Q2 2024 EVgo Inc Earnings Call

Operator: Thank you for standing by, and welcome to the Evgo second quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

Speaker Change: Thank you for standing by and welcome to the Evgo 2nd Quarter 2020 4 Earnings Conference Call.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question again, press star number one.

Speaker Change: All lines have been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, again press the star 1.

Operator: Thank you. I'd now like to turn the call over to Heather Davis, Vice President of Investor Relations. You may begin.

Thank you. I'd now like to turn the call over to Heather Davis, Vice President of Investor Relations. You may begin.

Heather Davis: Good morning, and welcome to Evgo's second quarter 2024 earnings call. My name is Heather Davis, and I am the Vice President of Investor Relations at Evgo. Joining me on today's call are Badar Khan, Evgo's Chief Executive Officer, and Interim Chief Financial Officer.

Heather Davis: Good morning and welcome to Evgo's second quarter 2024 earnings call. My name is Heather Davis and I am the Vice President of Investor Relations at Evgo.

Speaker Change: Joining me on today's call are Badar Khan, Evgo's Chief Executive Officer, and Stephanie Lee, Evgo's Interim Chief Financial Officer.

Heather Davis: Today, we will be discussing Evgo's second quarter financial results and our outlook for 2026, followed by a Q&A. Today's call is being webcast and can be accessed in the investor section of our website, at investors.evgo.com. The call will be archived and available there, along with the company's earnings release and investor presentation, after the conclusion of this call.

Speaker Change: Today, we will be discussing Evgo's second quarter financial results and our outlook for 2024, followed by a Q&A session.

Speaker Change: Today's call is being webcast and can be accessed on the Investors section of our website at investors.evgo.com.

The call will be archived and available there along with the company's earnings release and investor presentation after the conclusion of this call.

Heather Davis: During the call, management will be making forward-looking statements that are subject to risks and uncertainties, including expectations about future performance. Factors that could cause actual results to differ materially from our expectations are detailed in our SEC filings, including in the risk factors section of our most recent annual report on Form 10-K and quarterly report on Form 10-Q. The company's SEC filings are available on the Investor section of our website. These forward-looking statements apply as of today, and we undertake no obligation to update these statements after the call. Also, please note that we will be referring to certain non-GAAP financial measures on this call.

Speaker Change: During the call, management will be making forward-looking statements that are subject to risks and uncertainties, including expectations about future performance.

Factors that could cause actual results to differ materially from our expectations are detailed in our SEC filings.

Speaker Change: including in the risk factors section.

Speaker Change: of our most recent annual report on Form 10-K and quarterly report on Form 10-Q .

Heather Davis: The company's SEC filings are available on the Investor section of our website.

These forward-looking statements apply as of today, and we undertake no obligation to update these statements after the call.

Heather Davis: Also, please note that we will be referring to certain non-GAAP financial measures on this call.

Heather Davis: Information about these non-GAAP measures, including a reconciliation to the corresponding GAAP measures, can be found in the earnings material available on the Investor section of our website. With that, I'll turn the call over to Badar Khan, Evgo's CEO. Good morning, everyone, and thank you for joining us today.

Heather Davis: Information about these non-GAAP measures, including a reconciliation to the corresponding GAAP measures, can be found in the earnings material available on the Investor section of our website.

Heather Davis: With that, I'll turn the call over to Badar Khan, Evgo's CEO .

Badar Khan: Evgo delivered yet another excellent quarter. We achieved record revenues of over $66 million, and charging network revenues grew 2.4 times compared to last year, becoming the seventh consecutive quarter of double-digit growth in charging revenue and the sixth consecutive quarter of triple-digit year-over-year growth in network throughput. With the level of utilization and throughput we have in the network today, the annualized per stall unit economics have improved over 300% in just a short time. Providing yet more confidence, we will complete our path to profitability and deliver adjusted EBITDA breakeven in 2021.

Badar Khan: Good morning, everyone, and thank you for joining us today.

Badar Khan: Evgo delivered yet another excellent quarter. We achieved record revenues, over $66 million, and charging network revenues grew 2.4 times compared to last year.

Speaker Change: becoming the seventh sequential quarter of double-digit growth in charging revenue and the sixth consecutive quarter of triple-digit year-over-year growth in network throughput.

Heather Davis: With the level of utilization and throughput we have in the network today, the annualized per stall unit economics have improved over 300% in just a short six months.

Heather Davis: Providing yet more confidence, we will complete our path to profitability and deliver a just-a-deep-it-down breakeven in 2025.

Badar Khan: With the operating leverage we have in the business, once fixed costs are covered in 2025, all personal cash flows fall straight to the bottom line, conservatively resulting in over $200 million in adjusted EBITDA in three to five years' time. If we're only growing at the rate we are this year, a higher rate of stall growth would result in even stronger events. Let's look at some key highlights from this past.

Heather Davis: With the operating leverage we have in the business, once fixed costs are covered in 2025, all per store cash flows fall straight to the bottom line, conservatively resulting in over $200 million in adjusted EBITDA in three to five years' time, if we're only growing at the rate we are this year.

Heather Davis: A higher rate of store growth would result in even stronger EBITDA.

Speaker Change: Let's look at some key highlights from this past quarter.

Badar Khan: Our second quarter was yet another great quarter; charging network revenue more than doubled, driving an increase in total revenue. We grew our operational stores by 37% compared to last year and are on track to add 800 to 900 new owned and operated stores. Customer accounts continued to grow faster than VIO growth in the second quarter.

Speaker Change: Our second quarter was yet another great quarter, charging network revenue more than doubled, driving an increase in total revenues.

Heather Davis: We grew our operational stalls by 37% compared to last year, and are on track to add 800 to 900 new owned and operated stalls this year.

Heather Davis: Customer accounts continued to grow faster than VIO growth in the second quarter. And Evgo recently surpassed 1 million customer accounts, an exciting milestone.

Badar Khan: And Evgo recently surpassed 1 million customer accounts, an exciting milestone. We continue to see clear evidence of the operating leverage that we've talked about on our last few calls, with both expanding adjusted gross margins, especially in our own and operated business, and adjusted G&A improvement, translating into strong bottom line improvement year over year. Given our strong results and the consistent operational improvements in the business year-to-date, we have raised the midpoint of revenue and narrowed our adjusted Evigdog guidance for the full year, which Stephanie will provide more color on.

Heather Davis: We continue to see clear evidence of the operating leverage that we've talked about on our last few calls, with both expanding adjusted gross margins, especially in our owned and operated business, and adjusted G&A improvement translating into strong bottom line improvement year over year.

Heather Davis: Given our strong results and the consistent operational improvements in the business year to date, we have raised the midpoint of revenue and narrowed our adjusted EBITDA guidance for the full year, which Stephanie will provide more color on later.

Badar Khan: In Q2, EV sales in the U.S. reached over 300,000, including a record quarter for non-Tesla EV sales in the U.S. Non-pestless sales in the second quarter grew 35% compared to last year and accounted for more than 50% of EV sales for the first quarter.

Badar Khan: Non-Tesla EVs make up the majority of throughput on the Evgo network today, and we expect this trend to continue, which supports the future growth opportunity at EV. The EV market in the United States is at a tipping point, moving from early adopters of EVs to mass adoption. Today, 8% of new vehicles sold are electric, up from just 2% a few years ago. The key driver of mass adoption is more affordable. There are over 70 EV models available in the U.S., and many more are coming. J.D.

Badar Khan: Power's future vehicle calendar counts 38 new affordable models, or those with an expected MSRP of $35,000 or less, coming to market in the next 18 months. That's incredible. EV buyers will have more choice, including exciting models such as the Chevy Equinox, next-generation Chevy Bolt, Hyundai Ioniq 3, and Kia EV3, just to name a few. And this is expected to accelerate adoption. Looking at the total market, Bloomberg New Energy Finance forecasts that EVs are expected to sell for a lower price point than ICE vehicles in 2020.

Badar Khan: Significantly, it's important to note that BNF estimates that the total cost of ownership for EVs is already lower than for ICE vehicles. On top of VIO growth, Evgo benefits from multiple additional short and long-term tailwinds that are drivers of why throughput and charging revenue are growing and are expected to continue to grow faster than VIO growth. Rideshare is increasingly electrifying, and they will tend to charge at DCFCs, not L2 locations. Faster charge rates also not only lead to higher overall EV adoption, but being able to charge faster will decrease customers' reliance on home charging, thus increasing the share of public charging.

Badar Khan: More affordable vehicles are not only key to overall EV adoption but will tend to attract more customers without access to home charging, who will be reliant on public charging. Autonomous vehicles are a major long-term driver, as these cars will be electric and will charge at either public or dedicated DCSC levels. Finally, as the MAX cable is introduced, we expect Evgo to benefit more than other DCFC owner-operators because we expect to be able to attract more Tesla drivers, who represent roughly 60% of current VIO as our stations are located closer to where drivers live and work versus highway-focused charging.

Speaker Change: Autonomous vehicles are a major long-term driver, as these cars will be electric and will charge at either public or dedicated DCFC locations.

Stephanie Lee: Because we expect to be able to attract more Tesla drivers, who represent roughly 60% of current BIO, as our stations are located closer to where drivers live and work, versus highway focused charging companies.

Badar Khan: DCFC hardware companies and those that operate but do not own DCFC networks and instead sell equipment to site hosts and other customers will benefit to a lesser extent for many of these drivers because they generate one-time equipment sales versus recurring charging revenue that owner operators generate. Only some of these drivers benefit from L2P.

Badar Khan: And again, those benefits are limited to one-time equipment sales versus recurring charging revenue. And it's consistent with expectations of public DCFCs gaining a share of total energy delivered over time due to all the drivers. There is only one company that is exclusively focused on the owned and operated DCFC space that public equity investors can invest in, and that is Evgo.

