year growth was primarily driven by greater utilization of our charters in the U S and internationally the increased number of charges on blank networks and revenues.
Shaded with the blade mobility car sharing program.
Gross profit for the third quarter of 2023 is approximately $12 $8 million, an increase of 167% or $8 $3 million over the same period last year as a percentage of revenue gross margin was 29, 5% in Q3 2023 compared to 27, 7%.
In the same period of the prior year.
Now for the nine months ended September 32023, gross profit was approximately $29 $6 million an increase of 256%.
Or $21 $3 million over the same period last year now as a percentage of revenue gross margin was 33% compared to 21, 6% in the same period last year for the entire year.
As mentioned by Brendan earlier, our strategy of vertical integration and in sourcing of manufacturing as well as cost avoidance and cost optimization efforts have contributed to the continuous increases in our gross profit and margins and we're not done yet.
Operating expenses in the third quarter of 2023, with a $123 $5 million compared to $29 $3 million in the prior year operating expenses in the nine months ended September 32023, or $211 $2 million compared to $69 $8 million in the same period.
The prior year the elevated operating expense number in Q3 2023 includes a non cash goodwill and intangible asset impairment charge of $94 $2 million related to a quantitative impairment analysis, which determined that the fair value of all reporting units within the company.
Less than the carrying amount it is very important to mention and note here that these impairment charges are non cash and they do not I repeat do not impact the operations of our business in any shape or form excluding these impairment charges four hour.
From our operating results for the third quarter of 2023, our business operating expenses remained flat year over year at $29 $3 million.
At this about including the operating expenses for 2023 includes the acquisition expenses of envoy or or expenses related to the envoy acquisition of a million dollars. Meanwhile, we increased our Q3 revenue by $26 billion year over year that is a 152.
Increase in revenue, while keeping operating expenses flat, we achieved it through synergies and continuous improvement efforts to grow revenue and optimize our cost footprint.
Now adjusted EBITDA for the third quarter of 2023 was a loss of $11 $7 million compared to a loss of $17 $6 million in the prior year period. This is an improvement of $5 $9 million year over year now sequentially Q3, 2023, adjusted EBITDA improved by one point.
$8 million compared to the prior quarter as a percentage of sales our Q3 adjusted EBITDA improved 17 100 basis points year over year. We expect this trend to continue as we increase volume in our gross profit and real and realize more of the business savings through our continuous improvement plan.
That Brendan mentioned earlier.
Now in the nine months ended September 32023, adjusted EBITDA was a loss of $43 million a decrease from a loss of $45 $6 million in the same period last year.
The adjusted EBITDA for the three and nine months ended September 32023 excludes the impact of stock based compensation acquisition related costs onetime non recurring expense noncash impairment charges.
Noncash loss on the extinguishment of the note payable.
Now earnings per share for the third quarter of 2023 was a loss of $1 74 per diluted share compared to a loss of 51 per diluted share in the prior year period and the nine months ended September 32023, the earnings per share was a loss of $3.02 per share compared to a loss of <unk>.
<unk> 39 per share in the same period of the prior year. Please note that the impact of the noncash accounting adjustments to our goodwill and intangible assets asset negatively impacted Q3 and year to date earnings per share by $1 54.
Adjusted earnings per share for the third quarter of 2023 was a loss of 16 cents per share compared to a loss of 47 cents.
Per diluted share in the prior year period.
In the nine months ended September 32023, the adjusted earnings per share was a loss of $1 15.
For sure compared to a loss of $1 23 per share in the same period of the prior year non-GAAP adjusted earnings per share is defined as adjusted net income, which excludes the impact of stock based compensation acquisition related costs, one time nonrecurring expense noncash impairment charges in the Nat cat.
Cash loss on extinguishment of a note payable divided by the weighted shares outstanding now turning on to page 17, or slide 17, you can see that in Q3, we are continuing the trend we saw in the second quarter of increased profit gross profit when compared to our historic results. This is primarily.
Due to the high demand for our Chargers, our ability to meet the increased demand and jet and generally increased utilization our strategy of increasing our in house manufacturing is boosting margins and we expect to see the benefit reoccurring and expanding in the long term.
We ended the second quarter.
With cash and cash we ended the third quarter with cash and cash equivalents in the amount of $66 7 million our cash burn in the third quarter was $17 million, which was significant improvement from Q1 of $28 million for Q1 of 2023 of $28 million in Q2 of 2023.