Badar Khan: As we've discussed in our prior calls this year, we have very compelling unit experts. This is due to our proprietary network planning, resulting in carefully selected site locations and conservative underwriting. And they have grown considerably in the last.

Heather Davis: This is due to our proprietary network planning, resulting in carefully selected site locations and conservative underwriting, and they have grown considerably in the last six months.

Badar Khan: We reached a level of scale in kilowatt hours per stall that enabled us to generate positive annual cash flow on a per stall basis by the end of last year. And at that time, the top 15% of our stalls were generating over $30,000 per stall on an annual basis. In Q2 this year, our entire network is now generating over $7,000 annualized per store, and the top 15% is now over $40,000. This is driven by relatively minor increases in utilization and charge rates.

Speaker Change: We reached a level of scale in kilowatt hours per stall that enabled us to generate positive annual cash flow on a per stall basis by the end of last year. And at that time, the top 15% of our stalls were generating over $30,000 per stall on an annual basis.

Badar Khan: As a reminder, steady throughput per stall is the product of charge rate and utilization multiplied by 24 hours. If we continue to see the absolute increase in annual cash flow per stall over the next three, six-month periods, and we continue to grow stall count at the rate we are this year, then the simple math results in total network cash flow exceeding fixed costs, and thus adjusted EBITDA breaks even in 2025, three to five years from now. We expect to have around 7,000 stalls.

Badar Khan: If we're only adding stalls at the rate we are today, at that point, we would expect cash flow per stall across the whole network to be just under $40,000 per stall annually, given mostly by increased charge rates. And that's one of the many tailwinds due to the increasing mix of higher charge rate vehicles and a very conservative utilization assumption, far lower than the top 15% of our stalls.

Heather Davis: And a very conservative utilization assumption.

Heather Davis: If we had the same utilization in three to five years' time as the top 15% of our stalls today, with 80 kilowatt charge rates, we would double the cash flow per stall to over $85,000 annually.

Badar Khan: Resulting in a level of throughput also lower than the top 15% of our, If we had the same utilization in three to five years' time as the top 15% of our stalls today with 80 kilowatt charge rates, we would double the cash flow per stall to over $85,000. These unit economics not only provide very compelling adjusted EBITDA growth, but they also deliver very compelling project ROI. With the decline in gross capex per store we are targeting with our next generation chargers, and even with a much lower capital offset than we are seeing today, we would expect to see net capex per store in the $80,000 range. In other words, a one-time investment of $80,000, conservatively returning almost $40,000 annually.

Heather Davis: With the decline in gross capex per store, we are targeting from our next generation chargers.

Heather Davis: And even with much lower capital offsets than we are seeing today, we would expect to see net capex per stole in the $80,000 range.

Heather Davis: In other words,

Heather Davis: A one-time investment of $80,000, conservatively returning almost $40,000 annually. That is an excellent return on investment.

Badar Khan: That is an excellent return on investment. Once fixed costs are covered next year, given the very strong operating leverage, all store-based cash flows fall straight to the bottom line, resulting in very strong EBITDA growth. As I've said, we're assuming here that we continue store growth at only 800 to 900 new stores per year, which is our current growth rate. Of course, if we are successful in securing new financing, we would expect to materially increase that rate of growth.

Heather Davis: Once fixed costs are covered next year, given the very strong operating leverage, all store-based cash flows fall straight to the bottom line, resulting in very strong EBITDA growth potential.

Heather Davis: As I've said, we're assuming here that we continue stall growth at only 800 to 900 new stalls per year, which is our current growth rate. Of course, if we are successful in securing new financing, we would expect to materially increase that rate of growth.

Badar Khan: Therefore, our annual adjusted EBITDA in three to five years is simply 7,000 stalls times cash flow per stall in the prior slide minus fixed costs, with very significant continued growth beyond that. In fact, every 1,000 new stalls adds almost $40 million in adjusted EBITDA annually because we've already covered fixed costs based on our expected unit economics in three to five years. That is very compelling, said Eva Douglas. I sometimes get asked whether all the best sites have been developed, and the answer is most definitely not.

Heather Davis: I sometimes get asked whether all the best sites have been developed, and the answer is most definitely not. First, we have over 10,000 stores that currently pencil and meet our return expectations, and as EV adoption grows, more sites pencil.

Badar Khan: First, we have over 10,000 stools that currently pencil and meet our return expectations. And as EV adoption grows, we will add more sites. Secondly, our site selection algorithms and quality of stalls are just getting better and better. This chart shows daily throughput per stall for stalls in our network in Q2, depending on when they went online, with 2023 stalls, some of which would have been just over three months old, faring better than all

Heather Davis: And secondly, our site selection algorithms and quality of stools are just getting better and better.

Heather Davis: This chart shows daily throughput per stall for stalls in our network in Q2, depending on when they went online, with 2023 stalls, some of which would have been just over three months old, faring better than all prior years.

Badar Khan: Let's now turn to progress on our four key priorities that I described in our last call, improving the customer experience, operating in CapEx efficiencies, capturing and retaining high-value customers, and Securing Financing to Get to Free Cash. Improving the customer experience remains our first priority, and we continue to make progress on all the key metrics we have discussed previously. Decreasing the number of sites per stall so customers don't have to wait for a charge, and installing higher-power chargers so they can fuel up quickly. Having a reliable solution that works right on the first try.

Heather Davis: Let's now turn to progress on our four key priorities that I described in our last call. Improving the customer experience, operating in CapEx efficiencies, capturing and retaining high-value customers, and securing financing to get to free cash flow breakeven.

Badar Khan: And growing the number of sessions that have a hassle-free payment process; customers just plug the connector in, and the payment is processed automatically. This last feature gets rave reviews. And in Q2, we will release an auto-enrollment capability for some EV models and expect to expand that to many more EV models in the second half of the year, driving up the penetration of AutoCharge+. We believe we were able to execute these improvements because of the scale advantage we have over the 40 much smaller DCSC operators in the US and will ultimately result in customers gaining further confidence in public charging, driving up utilization and throughput.

Speaker Change: Having a reliable solution that works right on the first try and growing the number of sessions that have a hassle-free payment process. Where customers just plug the connector in and the payment is processed automatically.

Heather Davis: We believe we are able to execute these improvements because of the scale advantage we have over the 40 much smaller DCFC operators in the U.S. and will ultimately result in customers gaining further confidence in public charging, driving up utilization and throughput on our network.

Badar Khan: We've made excellent progress this quarter on driving efficiencies across both OPEX and capital. We completed the offshoring of most of our call volumes, which, as I said on our prior call, is a sizable portion of our sustaining GNA.

Heather Davis: We've made excellent progress this quarter on driving efficiencies across both OpEx and CapEx.

Badar Khan: You may have noticed from the economic slide earlier that we have already made substantial progress on lowering sustaining G&A costs per stall and continue to expect a reduction of around 15% on those costs in Q4 this year versus last, which is well on the way to the 40% or so reduction we're targeting in speedified. On the CAPEX side, we have already delivered a 5% improvement in gross CAPEX per store for FY24 Vintage CAPEX that we previously guided for this year as a result of the work on the prefab skids, various incremental improvements to component sourcing, and EPC improvements.

Heather Davis: Which is well on the way to the 40% or so reduction we're targeting in three to five years time.

Heather Davis: On the CAPEX side, we have already delivered a 5% improvement in gross CAPEX per store for FY24 Vintage CAPEX that we previously guided for this year as a result of the work on the prefab skids, various incremental improvements to component sourcing, and EPC improvements.

Badar Khan: Given the strategic imperative of this effort, I'm excited to tell you we hired a new EVP of engineering, Martin Sukup, who, over the past 14 years, has held leadership roles in the development of multiple generations of Tesla superchargers.

Speaker Change: Given the strategic imperative of this effort, I am excited to tell you we hired a new EVP of Engineering, Martin Sukup. Over the past 14 years held leadership roles in the development of multiple generations of Tesla superchargers. In fact, over a third of our new hires in the second quarter came from Tesla.

Badar Khan: In fact, over a third of our new hires in the second quarter came from Tesla. We've also passed key internal milestones on the joint development of next-generation architecture with an industry-leading partner that aims to lower gross capex per store by 30% and would represent a step change in customer experience due to a customer-focused design with improved firmware. We do expect to incur additional costs in the second half of this year to drive this strategically important effort, but we are not adjusting the midpoint of our adjusted EBITDA guidance due to expected improvements elsewhere.

Heather Davis: We've also passed key internal milestones.

Heather Davis: on the joint development of next-generation architecture with an industry-leading partner that aims to lower gross capex per store by 30 percent.

Heather Davis: and would represent a step change in customer experience due to a customer focused design with improved firmware.

Heather Davis: We do expect to incur additional costs in the second half of this year to drive this strategically important effort, but we are not adjusting the midpoint of our adjusted EBITDA guidance due to expected improvements elsewhere.

Heather Davis: This level of production and capex for store is what drives the even stronger returns I showed on the new economic slide and will be a key source of competitive advantage over the dozens of other smaller fast charging operators in the United States.

Badar Khan: [inaudible] It will be a key source of competitive advantage over the dozens of other smaller fast charging operators in the US. We also continue to make great progress on our growth priorities. Share of what I consider base low demand in our network continues to be strong, with 56% of throughput in the quarter coming from higher usage, relatively predictable customer segments that represent stickier kilowatt hours. And we've added to that demand with the extension of a charging credit program with Subaru.

Heather Davis: We also continue to make great progress on our growth priority.

Heather Davis: The share of what I consider base-low demand in our network continues to be strong, with 56% of throughput in the quarter coming from higher usage, relatively predictable customer segments that represent stickier kilowatt hours.

Heather Davis: And we've added to that demand with the extension of a charging credit program with Subaru.

Badar Khan: We also continue to attract new customers at higher rates than the growth in VIO, up almost 60% year-over-year. Our goal is to attract customers across all hours, potential utilization, as well as ensure we are attracting the right customers at the right times to maximize margin. We went live with the new customer data and engagement platform that allows us to do just that, and we are deploying segment-specific and low-cost campaigns to identify, attract, and retain customers to achieve the usage profile we are targeting.

Heather Davis: We also continue to attract new customers at higher rates than the growth in VIO, up almost 60% year-over-year.

Heather Davis: Our goal is to attract customers across all hours with potential utilization, as well as ensure we are attracting the right customers at the right times to maximize margin capture.

Heather Davis: We went live with the new customer data and engagement platform that allows us to do just that, and are deploying segment-specific and low-cost campaigns to identify, attract, and retain customers to get the usage profile we are targeting.

Badar Khan: We also expect to continue rolling out dynamic demand-based pricing across more of our network, as I mentioned earlier. Unlike most of the more than 40 charging operators in the U.S. today, Evgo has reached a level of scale that allows us to even contemplate these kinds of objectives and deliver on them, resulting in a key source of competitive advantage over most of the rest of the industry. Financing, we've also made solid progress this quarter.

Heather Davis: We also expect to continue rolling out dynamic, demand-based pricing across more of our network that I mentioned on the prior call.

Heather Davis: Unlike most of the more than 40 charging operators in the U.S. today, Evgo has reached a level of scale that allows us to even contemplate these kinds of objectives and deliver on them, resulting in a key source of competitive advantage over most of the rest of the industry.

Badar Khan: Capital offsets for our 2024 vintage stores are now expected to be around 50% this year versus the 40% we previously estimated. This is driven by a higher share of GM and grant-funded sites than we originally planned, and our continued focus on maximizing the amount of grant funding from all available funding sources. We continue to await finalized 30C guidance from Treasury and expect to execute our first 30C transaction in the second half of this year for the 2023 vintage store. Our application to the DOE Loan Program Office for a loan under the Title 17 Clean Energy Financing Program is ongoing.

Heather Davis: On financing, we've also made solid progress this quarter. Capital offsets for our 2024 vintage stores are now expected to be around 50% this year versus the 40% we previously indicated.

Heather Davis: This is driven by a higher share of GM and grant funded sites than we originally planned and our continued focus on maximizing the amount of grant funding from all available funding sources.

Heather Davis: We continue to await finalized 30C guidance from Treasury, and expect to execute our first 30C transaction in the second half of this year for the 2023 vintage stalls.

Heather Davis: Our application to the DOE Loan Program Office for a loan under the Title 17 Clean Energy Financing Program is continuing.

Badar Khan: We made significant progress this quarter, increasing our confidence of a conditional commitment in 2024. We believe we have a high-quality loan application that addresses the need for charging infrastructure to be built out at scale across the U.S. and supports a core part of President Biden's agenda in terms of vehicle electricity. One of the many strengths and differentiating factors of our LPO application is that we do not expect to need to issue new equity to reach financial close.

Heather Davis: We made significant progress this quarter, increasing our confidence of the conditional commitment in 2024.

Heather Davis: We believe we have a high-quality loan application that addresses the need for charging infrastructure to be built out at scale across the U.S. and supports a core part of President Biden's agenda in terms of vehicle electrification.

Heather Davis: One of the many strengths and differentiating factors with our LPU application is that we do not expect to need to issue new equity to reach financial close. This benefits both our shareholders and expedites our ability to reach financial close.

Badar Khan: This benefits both our shareholders and expedites our ability to reach financial close. As I've said before, if we're successful, we believe it'll be sufficient to not only expedite our journey to self-financing but also increase the annual rate of store growth by up to double or more. On top of our DOE loan application, Evgo is experiencing continued interest from the commercial bank market in relation to non-diluted financing structures for owner-operated DCFC charging stools. Evgo is a proven developer and operator of DCFC, and DCFC as an asset class is showing a strong correlation between revenue generation and VIO growth, as demonstrated by growth in Evgo's throughput.

Speaker Change: As I've said before, if we're successful, we believe it'll be sufficient to not only expedite our journey to self-financing, but also increase the annual rate of store growth by up to double or more.

Speaker Change: On top of our DOE loan application, Evgo is experiencing continued interest from the commercial bank market in relation to non-diluted financing structures for owner-operated DCFC charging stools.

Heather Davis: Evgo is a proven developer and operator of DCFC, and DCFC as an asset class is showing strong correlation between revenue generation and BIO growth, as demonstrated by growth in Evgo's throughput.

Badar Khan: The Positive Outlook for Long-Term VIO Growth Creates the Kind of Cash Flow Certainty Required to Support Debt Financial. We also expect to incur additional costs in the second half of this year to prepare our financial systems to accommodate project finance. But again, we are not changing the midpoint of our adjusted EBITDA guidance because of upsides we are expecting elsewhere. We continue to have sufficient capital to continue our CapEx plans well into 2025 without the benefit of any of these project finances. I'll now hand over the call to Stephanie, who will run through our strong financial performance for the second quarter of this year. Thank you, Badar.

Heather Davis: The positive outlook for long-term VIO growth creates the kind of cash flow certainty required to support debt financing.

Speaker Change: We also expect to incur additional costs in the second half of this year to prepare our financial systems to accommodate project financing.

Stephanie Lee: Evgo delivered another strong quarter of performance in Q2, exhibiting the seventh consecutive quarter of double-digit charging revenue growth and the sixth consecutive quarter of triple-digit year-over-year throughput. Revenue in the second quarter was $66.6 million, which represents a 32% year-over-year increase. This growth was primarily driven by increased charging network revenues. Retail charging revenues of $22.3 million grew from $9.1 million in the second quarter of 2023, a 146% year-over-year increase. Commercial Charging Revenues, which primarily includes revenue from our ride-share partnership of $7.1 million dollars, increased from $2.4 million dollars in the second quarter of 2023, exhibiting a 193% year-over-year increase. However, extend revenue of $27.7 million dollars declined as expected compared to the second quarter of 2020.

Speaker Change: Extend revenue of $27.7 million declined as expected compared to the second quarter of 2023, as we had significantly higher one-time equipment sales to the pilot company last year.

Stephanie Lee: As we had significantly higher one-time equipment sales to the pilot company last year, we added over 220 new operational cells in Q2, including Xtend. Total stalls in operation were approximately 3,440 at the end of June 2024, including 190 Evgo Extend stalls, increasing 37% from the end of June 2024. During the second quarter of 2024, Evgo added over 131,000 new customer accounts, a 60% increase versus Q2 of 2023. Evgo ended the quarter with more than 1 million customer accounts, an exciting milestone on our growth trajectory. During the second quarter of 2024, network throughput increased 2.6 times from last year to 66 gigawatt hours.

Speaker Change: During the second quarter of 2024, Evgo added over 131,000 new customer accounts, a 60% increase versus Q2 of 2023.

Speaker Change: Evgo ended the quarter with more than 1 million customer accounts, an exciting milestone on our growth trajectory.

Stephanie Lee: We continue to benefit from many factors that are driving this accelerated growth, such as EB buyers moving from early adopters to mass adopters, with a higher portion of multi-unit dwellers who may not have access to home charging. The Rapid Growth in Ride Share, Increased ED Vehicle Miles Traveled, increasing EV charge rates, and heavier, less efficient EV models. One of the metrics driving our network throughput growth is utilization. Evgo's network throughput continues to grow nearly four times faster than the growth in BIO.

Speaker Change: Increasing EV charge rates and heavier, less efficient EV models.

Speaker Change: One of the metrics driving our network throughput growth is utilization.

Speaker Change: Evgo's network throughput continues to grow nearly 4 times faster than the growth in BIO. Our utilization averaged over 20% across the network in the second quarter of 2024, nearly doubling from a year ago.

Stephanie Lee: Our utilization averaged over 20% across the network in the second quarter of 2020, nearly doubling from a year ago. Furthermore, over 58% of our stalls had utilization greater than 15%. Over 44% of our stalls had utilization greater than 20%, and over 23% of our stalls had utilization greater than 30%. We therefore believe that we are on a strong trajectory to hit the utilization level of 23% needed to achieve the unit economics Badar previously achieved. Our increased network throughput growth is driven by our increasing network size through stall deployment and how much energy each stall is dispensing on a daily basis.

Speaker Change: We therefore believe that we are on a strong trajectory to hit the utilization level of 23% needed to achieve the unit economics Badar previously discussed.

Speaker Change: Our increased network throughput growth is driven by our increasing network size through stall deployment and how much energy each stall is dispensing on a daily basis.

Stephanie Lee: Average daily throughput per stall more than doubled versus last year, reaching 227 kilowatt hours, with average daily throughput per stall for the month of June 2024 averaging 242 kilowatt hours. Utilization on the network also nearly doubled year over year, with utilization in the month of June 2024 averaging 21%. Charged rates, which measure the amount of electricity delivered over the same period of time, increased 12% from the prior year to 47 kilowatt hours.

Speaker Change: Average daily throughput per stall more than doubled versus last year, reaching 227 kilowatt-hours, with average daily throughput per stall for the month of June 2024 averaging 242 kilowatt-hours.

Speaker Change: Utilization on the network also nearly doubled year over year, with utilization in the month of June 2024 averaging 21%.

Stephanie Lee: We expect charge rates to continue to grow over time as EV-VIO NICS shifts towards EV models with faster batteries, and our network mix becomes increasingly faster as we add primarily 350 kilowatt charges. The profitability that our core owned and operated network delivers is improving, which is demonstrated through the growth in our charging network margin. In Q2, our charging network margin was 34.2%, improving from 19.1% in Q2 2020. As the average daily throughput per stall increases.