Up $47 million, we have flexibility in terms of strengthening our balance sheet as we move forward. We have an outstanding ATM up $230 million and then and are engaged in exploring other opportunities. Our goal has been to demonstrate the strong operating results of blinks business along with proper Gen.
<unk> potential as we entertain additional sourcing.
Shareholder friendly funding.
Our management team is focused on prioritizing sustained profitability and achieving positive adjusted EBITDA run rate and by December 2024 through revenue growth gross margin expansion cost savings and streamlining our processes to foster a culture of continuous improvement the second consecutive.
In this quarter.
A record quarter resulted in a clear indication that our financial and operating strategy is effective and now I'd like to turn the call back over to Brendan for a few final comments go ahead Brendan.
Thanks, Michael.
We are thrilled to have delivered our second consecutive quarter of absolutely record Blake breaking revenue growth, we had to push the team to think outside of the box and while adopting a methodical and consistent approach to reducing operating expenses.
Given our performance to date and the visibility we have.
We've raised our revenue target for the full year to $128 million to $133 million and we have reiterated our goal of targeting positive adjusted EBITDA by December 'twenty 'twenty four.
We are very proud of this team and the effort this past quarter.
But we are excited even more about what the future holds for Blake as we continue to focus on fundamentals and we remain committed to delivering disciplined and continuous improvement as we charged towards profitability and breakeven in December of 'twenty 'twenty four so with that.
I believe we are now open and ready for questions. So we'll turn it over to the operator.
Certainly at this time will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue for participants using speaker equipment. It may.
Be necessary to pick up your handset before pressing the star keys. Please.
Please hold just one moment, while we poll for questions.
Your first question is coming from Robert Jameson with UBS. Please state. Your question your line is live.
Hey, guys congrats on a great quarter.
You know really nice to see the revenue growth I guess just to focus a little bit on gross margin just given the strength in product sales, obviously charging revenues saw as well, but just kind of want to talk about the gross margin profile between.
Between your level choosing DCF Caesars has become a larger portion I mean, how should we think about that going forward.
Yeah. It's a good question. So you know when we break out the two Oh, you know of course on our.
Fell to an R series line, where we have very very robust.
Gross profit on a per new unit retail.
The fast charger on an aggregate level lags behind.
And what we are doing and we began doing this month and actually the previous quarter is we started to introduce bill Blink built in manufactured D. C. Fast searches. The first was our R series nine Charger, which is a 30 to 40 kilowatt charge or mostly fleet in dealerships, but it's the number one seller we sell.
We've improved the gross margin on that product and we expect to see as we sell more of those in the balance of this year into next year and as we've previously announced we're working on our own to 40 D. C fast charger, which will be a silicon carbide model.
That will either be 100% manufactured a blink or manufactured through a contract manufacturer. We're a gross margin hit our targets and we're finalizing those plans. So each step of the way we're looking at the portfolio and we're saying here are our margin targets, let's make sure we balance the portfolio in both D C fast start.
Or is it an L twos to get to the aggregate target and so far so good but we have more work to do on that and we've already laid the groundwork to achieving all those goals.
Yeah.
And areas, where you can continue to control some of your operating expenses I know you've got ongoing programs, where you're trying to consolidate some of your redundant systems move things onto the Blink network just kind of curious when we look through the rest of this year and then into 'twenty for you now.
Are those going up which is going to basically drive most of that improvement are there any other levers that we should be thinking about as we kind of look into next year.
Yeah, and you know it's.
Predominantly it first so when we see some of the savings start to trickle in in Q4, it's going to be around network Q1 next year, you're going to see systems integrations on back office net suites Salesforce other ancillary systems that will go from a country basis to a global basis and then.
Youre going to see more ancillary software applications that reduce the need for human capital across the board. So what we don't have is a one lever approach on this we have a multiplicity of levers and to get there. We took one of the major consulting companies, who did a complete analysis on how do we.
Get to this number so when you analyze the whole business globally, and we looked at both where we either enhance revenue and where the additional both cost avoidance strategy and cost cutting strategies need to come into play and it is a very robust plan and we are working towards that plan. We look to you know its gonna most.
Coming to effect in the first year and then trickle in in the first half of next year and then as we get into the second half you'll see Q3 with the net results all manifesting in Q4 of next year.
Excellent. Thanks for taking my question Congrats again.
Sure.
Yeah.
Your next question is coming from Craig Irwin with Roth M. Can please pose your question your line is live.