Speaker Change: We expect charge rates to continue to grow over time as EV-VIO mix shifts towards EV models with faster batteries, and our network mix becomes increasingly faster as we add primarily 350 kW chargers.

Speaker Change: The profitability that our core owned and operated network delivers is improving, which is demonstrated through the growth in our charging network margins.

Stephanie Lee: We expect to see continued improvement in our operating leverage, which is a significant driver for achieving adjusted EBITDA breakeven in 2025. Our charging network revenues already cover our stall-dependent cost of sales, which include fixed costs, such as site rent, property tax, and some maintenance, and variable costs, such as energy. As a reminder, there is seasonality in our charging network margins, as summer electricity tariffs are higher than winter. As I mentioned earlier, revenue grew 32% in the second quarter of 2024 to $66.6 million. Adjusted gross profit was $17.7 million in the second quarter of 2020, up from $12.9 million in the second quarter of 2023.

Speaker Change: As average daily throughput per stall increases.

Speaker Change: Our charging network revenues already cover our stall-dependent cost of sales, which include fixed costs such as site rent, property tax, and some maintenance, and variable costs such as energy costs.

Speaker Change: As a reminder, there is seasonality in our charging network margins, as summer electricity tariffs are higher than winter tariffs.

Speaker Change: As I mentioned earlier, revenue grew 32% in the second quarter of 2024 to $66.6 million.

Stephanie Lee: Adjusted growth margin was 26.5% in the second quarter of 2020, an increase of 110 basis points compared to the second quarter last year. Adjusted G&A as a percentage of revenue also improved from 46.3% in the second quarter of 2023 to 38.5% in Q2 of this year, demonstrating the operating leverage of Adjusted EBITDA was negative $8 million in the second quarter of 2020, a $2.6 million improvement versus negative $10.6 million in the second quarter of 2023. Cash, Cash Equivalents, and Restricted Cash was $162.7 million as of June 30, 2021.

Stephanie Lee: We generated cash from operations of $7.6 million in the second quarter of 2024, due primarily to the timing of working capital changes. Capital expenditures were $24.2 million in the second quarter of 2020. Capital Expenditures, net of capital offsets, was $13.8 million in Q2 of 2024. Our capital expenditures net of capital offsets for the first half of 2024 reflect lower 2024 vintage CapEx for the operational stalls, which benefited from a combination of cost reduction, mixed shifts to stalls that were relatively cheaper and faster to build, as well as mixed shifts to stalls that qualify for GM funding and higher amounts Now, turning to our 2024 guidance. Evgo is increasing the midpoint of our 2024 revenue guidance by $10 million, and we expect full-year 2024 revenue to be in the range of $240 million to $270 million.

Speaker Change: Capital expenditures were $24.2 million in the second quarter of 2024.

Speaker Change: Mixed shifts to sols that were relatively cheaper and faster to build, as well as mixed shifts to sols that qualify for GM funding and higher amounts of grant funding.

Stephanie Lee: We expect to see quarterly sequential growth in charging network revenue. Extend revenue will remain relatively consistent in the second half of 2024 and will be primarily comprised of construction revenue, which has lower margins than equipment. We are retaining the midpoint of our 2024 adjusted EBITDA guidance, but we are narrowing the range to negative $44 million to $34 million. As Badar mentioned, we expect to make increased investments in the joint development of our next generation architecture, as well as our financial systems to support project financing in the second half of 2024, which we expect will be sufficiently covered by revenue uptake. We expect capital expenditures, net of capital offsets, to be in the $90 to $105 million range, with the main use of CapEx to add $800 to $900 of new Evgo installations this year.

Speaker Change: Extend Revenue will remain relatively consistent in the second half of 2024 and will be primarily comprised of construction revenue, which has lower margins than equipment sales.

Speaker Change: As Badar mentioned, we expect to make increased investments in the joint development of our next generation architecture, as well as our financial systems to support project financing in the second half of 2024, which we expect will be sufficiently covered by the revenue upside.

Badar Khan: We expect capital expenditures, net of capital offsets, to be in the $90-$105 million range, with the main use of CapEx to add 800-900 new Evgo-owned stalls this year.

Stephanie Lee: As a reminder, we incur CapEx in advance of the vintage or operational year. As a result of our efforts over the past few years to build our growth engine, we have successfully decreased lead times between mobilization and construction completion to enable us to incur less capex in advance of the vintage year than we have historically done to maintain the same rate of stall growth. We remain fiscally prudent and only build stalls that meet our return on investment.

Speaker Change: As a reminder, we incur CapEx in advance of the vintage or operational year.

Speaker Change: As a result of our efforts over the past few years to build our growth engine,

Speaker Change: We have successfully decreased lead time.

Speaker Change: between mobilization and construction completion to enable us to incur less capex in advance of the vintage year than we have historically done to maintain the same rate of stall growth.

Speaker Change: We remain fiscally prudent and only build stalls that meet our return hurdles.

Operator: As part of our Renew program, we also expect to remove or replace 150 to 200 Evgo-owned stalls in 2024 to improve the reliability of our chargers and our customer experience. We are as confident as ever that Evgo is on a clear path to an important inflection point in our program. Namely, hitting adjusted EBITDA break-even for the full year of 2025. This is based on the expectation that EV-VIO will continue to grow and that Evgo will continue to expand its network and realize operational efficiency.

Speaker Change: As part of our Renew program, we also expect to remove or replace 150-200 Evgo owned stalls in 2024 to improve reliability of our chargers and our customer experience.

Speaker Change: We are as confident as ever that Evgo is on a clear path to an important inflection point in our business.

Speaker Change: Namely, hitting adjusted EBITDA breakeven for the full year of 2025.

Speaker Change: This is based on the expectation that EV-VIO will continue to grow and that Evgo will continue to expand its network and realize operational efficiencies.

Operator: We look forward to continuing to share our progress in 2024 with you throughout the rest of the year. Operator, we can turn the call over to questions. Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again.

Speaker Change: We look forward to continuing to share our progress in 2024 with you throughout the rest of the year.

Speaker Change: Operator, we can turn the call over to questions.

Speaker Change: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. Your first question comes from a line of Chris Dendrinos from RBC Capital Markets. Your line is open.

Operator: Your first question comes from the line of Chris Dendrinos from RBC Capital Markets. Your line is open. Yeah, good morning, and congratulations on a good quarter. I guess maybe to start things off, you mentioned the Max cables that are coming in and the opportunity to service more Tesla vehicles as a result. Can you maybe share where, I guess maybe what portion of the revenue today is a result of charging Tesla vehicles and then how you all are kind of internally thinking about what the uptake might be from the access to being able to charge more Tesla vehicles with that cable? Yeah, thanks, Chris.

Badar Khan: We're very excited about the NAICS cable for the reasons you just cited. We expect to be able to start deploying NAICS cables towards the end of this year, and we'll start to roll them out across the rest of our network over time. We're excited about them because, as I said before in prior calls, our locations are urban and suburban, and they tend to be closer to where people live and work.

Chris D'Angelo: Yeah, good morning, and congratulations on the good quarter.

Chris D'Angelo: Thank you. I guess maybe to start things off, you mentioned the NAX cables that are coming in and the opportunity to service more Tesla vehicles as a result. Can you maybe share where...

Chris D'Angelo: I guess maybe what portion of the revenue today is a result of charging Tesla vehicles and then how you all are kind of internally thinking about what the uptake might be from the access to being able to charge more Tesla vehicles with that cable. Thanks.

Speaker Change: Yeah, thanks, Chris. We're very excited about the NAAQS cable for the reason you just cited.

Speaker Change: You know, we expect to be able to start deploying NAICS cables towards the end of this year.

Speaker Change: And we'll start to roll them out across the rest of our network over time. We're excited about them because, as I said before in prior calls, our locations are urban, suburban locations. They tend to be closer to where people live and work.

Badar Khan: For instance, we have 1.6 times the amenities within walking distance of our locations versus a Tesla, the average Tesla site. And so we're expecting to be able to, through our more sophisticated marketing and growth programs, be able to target those customers that live closer to our locations and, therefore, get a growing portion of Tesla drivers. Today, Tesla drivers represent a very small, minimal share on our network.

Speaker Change: As a for instance, we have 1.6 times the amenities within walking distance of our locations versus a Tesla, the average Tesla site.

Speaker Change: And so, you know, we're expecting to be able to, through our more sophisticated marketing and growth programs, be able to target those customers that live closer to our locations and therefore get a growing portion of Tesla drivers.

Speaker Change: Today, Tesla drivers represent a very small, minimal share on our network, and so this represents a fairly significant upside for the company if we're able to attract roughly the 60% of VIO that are Tesla vehicles today.

Badar Khan: And so this represents a fairly significant upside for the company if we're able to attract roughly 60% of VIOs that are Tesla vehicles. And then, I guess, as a follow-up here, you mentioned the next-gen charging infrastructure that you all are working on and some of the incremental investment going into that later this year. I guess, can you provide maybe a preview, a little bit of what changes there are, is that more just operational changes around the charging stall, or are there structural changes to what it looks like?

Speaker Change: Got it. Okay. And then I guess as a follow-up here, you know, you mentioned that next-gen charging infrastructure that y'all are working on and some of the incremental investment going into that later this year. I guess can you provide maybe a preview, a little bit of

Speaker Change: What is...

Badar Khan: And I think you also mentioned that that hopefully improves some of the customer experience, so maybe just a bit more details on what this is going to look like. Yeah, quick question. I mean, just to begin with, you know, we've reached a level of scale in the company where we can actually become a strong partner to our suppliers because of the enormous number of customer interactions that we bring to the table. A lot of these suppliers don't actually interface with customers directly.

Speaker Change: Yeah, great question. I mean, just to begin with,

Speaker Change: You know, we've reached a level of scale in the company where we can actually become a strong partner to our suppliers because of the enormous number of customer interactions that we bring to the table.

Badar Khan: Of course, we've got a million customers, and so we have a very good sense of customers' frustrations and pain points. We bring that to the design process, and I think that's an advantage that we have over the very large number of smaller operators in the United States for DCSC today. And with that experience, we expect to be able to deliver a different site configuration, a distributed bus architecture, a different design for the equipment, and for the dispenser.

Speaker Change: A lot of these suppliers don't actually interface with customers directly, of course we've got a million customers and so we have a very good sense of customers' frustrations and pain points.

Speaker Change: We bring that to the design process. I think that's an advantage that we have over the very large number of smaller operators in the United States for DCSC today.

Speaker Change: And with that experience, we expect to be able to deliver a different site configuration, a distributed bus architecture, a different design for the equipment, for the dispenser. So it's focused primarily on the equipment as opposed to the construction, but of course,

Badar Khan: So it's focused primarily on the equipment as opposed to the construction, but of course, the site configuration should result in some improvements in construction costs and timelines as well. And that's really what we are working on. We've been working on it for the better part of a year.

Speaker Change: The site configuration should result in some improvements in the construction costs and timelines as well.

Badar Khan: I think the addition of the additional talent that we've just had over the past quarter, particularly some very strong leadership from folks who've been very closely involved with the leadership of the Tesla superchargers, I think adds to all of that experience. And we expect to be able to have something in the market by the second half of 2026, with prototypes much earlier than that. And we're targeting, as I said on the call, a 30% improvement in gross capex.

Speaker Change: And that's really what we are working on and we've been working on it for the part a year. I think the addition of the additional talent that we've just had over the past quarter, particularly some very strong leadership from folks who've been very closely involved with the leadership of Tesla superchargers, I think adds to that all of that experience.

Speaker Change: And we expect to be able to have something in the market by the second half of 2026 with prototypes much earlier than that. And we're targeting, as I said on the call, a 30% improvement in the gross capex per store.

Operator: Thank you. Your next question comes from Bill Peterson from JP Morgan. Your line is open. Hi, Bill. Yeah, hi. Hi, good morning.

Speaker Change: Got it. Thank you.

Speaker Change: Your next question comes from a line of Bill Peterson from J.P. Morgan. Your line is open.

Operator: Thanks for taking the questions. Nice job on the quarterly execution. On the three- to five-year model you presented and updated here in this quarterly presentation, you illustrate nearly 50 percent in adjusted profit margin and gross profit margin, which is up from, I believe it was around 40 percent at the midpoint in your presentation from the first quarter. So I'd like to revisit this in light of what appears to be, you know, increasing power prices broadly, competition from other networks, which, from what I can tell, generally charge at a lower price point, and maybe lower gas prices going forward, which obviously impacts TCO.

Speaker Change: Hi, Bill. Yeah. Hi. Hi. Good morning. Thanks for taking the questions. Nice job on the quarterly execution.

Speaker Change: On the three- to five-year model you presented and updated here in this quarterly presentation,

Bill Peterson: You illustrate nearly 50% in adjusted profit margin, gross profit margin, which is up from, I believe, is around 40% at the midpoint in your presentation from the first quarter. So I'd like to revisit this in light of what appears to be, you know, increasing power prices broadly, competition from other networks.

Speaker Change: Which, from what I can tell, generally charge at a lower price point. Maybe lower gas prices going forward, which obviously impacts TCO. So, I guess what I'm getting at is, can you unpack your expectations around pricing, price increases?

Operator: So I guess what I'm getting at is, can you unpack your expectations around pricing, price increases, power prices, inflation, and other factors that are driving it to this adjusted gross margin target? And more importantly, or equally importantly, what's changed in your view to raise this, Stross's, Margin Target by 10 percentage points at the midpoint? So, I don't think the gross margin target has changed, actually, Bill, for the three-to-five-year outlook. We are assuming that prices, unit prices, and unit costs that we're seeing today will be intact in three-to-five years.

Speaker Change: Power prices, inflation, other factors that are driving it to this adjusted gross margin target. And more importantly, or equally importantly, what's changed in your view to raise this gross margin target by 10 percentage points at the midpoint?

Speaker Change: So, I don't think that the gross margin target has changed, actually, Bill, for the three-to-five-year outlook. We are assuming that prices, unit prices and unit costs,

Speaker Change: that we're seeing today are intact in three to five years time.

Badar Khan: And the reason we believe that is because there's tremendous demand for charging infrastructure that exceeds supply. And with Tesla's slowdown or withdrawal or whatever it is, I think it just further reinforces demand exceeding supply for charging infrastructure in the long term. I think, as I said before, we are really in the early stages around the level of sophistication of pricing. I've talked a little bit about pricing in prior calls in terms of time of use pricing, and, obviously, location-based pricing.

Speaker Change: And the reason we believe that is because there's tremendous demand for charging infrastructure that exceeds supply and with Tesla's slowdown or withdrawal or whatever it is, I think just further reinforces demand exceeding supply for charging infrastructure.

Speaker Change: In the long term, we, I think as I said before, we are really in the early stages around the level of sophistication of pricing. I've talked a little bit about pricing in prior calls.

Speaker Change: In terms of time of use pricing, clearly obviously location-based pricing.

Badar Khan: But we are introducing, and we have begun introducing, automated dynamic demand-based pricing on a relatively small portion of the network, and I expect that to continue. And so, for all those reasons, we felt that there's really only upside, actually, in the margins as I look forward over time. The real driver here, of course, is the tremendous tailwind of charge rates. Charge rates are rising because vehicle mix, batteries in the vehicles that Americans are buying are getting faster, and we're deploying faster chargers on the road in our fleet.

Speaker Change: But we are introducing, and we have begun introducing, automated dynamic demand-based pricing.

Speaker Change: Relatively small portion of the network, and I expect that to continue.

Speaker Change: And so for all those reasons, we felt that there's really only upside, actually, in the margins as I look forward over time. The real drivers here, of course, is the tremendous tailwind of charge rates. Charge rates are rising because vehicle mix.

Speaker Change: Batteries in the vehicles that Americans are buying are getting faster and we're deploying faster chargers on the road in our fleet together with a relatively modest utilization assumption generates some very compelling cash flows per stall.

Badar Khan: Together with a relatively modest utilization assumption, this generates some very compelling cash flows per store. Just to be clear, in the first quarter, you had a range of adjusted gross profit of $220 million to $300 million and revenue of $600 million to $700 million. That midpoint is 40%. In this presentation, you have 314 adjusted gross profit at a revenue of 640, so that's closer to 50%. We can take that offline, but there is a difference.

Speaker Change: Just to be clear, in the first quarter you had a range of adjusted gross profit of $220 million to $300 million, and a revenue of $600 million to $700 million. That midpoint is 40%.

Speaker Change: In this presentation, you have 314 adjusted gross profit at a revenue of 640, so that's closer to 50%. We could take that offline, but it is a difference.

Badar Khan: My next question is just sort of around election risk. So, you know, you talked about the duty loans program, but you're engaged in the process, but how much timing risk should we think about this in advance of the election? Do you have a sense of urgency to get this funding done before the election? I guess, more broadly, what is your current thinking around policy support or any potential changes that we could see in a change in government?

Speaker Change: My next question is...

Speaker Change: in the, just a sudden run election risk. So, you know, you talked about the duty loans program, but.

Speaker Change: You know, you're engaged in the process, but...

Speaker Change: How much timing risk should we think about this in advance of the election? Do you have a sense of urgency to get this funding done before the election? I guess more broadly, what is your current thinking on policy support or any potential changes that we could see in a change in government?

Badar Khan: Yeah, I think a couple of things here. I mean, as we said in prior calls, people are buying electric vehicles across the United States. Some of the states that we're seeing the strongest demand for charging are actually states like Texas and Florida, and a handful of other red or purple states. So, you know, what we're seeing on the ground are people buying electric vehicles across the United States, and our charging demand is occurring across the United States, in red states and blue states. So I think that just speaks very well to the underlying demand. We think our business is successful and thrives under any administration.

Speaker Change: Yeah, I think a couple of things here. I mean, I think, as we've said in prior calls, people are buying electric vehicles across the United States.

Speaker Change: Some of the states that we're seeing the strongest demand for charging are actually states like Texas and Florida.

Speaker Change: A handful of other red or purple states, so what we're seeing on the ground are people buying electric vehicles across the United States and our charging demand is occurring across the United States, red states and blue states.

Speaker Change: So I think that's that I think that.

Speaker Change: It just speaks very well to the underlying demand. We think our business is successful and thrives under any administration. I think the IRA particularly is delivering hundreds of billions of dollars of investment in a number of key states across the United States, so I think that's

Badar Khan: I think the IRA, particularly is delivering hundreds of billions of dollars of investment in a number of key states across the United States. So I think that's a very solid ground. The states that have gone after the NEBI program, although it's not a core part of our business today, as I said before, tend to be, you know, red Republican states.

Speaker Change: I think that's in very solid ground. The states that have gone after the NEBI program, although it's not a core part of our business today, as I said before, tend to be, you know, red Republican states. And that's what we've seen over the course of the last year and a half. So...

Badar Khan: And that's what we've seen over the course of the last year and a half. So we feel, you know, actually on a very good ground, regardless of what happens in the election. In terms of the DOE, LPO, you will have seen the DOE-LPO team is working very hard to get more applications through their pipeline. And together with the work that we've had over the course of this last quarter, we feel pretty confident in being able to get conditional commitments this year. Your next question comes from the line of Craig Irwin from Roth Capital Partners. Your line is open. Good morning.