Good evening gentlemen, congratulations on chunky revenue result.
I wanted to ask Brendan if you could talk a little bit of about what's working specifically for Blink here right you're.
Our growth rates are materially above that of the rest of your peers you know what.
We're seeing across the industry.
You know I.
I understand level too as a point of strength, obviously for blink and in the market right. Now can you can you maybe speak about whether or not this is market related blink specific as far as the specific products that you're offering and you know can you maybe talk about the relative availability of.
Some of the US funding support out there for your customers to to use these level two products and whether or not this is is having a beneficial impact versus some of the challenges in the the fast charging area of the market.
Yeah. So first I don't know if we're in unique or not I think we're unique in the way that our flexible model doesn't say no to a customer right.
And that if we the customer is a good side hosting its accretive towards our utilization we can pay for it all and derive revenue.
If it's not we have the products and services that are competitive, but when you add into that and this is really the point of differentiation. The fact that on the majority of L. Twos that we sell there's still some that are third party, but on the majority of B cell in the U S. It's all shifted to our own manufacturing and we control that.
Cost you know we build the parts to some degree in India, we build all the way down to sub assemblies in Bowie, Maryland, we put those together at a much lower Cogs and that makes us hyper competitive, especially when we add the networks to it which we designed around network others can't do that and we're also not.
Subject to supply constraints.
You know we will take the post office, we were the first company and with the post office because really.
It was easier for us not that its difficult in general is a big task to increase production, while servicing all of our other customers and then meeting the timelines of the post office simultaneously. So that is what set us apart we could still get a very effective margin on the post office deal and.
And yet you know be ahead of all of our our customers or are there other our competition and winning that St deal, where others Couldnt do that.
And we continue to do that we've you know the great thing about the post how some of the deals. We won other fleet deals both commercial fleet sales and we we we got another one and just the other day about $202 million a deal. It is is that competitively advantaged for manufacturing and from this cost effective model.
We can get in there and maintain high margins you know DC fast Chargers.
Story right, you, you're not going to get as high as margin, but if you can get the volume in it's very good for revenue and then you have to ship the manufacturing.
And answer the question, Yeah, Theres a lot more L twos.
Al deals out there utilities, driven and local driven on a rebate format or in conjunction with utility bill even for multifamily dwell the billings and other and we continue to align with those programs across the United States in Florida and in other jurisdictions that that offer them and it's just you know I mean, Craig I can't say more.
About the maintenance and the upkeep difference between that'd be a D C fleet and a heavy L. Two fleet. It. It's just remarkably difference in terms of the upkeep the maintenance and as we've discussed many many times you know if I'm looking at an owner operated model an install of an L to that is.
Full turnkey by Blake I, just need 18 months for a payback on 10% utilization and if it's a hybrid I need a year at 10% your utilization that really sets us apart because you know by the numbers you've done DC fast charging that doesn't have the same profile.
Yeah understood that makes a whole lot of sense. So the second question I wanted to ask is about your revenue guidance a $1 28 to 130 Street, it's a nice increase I'm obviously following through on the strength in the third quarter, you know that that implies that the consensus numbers are bracketed them by a by what you're giving us.
Guidance Tonight, you know can you maybe talk a little bit about the sequential progression here is there may be some conservatism in the way that youre looking at the fourth quarter or is there potentially some supply chain considerations or or maybe are you are you anticipating just a small.
The impact of the move to the new facility in Bowie, Maryland, Maryland.
Having a short term impact on your throughput you know can you maybe just describe dessert and show sequential yeah. So let's start with the last one so we don't.
And anticipate where we're gonna do parallel processing had a buoy. So as the new facility comes online will still be processing out of.
The Tesla Tesla drive location and then the new location will begin operations. So you might have a 24 hour cycle, what does the interruption, but it won't be anything more than 24, maybe maybe 36 of the outset otherwise the team has got a good plan plan together to ramp up and change a very very.
Right.
Now when we look at.
What happened and yet there was a little bit of you know, we got the opportunity to ship and we had a lot more product come in in the month that was already booked.
And.
So the warehouse situation as Craig has discussed with you in the past is it you know isn't great right. So we want them and in fact, we want to maintain you know a throughput push so instead of holding and saying hey, well count that next quarter, we pushed everything through because we had a whole bunch of bookings that were coming in in terms of <unk>.
Product into the warehouse for Q4, and frankly, you know we couldn't hold both right. So that increased revenue we had some of those bookings we're gonna be in Q4, but they ended up in Q3 was really gave us a good number so theres a smoothing effect going in to Q3, where it's not going to be as high as the number.
As we saw this month, but its still going to be one of the best we've ever had.
Excellent excellent and then last question, if I may I'm, you're charging service revenue.
It's doing fantastic. So you're obviously seeing the same benefit that E. V. Go is you know people are driving that he needs more and using third party charging more but can you maybe talk about your mix of endpoints and your expectations for utilization on the network.
I know, there's some some legacy endpoints versus anything that you've you've invested in more more recently you know how do you feel about the potential for continued increases in and.
Asian and throughput on the network.
Yeah, we we feel very good about the choices, we've been making over the last three plus years as you indicated we had some legacy charges out there.
Aren't doing as well, but when we analyze the book of business on let's go to the owner operator model both in Europe and in the U S. We're seeing greater than 15% utilization on average and the majority of charges that we installed using our new methodology and you know the there's no wacky science to the new methodology is based on.
Plea a platform of arc T. I S appended with a lot of data it looks at.
How many charges are coming into the space, including competitors looks at how many evs are going to be sold it looks at the geographic implications of where the site has and make sure that that site needs are projected utilization and we've been using that in Europe and the U S. In a disciplined manner since about November.
2020, and those sites and those new installations that have happened to do much better now. We're also working with the older sites and where we can upgrade move or change Chargers were doing so were doing some upgrades now on.
On a low locations, where we believe that with new equipment that is higher than the existing infrastructure, which is mostly could be kilowatt, we're going to get a higher degree of utilization on that the operations team led by the C. O L. My photography or has that underway. So that would give us some benefit but it's gonna be marginal so it's really sticking to our gum.
One's on the owner, operator model, where the hybrid or other on making sure. We have a disciplined approach to both investments and discharge replacement.
Excellent well congratulations on this progress Oh I'll go ahead and carpet.
Back in the queue.
Sure.
Your next question is coming from Steven Zenker, I always stiefel. Please pose your question your line is live.
Oh, Thanks, good evening everybody.
I guess the first for me is when I look at it.
Can you talk a little bit about this but when you wanted the product sells the product. So we're obviously very strong and can you talk about.
Where they're growing like what were what were the big the big drivers or end markets, where the where the product sales were going that kind of drove it so strongly sequentially.
Yeah, So I'll break them down and the big categories, right and one's going to be up.
General kitchen sink.
So we continue to have a robust level of dealership and commercial fleet, which is increasing overtime.
As we started with dealerships that we're moving that fleet business beyond dealership into other companies will have up.
I'm pretty significant.
Announcement on one of those Marshal fleet and then municipal fleet Municipal fleet continues such as the post office continues to be a very very big opportunity for us and as I said earlier you know it. It definitely is one deal begets another deal and if you did a very good job.
On that.
You're going to you're going to get a sales opportunity when we exploit that fleet channel both municipal and the commercial fleet is it's predominantly sales right. There are very few owner operator instances within that and that adds to that hot high product sales mix now when we get into the other group, that's where it's a mix and that.
The health care, which we're big and we have a multiplicity of contracts with health care organizations, all across the United States from Cleveland Clinic to Levi highly Hell Hell to Kaiser Permanente and I'm, probably missing about 10 that are the seawell would yell at me for not mentioning that sense sense to look.
That it's a split between the two somewhat to own them and others. One on the owner operator model and then it's a 50 50 split on the hybrid model, so which reduces our capex involvement that is another big but book book of business and the rest is a kitchen sink of others. Like me you know, we mentioned to Mcdonald's for for.
For there the largest franchise that that's that second we'll call. It the catch all which is all of those customers that we have but this need for the sale of the Chargers as we look at and this is it gives us a lot of faith in the future right. When we look at that 30 million charge, a need and that's at 35% pen.
Right and you've got to keep in mind, California in 2020 threes at 'twenty. Two so they're almost you know theyre getting towards that number pretty quick on there. You know that is 28 plus million of them are chargers that R. L. Two that are designated for multifamily dwellings.
Are there designated for fleet their designated for other municipal fleet and for in home charging and that's blinks sweet spot.
So that is where the sales are coming from today and that's why we say see the sales coming from for the foreseeable future.
Great.
That helps thank you and then.