Speaker Change: We feel, you know, actually on very good ground, regardless of what happens in the election.

Speaker Change: In terms of the DOE LPO, you will have seen the DO LPO team are working very hard to get more applications through their pipeline.

Speaker Change: Together with the work that we've had over the course of this last quarter, we feel pretty confident in being able to get conditional commitment this year.

Speaker Change: Your next question comes from a line of Craig Irwin from Roth Capital Partners. Your line is open.

Operator: Thanks for taking my questions. I definitely appreciate the update on the financing. In your prepared remarks, you talked about the eligibility of certain 2023 stalls, 2023 vintage stalls. In the presentation, you said 24 vintage is now supposed to have 50% capital offsets. It was $160 million spent, or just under, on CapEx in 2023. Can you maybe help us sort of frame out what this incremental funding would be proportionate to the CapEx that was spent last year? Sure. Stephanie, do you want to take that first?

Craig Irwin: Good morning and thank you for taking my questions.

Craig Irwin: I definitely appreciate the update on the financing. In your prepared remarks, you talked about

Speaker Change: The eligibility of certain 2023 stalls, 2023 vintage stalls, you know, in the presentation you said 24 vintage is now supposed to have 50% capital offsets.

Speaker Change: It was $160 million spent, or just under, on CapEx in 2023. Can you maybe help us sort of frame out what this incremental funding would be proportionate to the CapEx that was spent last year?

Speaker Change: Sure. Stephanie, do you want to take that first?

Stephanie Lee: Yeah, thanks for the question, Craig. I think it's a little bit interesting because when we talk about fiscal CapEx versus vintage CapEx, it gets a little bit interesting, because from a fiscal CapEx perspective, right, we spend in advance of the year of the vintage. So, as I mentioned in our prepared remarks, we, in terms of the amount that we have to spend now incrementally in advance. Because we have shorter lead times between mobilization and construction start, fiscal capex gets a little bit interesting. So I'd rather speak to more of the vintage kind of concept.

Stephanie Lee: Yeah, thanks for the question, Craig. I think it's a little bit interesting because when we talk about fiscal CapEx versus vintage CapEx,

Stephanie Lee: It gets a little bit interesting because from a fiscal CapEx perspective, right, we spend in advance of the year of the vintage. So as I mentioned in our prepared remarks, in terms of the amount that we have to spend now incrementally in advance.

Stephanie Lee: Because we have shorter lead time between mobilization and construction start, fiscal CAPEX gets a little bit interesting, so I'd rather speak to more of the vintage kind of concept. And so...

Stephanie Lee: And so from a vintage perspective, when we look at the 2024 vintage, what's driving the higher percentage of capital offsets is really the mix, one being that it's a higher mix of the GM stalls that we've got. So we've got higher reimbursements from the GM side of the partnership, as well as just been much more successful. We've been very, very focused in the past year on trying to maximize grant funding in our site selection.

Speaker Change: From a vintage perspective, when we look at the 2024 vintage, what's driving the higher percentage of capital offsets is really the mix?

Speaker Change: One being that it's a higher mix of the GM stalls that we've got, so we've got higher reimbursement.

Speaker Change: from the GM side of the partnership.

Stephanie Lee: As well as, we've just been much more successful, we've been very, very focused.

Speaker Change: You know in the past year with with trying to maximize grant funding in our site selection So what you're seeing in the vintage side is really the result of a lot of the work the hard work that's gone on with really focusing on maximizing

Stephanie Lee: So what you're seeing on the vintage side is really the results of a lot of the hard work that's gone on with really focusing on maximizing the grant funding, as well as the 30C coming into play as well. And so that's really what's driving the 50%. And so the 2023 vintage stalls didn't have some of those elements in them, or to the extent that we have now. And so the mix was also very different in the 2023 vintage.

Speaker Change: The grant funding as well as, you know, the 30C coming into play as well. And so that's really what's driving the 50%. And so the 2023 vintage stalls didn't have some of those elements.

Speaker Change: in there or the extent that we have now. And so the mix was also very different in the 2023 vintage.

Stephanie Lee: So it's a little bit more challenging sort of to compare some of that, but hopefully that provides color with the success that we're seeing with the 2021-2024 vintage. We don't expect that same, you know, level of 50% to continue. And as Badar mentioned when he spoke about the unit economics, you know, when we're talking about the sort of 80% CapEx expectation in the three to five years, even if we had a lower percentage of capital offsets, you know, with the architecture that we're targeting, that's really where we're going to see a lot more improvements in our cost structure.

Speaker Change: So, it's a little bit more challenging sort of to compare some of that, but hopefully that provides color with the success that we're seeing with the 2024 vintage. We don't expect that same, you know, level of 50%.

Speaker Change: To continue and as Badar mentioned when he spoke to the unit economics

Badar Khan: When we're talking about the 80% CapEx expectation in the three to five years, even if we had a lower percentage of capital offsets.

Badar Khan: With the architecture that we're targeting, that's really where we're going to see a lot more of the improvements in our cost structure.

Stephanie Lee: Can I just add that the team has done a fantastic job of building stalls this year that have higher offsets, choosing stalls that are cheaper sites, and building cheaper on the site that we were expecting to build. And I think all of that actually shows the flexibility that we have in our development pipeline, where we can, in fact, move to sites that have higher and more attractive cash flow profiles, as we did this past quarter. understood, and understood.

Speaker Change: Thank you. Thank you.

Speaker Change: Can I just add, I think the team has done a fantastic job of

Speaker Change: Building stores this year that have higher offsets.

Speaker Change: Choosing stalls at our cheaper sites.

Speaker Change: building cheaper on the site that we were expecting to build. And I think all of that actually shows the flexibility that we have in our development pipeline, where we can in fact, move to sites that have these higher and more attractive cash flow profiles, as we've done this past quarter.

Speaker Change: Understood, understood.

Badar Khan: So my next question, I guess, is something Bill was touching on, but I'll ask it a different way, right? If you look at the big picture, right? Electricity rates are up about 30% in the last year here in North America. Your charging gross margins have gone from 19% to 34%, so the utilization and efficiencies that you just mentioned are clearly going to benefit you now and going forward.

Speaker Change: So my next question, I guess it's something Bill was touching on, but I'll ask it a different way, right?

Speaker Change: If you look at the big picture, right, electricity rates are up about 30% in the last year here in a bit.

Speaker Change: here in North America.

Speaker Change: Your charging gross margins have gone from 19% to 34%.

Speaker Change: So, the utilization and efficiencies that you just mentioned.

Badar Khan: But can you maybe unpack for us what you're doing that's allowing you to pass through these price increases? What sort of protection do you have or what sort of competitive dynamic is there that's allowing you to pass through efficiently these higher electricity costs given that, you know, it's having a material impact in other areas of the economy? Yeah, it's a good question, Craig.

Speaker Change: are clearly going to benefit you now and going forward.

Speaker Change: But can you maybe unpack for us what you're doing?

Speaker Change: that's allowing you to pass through this this price increases what sort of protection do you have or what sort of competitive dynamic is there that's allowing you to pass through efficiently these higher electricity costs given that you know it's having a material impact in other areas of the economy

Badar Khan: And just to be a reminder, we have not increased price. We are seeing an expanding charging margin because of the operating leverage that sits within the cost of sale. At the end of last year, roughly 40% of our cost of sales was fixed. And so as utilization expands, as we're getting more usage on a per stall basis, which is exactly what we've been seeing for the better part of a year and a half now, and we will expect to continue to see, we will see an expanding charging margin without any impact on prices.

Speaker Change: Yeah, it's a good question, Craig, and just to be, as a reminder, we have not increased prices.

Speaker Change: We are seeing expanding charging margin because of the operating leverage that sits within cost of sales.

Speaker Change: At the end of last year, roughly 40% of our cost of sales was fixed, and so as utilization expands

Speaker Change: As we're getting more usage on a per store basis, which is exactly what we've been seeing for the better part of a year and a half now, and we will expect to continue to see, we will see expanding charging margin without any impact on prices.

Badar Khan: And I think that is, I think that's the beauty of the economic model that we have here. Tremendous operating leverage in both cost of sales and tremendous operating leverage in GNA, where roughly 70% of our GNA is fixed. So once the stall-based cashflow, the cashflow from stalls times the number of stalls exceeds the fixed costs, all of those cash flows fall straight to the bottom line.

Speaker Change: And I think that is, I think that's the beauty of the economic model that we have here. Tremendous operating leverage in both cost of sales and tremendous operating leverage in G&A, where roughly 70% of our G&A is fixed.

Speaker Change: So once the store-based cash flow.

Speaker Change: The cash flow from stalls, from stall base times the number of stalls exceeds the fixed costs.

Badar Khan: With respect to margins and prices beyond the operating leverage, that expansion that we have driven, and the expansion that we've been seeing. As I said before, there is very strong underlying demand for charging and for fast charging infrastructure. Reasons I laid out both the underlying growth in battery electric vehicles but also the several tailwinds that are shifting and growing the share of public charging. And I'm not even covering the charging that we may expect to get from Tesla, the Tesla VIO, which is not currently showing up on our network. I think all of those reasons are support, unit margins, prices minus costs, on a percent per kilowatt hour basis, remaining robust. Thank you.

Speaker Change: All of those cash flows fall straight to the bottom line.

Speaker Change: With respect to margins and prices beyond the operating leverage, that expansion that we have driven, expansion that we've been seeing. As I said before, there is very strong underlying demand for fast charging infrastructure.

Speaker Change: For the reasons I laid out, both underlying growth in battery electric vehicles, but also the several tailwinds that are shifting and growing the share of public charging.