The other the other thing I was going to ask it I don't know how granular you're willing to get that one when we think about sort of an EBITDA positive position by the end of 'twenty 'twenty four.
Yeah.
Ballpark type of revenue quarterly revenue you'd need or I don't know.
I assume there's cross controls involved there's probably some gross margin improvement.
Any targets you can give us as far as growth resumes together now.
Not yet.
So what we're doing is we began to activate the plan and it's very detailed when we hit the target for the.
At the end of the year, which was the first time, we gave guidance out as you might remember right. What I was very we were very nervous doing that but we did it and it looks like it was the right move to do well.
We'll start to analyze everything and then see if we ever wanted to do quarter by quarter targets or give general we're gonna give general guidance. We believe for the year. After we report out the end of the year. On 2024, then we will assess the need for specific guidance, but you're right on when we look.
Look at what the levers are so theres cost reductions or some personnel reduction due to efficiencies in there and redundancies that are that are exposed. There is margin enhancement. There was he enhancements, where we can take pricing due to the market says hey, you can increase and it could be absorbed without any headaches.
All of that is baked into the plan.
Excellent. Thank you for the details.
Sure.
Once again, if you do have any remaining questions or comments. Please press star one at this time, please hold the moment, while we poll for questions.
Your next question is coming from Noel Parks with Tuohy Brothers. Please pose your question your line is live.
Hi, good afternoon.
Hey.
Just had a couple of things.
Just sort of a.
General perspective.
I was wondering.
Maybe what you're thinking.
Thinking about or maybe what you're measuring around the power.
Of your brand and and the reputation as far as charter up charter availability.
It's something that quit over here.
More expansion and people are more experienced with different.
Different operators.
It seems to me those are things that are are increasingly going to be.
Any thoughts you have on that would be great.
Oh, yeah. So it's a huge focus of the company. So in the you know and I've said this before and will continue to say it.
When we talked about quality, let's let's let's put quality and holistic bucket you know it is from everything we say to everything to do everything we build and everything we maintain.
While we had a focus on quality.
It was let's say X and now it's definitely why when we talk about it every day, we are fully participating in the U S. Government Subcommittee that's looking at charging quality, we're fully involved in California, our CTO has taken great steps to make sure that we meet the minimum.
And plus plus on what the quality standards that are coming out of both California and out of the federal study that he actually participates in and then we're working on both downstream quality to make sure that everything about our Chargers and the network work when we look at and we analyze them we brought.
Down what the quality issues or you know, it's over 85% of all come and customer connectivity and it's either the network the cellular connection the screen or the credential and I D. So we are eliminating points of contact where possible to make sure when a customer engages in our with our charge.
There's there's a limited amount of points of failure.
And that's what the team is doing and you know some of this also goes into everyone maturing as a company and make sure that you placed chargers in the correct location, where they can connect to our network.
And that you eliminate the ones that don't or when you go into that installation you come up at a higher budget on your capital expense to enhance the level of connectivity. So that theres no interruption and these are all things that Blake is doing and I and I should say the industry as a whole is coalesced to improve that level of.
Quality and the last part of that is you really got to look at your legacy portfolio and you got to make a decision on some of these chargers and especially ones that are owned by individuals that don't upgrade them and frankly, you have to be aggressive you'll have to take them off the market and you know sometimes you have to negotiate with the owner to say Hey, you know.
We keep getting bad knocks on this.
Cause you won't buy a new charger or one upgrade this and you know those are difficult conversation, but across the board on all of those levers Blink is fully engaged and we are seeing improvement.
Great Thanks and.
Another thing is hum amongst some of the the startups that are specifically focusing on the on the commercial market.
Including some that are they're looking at everywhere from delivery to more heavy duty. It. It does seem that there after what had been maybe a little bit of a COVID-19 era, a slowdown it seemed that they were on a pretty good trajectory as far as adoption.
Our large commercial fleets.
Powertrain technology.
Technology, and so forth, but but then it seems that in just the last quarter or so we've been getting.
Sort of some signs of there being a bit of a chill there as far as any customers actually pulling the trigger and moving ahead with the orders I just wondered if if any of you.
You saw any of that filtering gone through charge yourselves, a freak discussions and so forth.
Yeah, well, so hands down the number on the uptick right now is sleep.
And what we're not seeing is we're not seeing an accelerated bookings to revenue fallout right at its remaining flat and in fact, it's improving.
From what it whereas before so in even in you know 60, and 90 days 60, 90, and sometimes 180 days out.