Speaker Change: And I'm not even covering the charging that we may expect to get from Tesla VIO that's not currently showing up on our network.

Speaker Change: I think all of those reasons are support, unit margins, prices minus costs, on a per cents per kilowatt hour basis, remaining robust.

Badar Khan: So my next question, I should probably start with, you know, we all appreciate the significant improvement in disclosures over the last couple quarters. The charging network gross margin is one of the items that all of us, looking closely, are kind of backfilling in our models as we get the incremental quarterly reports as you print them. [inaudible] You mentioned seasonality, right? We did have a dip of 550 basis points sequentially in these charging network gross margins, which was more than a year ago this quarter. Can you maybe talk us through how things played out last year?

Speaker Change: for the foreseeable future.

Speaker Change: Thank you so much. My next question.

Speaker Change: I should probably start with, you know, we all appreciate the significant improvement in disclosures over the last couple of quarters.

Speaker Change: The charging network gross margin is one of the items that all of us, looking closely, are kind of back-filling in our models as we get the incremental quarters as you print them. So...

Speaker Change: You mentioned the seasonality, right? We did have...

Speaker Change: You know, a dip of, you know, 550 basis points sequentially in these charging network gross margins, which was more than a year ago quarter.

Speaker Change: Can you maybe talk us through how things played out last year? Did we trough in the second or third quarter?

Badar Khan: Did we trough in the second or third quarter? And I guess the math says we obviously troughed probably in the third quarter, but how do we expect things to play out this year as far as charging network gross margins are concerned, given the network charges and the other items that impact short-term margins here? And then are there any of the items that there's an apparent acceleration of stall build-outs maybe at the company. Are any of those expenses gonna be there in the charging network gross margins as you disclose them at this point? Quite a few things in there, Craig, but let me also ask Stephanie to step in.

Speaker Change: And I guess the math says we obviously dropped, you know, probably in the third quarter.

Speaker Change: How do we expect things to play this year?

Speaker Change: As far as charging network gross margins.

Speaker Change: Given the network charges and the other items.

Speaker Change: that impact, you know, short-term margins here. And then are there any of the items that, you know, there's an apparent acceleration of stall build-outs, maybe, at the company. Are any of those expenses going to be there in the charging network gross margins as you disclose them at this point?

Badar Khan: We did have some one-offs in Q1, which we talked about on the last call that pushed the charging margin up about five percentage points. In terms of going forward, Q3 is typically the lowest point. It's where we have the highest tariffs for electricity that we buy. Stephanie, do you want to expand on either of those two points? Sure. Yeah, this is exactly it, Badar.

Stephanie Lee: Quite a few things in there, Craig, but let me also ask Stephanie to step in. We did have some one-offs in Q1, which we talked about on the last call that

Speaker Change: pushed charging margin up about five percentage points. In terms of going forward, Q3 is typically the low point. It's where we have the highest tariffs for electricity that we buy. Stephanie, do you want to expand on either of those two points?

Stephanie Lee: So Q1, as a reminder, we did have some breakage revenue, the one-time breakage revenue that impacted and drove favorability because that was all 100% charging margin there. So that amount was roughly $2.5 million that we saw as that one-time sort of adjustment. And then in Q2, you do start seeing some of the summer tariffs hit, especially in the month of June when you start seeing the cost rise. So Q2 actually does already – you start to see the seasonal shift in the charging network margin. And then where you see it full bore clearly is in Q3.

Stephanie Lee: Sure, yeah, this is exactly it, Badar. So Q1, as a reminder, we did have some breakage revenue, the one-time breakage revenue that impacted and drove favorability.

Stephanie Lee: Because that was all 100% charging margin there.

Stephanie Lee: So that amount was roughly $2.5 million that we saw as that one-time sort of adjustment. And then in Q2, you do start seeing some of the summer tariffs hit, especially in the month of June is when you start seeing the cost rise. So Q2 actually does already, you start to see the seasonal shift.

Stephanie Lee: in the charging network margin. And then where you see it full bore clearly is in Q3. And so even last year, I think there, every period sort of has.

Stephanie Lee: And so even last year, I think every period sort of has some one-time adjustments. And we did also have some one-time adjustments in the Q2 2024 charging network margins as well. And so sometimes it does create some unexpected variances that you would see. But going forward, really, what we need to sort of focus on is what the expected margin is with the seasonality. And so even as you're looking out to your forecasting for Q3 and Q4, again, you would expect to see that margin hit in Q3 and then bump back up and improve in Q4. And you mentioned the two and a half in the first quarter.

Stephanie Lee: Some one-time adjustments, and we did also have some one-time adjustments in the Q2 2024 charging network margins as well.

Stephanie Lee: And so sometimes it does create, you know, some unexpected variances that you would see. And so, but going forward, you know, really what we need to sort of focus in on is what the expected margin is with the seasonality. And so even, you know, as you're looking out to your forecasting for Q3 and Q4, again, you would expect to see that margin hit in Q3 and then bump back up and improve in Q4.

Speaker Change: And you mentioned the two and a half in the first quarter. Was the delta in the second quarter either positive or negative? And can you possibly share that number with us?

Stephanie Lee: Was the delta in the second quarter either positive or negative? And can you possibly share that number with us? Um, the big one So, normally, with some of our partnership contracts, we have breakage that happens. Our largest contract that had breakage in it was our Nissan contract in Q1. And so, that is not recurring. There's also, in Q2, we didn't have any sort of material, large one-time adjustments. They were a series of smaller ones, so there wasn't anything of that magnitude kind of all in there.

Speaker Change: So, normally with some of our partnership contracts, we have breakage that happens. Our largest contract that had breakage in there was our Nissan contract in Q1.

Speaker Change: And so that is not recurring. There's also, in Q2, we didn't have any sort of material large one-time adjustments. They were a series of smaller ones. So there wasn't anything of that magnitude kind of all in there.

Stephanie Lee: So, nothing to call out from that perspective, Craig, that we would adjust of a similar magnitude, just a series of smaller one-time adjustments in various areas. I think, Craig, if you take out the breakage that Stephanie talked about in Q1, it gets you to about the same, more or less the same, charging margin this quarter. We've clearly seen a slight improvement in utilization, and you can see from your economic slide that any improvements in utilization and charge rate improve charging margin, but we also have a lower LCFS price this quarter than we had in the first quarter, so that's impacted the charging margin a little bit. Yes,

Speaker Change: So, nothing to call out from that perspective, Craig, that we would adjust of a similar magnitude, just a series of smaller one-time adjustments in various areas.

Craig Irwin: I think, Craig, if you take out the the breakage that Stephanie talked about in Q1, it gets you to about the same, more or less the same, charging margin this quarter.

Speaker Change: We've clearly seen a slight improvement in utilization, and you can see from the economic slide, any improvements in utilization and charge rate improves charging margin. But we also have lower LCFS price this quarter than we had in the first quarter.

Speaker Change: and much more. So that's impacted the charging margin a little bit. Yes. And LCFS, you know, the percentage of total revenue is shrinking. It's less than 5%, but LCFS is also 100% margin, so that to Badar's point, it will drive also volatility in your charging network margin.

Stephanie Lee: And LCFS, you know, the percentage of total revenue is shrinking, so it's less than 5%, but LCFS is also 100% margin, so that, to Badar's point, it will also drive volatility in your charging network margin. In terms of LCSF pricing right now, we're consistent with the rest of the market. I think we're expecting that it will hold to the current levels through the rest of this year. But, you know, that can clearly have an impact on the charging network margin. Great. Thanks for the detail and congrats on the strong progress.

Badar Khan: In terms of LCSF pricing right now, we're consistent with the rest of the market. I think we're expecting that it will hold to the current levels through the rest of this year, but that clearly also can have an impact on the charging network margin.

Speaker Change: Great, thanks for the detail and congrats on the strong progress.

Operator: Thank you. Your next question comes from the line of William Griffin from UBS. Your line is open. Hi. Hey, Badar, and hey, everybody. Good to speak with you all.

Speaker Change: Thank you.

Speaker Change: Your next question comes from a line of William Griffin from UBS. Your line is open.

Speaker Change: Bye.

William Griffin: Hey Badar and hey everybody good to speak with you all. My first question here was just going back to the charging margin again here.

Operator: My first question here was just going back to the charging margin again. Do you see the implementation of dynamic pricing as potentially helping to drive a more stable charging margin going forward, you know, around the volatility or variability you see in wholesale rates? Or do you see this more as just increasing your ability to capture a higher margin during times of higher customer demand? Really, what we're doing is, and I spoke about this on the call just now in the main part of the call, you know, we are, I think we have reached a level of scale and sophistication where we are able to not just build chargers and hope people show up at whatever time of the day they want, but actually build chargers and increasingly impact when customers are charging.

William Griffin: Do you see implementation of dynamic pricing as potentially helping to drive more stable charging margin going forward, you know, around the volatility or variability you see in wholesale rates, or do you see this more as a just increasing your ability to capture a higher margin during times of higher customer demand?

Speaker Change: Really what we're doing is, and I spoke about this on the on the call just now in the main part of the call, we are, I think we have reached a level of scale and sophistication.

Speaker Change: where we are able to not just build chargers and hope people show up at whatever time of the day they want, but actually build chargers and increasingly impact when customers are charging.

Operator: So charging throughout the day, where we've got utilization across all 24 hours without, and so therefore growing utilization without having challenges with queuing. And secondly, shifting demand, where we're trying to get the right customers, if you will, charging at the right times of the day, where we're maximizing margin capital. That's what we're doing, and that requires us to have sophisticated pricing, not just time of use and location-based pricing but demand-based pricing. It also requires different subscription programs.