The time for when you booked it to the one youre going to get the revenue we're not seeing significant fallout in any of those numbers are right now and a lot of that is fleet. You're you know you're one offs are really quick delivery cycle. The 30 to 60 days. So it's your longer commitments and fleet.
That we are going to really look at and those are the commercial ones that you win the miscible ones like the post office you know were already in our second tranche and the post office somebody got so much more to go because that's 43 point.
Five.
44500 charter or something I might have gotten there off a little bit on that I'm thinking about are our gross our revenue number again 43 point.
Fourth floor plates free so even on that there's no fall off we did the first tranche. The second tranche. So the post office is fully committed some you know nothing and even you know we see it to uptake and stole multifamily dwelling and all these other areas too so I'd say.
<unk>.
From who we're dealing with and what we're seeing on the business front everybody's engaged and it's an up uptick we're not seeing much fallout at all in any customer segments.
Okay.
Great. Thanks for the detail.
Your next question is coming from Chris Pierce with Needham. Please pose your question your line of sight.
Oh, Hey, good evening, everybody could you just talk about I know you talked about it on the last call reasons, why gross margins might be down sequentially in the second word.
And in the second half of 'twenty, three but then they might accelerate in 'twenty. Four can you just kind of refresh our memory on that I think it was legacy trading equipment that you hadn't built and then you mentioned in response to your question potentially using a third party to build level III charges. So I was just kind of curious why you'd want to go down that road again.
Yeah. So it's a it's an option. So we are let's start with the last one that moved potent and remind me if I forget the first one but let's get the last one so we've got a fully dedicated study that is almost completed on building our own D. C. Fast start to the 240, where that would take place and what the cost structure will.
We also have a study going on in the analysis on third party what that hit on capital budget will be et cetera. So we haven't made a final decision here what we're going to do is make the right decision for Blink and for Blake.
Shareholders and the bottom line of the company, we have our eye and are biased towards gross margin, but we also have to look at the whole financial equation to make sure that works for what we need to do now.
You know when we say contract manufacturing on that we would never you know if we decided to move forward with manufacturing on that we're not going to.
You know go and buy and say Hey, you know, we'll use her design that looks like our design it'll be our charger. So it'll be designed to our specs and we're going to source the product with them to make sure we get it down to a level that maintains our margin that is what we're looking at right now now that could change.
Right. It could change your pivot as more data becomes available, but that's where we are on the topic will have a final decision on that out shortly as I said the product is in final prototype design, but functional units now and then we will have a final assessment on it.
And what was the I forgot the other one already I'm, sorry, Oh, no problem sequential gross margins in Q3 versus Q, Yeah. So you hit it.
Or is it already 24.
Yeah. So you know a lot of DC fast Chargers took us down from the higher number that we had in that and there is still we have quite a bit we had less legacy.
We worked through in Q2.
Two we still have you know on a percentage basis, it's low but when it impacts margin.
No it tends to have a greater impact.
Because of where you were at we still have some legacy.
I would estimate the legacies is.
It is less than 5% and I and we'll get you a correct number on that but I'm doing an estimate in my head on is less than 5% of aggregate.
Now that we have in stock and that we're currently selling but its still there is predominantly on the L. Two oh and its legacy that we have both in the United States and in England, and then in Europe that we're working through.
Okay, perfect and just lastly, you talked about level three demand would be sort of just kind of answered. This question around it would you say level to demand is slowing or you wouldn't frame. It that way you would just say level three demand is growing at a faster rate.
So you know and and you know I've had the I've been blessed with getting to work for Big D. C. Fast start their companies and then getting to work for blank. That's a problem L. T that does some D. C fast charging the pace of L. Two is increasing dramatically. Although if you do a share of voice analysis.
What did you hear about is DC fast charging, but this but that share of voice analysis doesn't equate to the volume all the L. Two lines are increasing dramatically.
That makes sense, because you know 90 plus percent of the charging takes place on El too. So now we're starting to see higher velocity and throughput on that which makes sense with every piece of analysis that ever has been done in the industry.
Okay. Thank you.
Yeah.
We have reached the end of our question and answer session and I will now turn the call back to the tallies cause he asked for closing remarks.
Thank you Kelly and thank you to all of you on the phone and the webcast.
As we announced another record quarter for blank. This concludes our call today.
Yeah.
Thank you. This does conclude today's conference you may disconnect. Your phone lines at this time. Thank you for your participation.