Speaker Change: So, charging throughout the day, where we've got utilization across all 24 hours, without

Speaker Change: And so, therefore, growing utilization without having challenges with queuing. And secondly,

Speaker Change: Shifting demand, where we're trying to get the right customers, if you will, charging at the right times of the day, where we're maximizing margin capture.

Speaker Change: That's what our.

Speaker Change: That's that's what we're after that's what we're doing and that's that requires us to have sophisticated pricing

Speaker Change: not just time-of-use and location-based pricing but demand-based pricing. It also requires different subscription programs.

Badar Khan: And it also requires sophisticated outreach to customers. Going live with a new customer database, a customer data and engagement platform, as we did in the second quarter, allows us to achieve all of that.

Speaker Change: and it also requires sophisticated outreach to customers. Going live with a new customer database, a customer data and engagement platform as we did in the second quarter allows us to achieve all of that.

Badar Khan: And just on the OEM partnerships, to the extent you can speak to it, I would be curious to hear, you know, sort of how the conversations with GM have been going as you continue to partner with them. And then, you know, to the extent you've had conversations with other other OEMs about potentially establishing similar partnerships here in the future. The GM partnership is great. We have a very strong and very long-standing relationship with them.

Speaker Change: Got it. And just on the OEM partnerships, to the extent you can speak to it, would be curious to hear, you know, sort of how conversations with GM have been going as you continue to partner with them, and then, you know, to the extent you've had them, conversations with other OEMs about potentially establishing similar partnerships here in the future.

Speaker Change: The GM partnership is great, we have a very strong and very long standing relationship with them. As Stephanie and I both said over the call, one of the reasons we have

Badar Khan: As Stephanie and I both said on the call, one of the reasons we have done a nice job on cash this quarter is that we've had more stalls that are GM-funded cooperative than maybe we expected at the beginning of the year. And that's a result of a strong partnership with them. So that's going very well. In terms of other OEM discussions, we did announce a very, very small kind of pilot infrastructure deal with Toyota earlier this year, where they funded the construction of a couple of locations for us.

Speaker Change: done a nice job on cash this quarter is that we've had

Speaker Change: more stalls that are GM funded and co-operational than maybe we expect at the beginning of the year.

Stephanie Lee: and that's a result of a strong partnership with them, so that's going very well.

Speaker Change: In terms of other OEM discussions, we did do, we did announce

Speaker Change: A very, very small kind of pilot infrastructure.

Speaker Change: deal with Toyota earlier this year where they funded the construction of a couple of locations for us.

Badar Khan: And so we're engaged in dialogue with about almost a dozen OEMs, ranging from infrastructure dialogue to charging credits to data integration to help their drivers locate the charging stations that we have. So we're pleased with the dialogue, and we intend to continue with it. Very good. That's all for me. Thanks.

Stephanie Lee: And so we are engaged in dialogue with about almost a dozen OEMs, ranging from either infrastructure dialogue to charging credits to data integration to help their drivers locate the charging stations that we have. So we're pleased with the dialogue and we intend to continue with it.

Speaker Change: Very good. That's all for me. Thanks.

Operator: Thank you. Your next question comes from the line of Chris Pierce from Needham & Company. Your line is open. Hi Chris.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Chris Pierce from Needham & Company. Your line is open.

Operator: Hey, good morning, everyone. I'm looking at slide 19. And if you think about charge rate as the tip of the spear, what's kind of, what can you control here? Like, what's the governor?

Speaker Change: Hi Chris. Hey, good morning everyone. I'm looking at slide 19 and if you think about charge rate as the tip of the spear, what's kind of, what can you control here, like what's the governor, like should we see

Speaker Change: like step function improvement in charge rate based on new cars that are being released and the new stalls they're putting out there because that drives throughput per stall, that drives utilization, that's where it seems to be the tip of the sphere. I just kind of want to think about the right way to think about charge rate over the next couple of years.

Badar Khan: Like, should we see, like, step function improvement in charge rate based on new cars being released in a new policy to put it out there? Because that drives throughput per stall. That drives utilization. That sort of seems to be the tip of the sphere.

Badar Khan: I just kind of want to think about the right way to think about it, the charge rate over the next couple of years. Yeah, I mean, as well, if you go back to our year in economics slide, Chris, we are expecting charge rates to get up to about 80 in three to five years. And that's simply a function of assuming that Americans are buying electric vehicles with the same mix they were last year. So the same mix of higher charge versus lower charge rate vehicles. And Evgo continues to install mostly 350 kilowatt chargers.

Speaker Change: Yeah, I mean, as well, I mean, if you go back to our unit economics slide, Chris, we are expecting charge rates to get up to about 80 in three to five years, and that's...

Speaker Change: That is simply a function of assuming that Americans are buying electric vehicles with the same mix they were last year.

Chris D'Angelo: so the same mix of higher charge versus lower charge rate vehicles.

Speaker Change: and EVgo continues to install mostly 350 kilowatt chargers so our the mix

Badar Khan: So our mix of 350 kilowatt charges across our network expands. It's gone from 20% in the beginning of 2023 to just over 40% today, and hopefully it will get up to about 50% by the end of this year. That'll continue as it's mostly what we're deploying.

Speaker Change: of 350 kilowatt charges across our network expands. It's gone from

Speaker Change: 20% in the beginning of 2023 to just over 40% today, hopefully get up to about 50% by the end of this year. That'll continue as it's mostly what we're deploying. Those two factors.

Badar Khan: Those two factors just by themselves will result in charge rates getting up to that 80 level in three to five years. That assumes no improvement in technology. That assumes OEMs don't bring out faster charge rate cars, which of course they will. In other words, it assumes the vehicles that were on the market last year.

Speaker Change: just by themselves will result in charge rates getting up to that 80 level in three to five years. That assumes

Speaker Change: No improvement in technology that assumes

Speaker Change: OEMs don't bring out faster charge rate cars, which of course they are. In other words, it assumes the vehicles that were on the market last year. So yeah, I would expect to see charge rates continue.

Badar Khan: So yeah, I would expect to see charge rates continue over the next several years. And as you have pointed out, charge rates and utilization are the two inputs into daily throughput per store, which is all about the operating leverage that's growing the charging margin quite nicely for us. I will say that there is some seasonality in charge rates, so charge rates tend to be lower in the winter months and higher in the storm. Okay, and then... With the 10,000 solves that pencil, according to your prepared remarks, how are you?

Speaker Change: over the next several years. And as you have pointed out, charge rates and utilization are the two inputs into daily throughput per stall, which is all about the operating leverage that's growing charging margin quite nicely for us.

Speaker Change: I will say that there is some seasonality in charge rates, so charge rates tend to be lower in the winter months.

Speaker Change: and higher in the summer months.

Speaker Change: Okay, and then, with the 10,000 solves that pencil, according to your prepared remarks, how will you...

Badar Khan: I'm assuming competition for these stalls has lessened. Well, I guess I don't really know if Tesla was using the same algorithm to find the same stalls, etc. But, like, have you thought about trying to increase the pace of...

Speaker Change: I'm assuming competition for these stalls has lessened or I guess I don't really know if Tesla was using the same algorithm to find the same stalls, etc. But like, have you thought about trying to increase the pace of...

Badar Khan: Spell Growth, or I'm just kind of curious what the competition is like for these sites versus industry changes in the past six months. Yeah, so look, we've got excellent relationships across the board. We were talking about relationships with OEMs just a minute ago, but we've got fantastic relationships with site hosts, as well as other partners in the ecosystem. I think that's what differentiates Evgo from the dozens of smaller operators in the US. I think what also differentiates the company is our very sophisticated site selection and proprietary algorithms that go into where we locate our stools.

Speaker Change: Spell growth or I'm just kind of curious what the competition is like for these sites versus industry changes in the past six months

Speaker Change: Yeah, so look, we've got excellent relationships across the board. We were talking about the relationships with OEMs just a minute ago, but we've got fantastic relationships with site hosts.

Speaker Change: as well as other partners in the ecosystem. I think that's what differentiates EVgo from the dozens of smaller operators.

Speaker Change: in the U.S. I think what also differentiates the company is our very sophisticated site selection and proprietary algorithms that go into where we locate our stools.

Badar Khan: I put up a chart in my prepared remarks showing that the sites are just getting better. The stuff that were the charging stations that we installed in 2023 are better than everything we installed every year prior. And so we feel very good that there's a great set of sites that are out there for us.

Speaker Change: I put up a chart on the Prepared Remarks solve.

Speaker Change: The sites are just getting better.

Speaker Change: The charging stations that we installed in 2023 are better than everything we installed every year prior. And so we feel very good that there is a great set of sites that are out there for us.

Badar Khan: In terms of, you know, competition, you know, it's, it's, I think it's still relatively early days in terms of Tesla's slowdown or withdrawal or whatever it is, but we expect to be able to continue the journey that we're on. In terms of accelerating our growth in stalls, I mean, the financing that I've been talking about for the last couple of quarters, the goal is to be able to accelerate the pace of stall growth. And so I've talked about potentially accelerating that by up to two times or more.

Speaker Change: in terms of competition.

Speaker Change: still relatively early days in terms of Tesla's slowdown or withdrawal or whatever it is, but we expect to be able to continue the journey that we're at.

Speaker Change: In terms of accelerating our growth of stalls, I mean, the financing that I've been talking about for the last couple of quarters, the goal is to be able to accelerate the pace of stalls.

Speaker Change: and so I've talked about potentially accelerating that by up to two times or more and that depends upon the the quantum of the financing that we're able to to achieve.

Badar Khan: And that depends upon the quantum of the financing that we're able to achieve. Clearly, you know, if we installed no more stalls next year and reached EBITDA breakeven, we would actually be cash flow positive at that point or cash flow breakeven. But with the economics and the returns that I think these stalls present, I think shareholders would expect us to continue to deploy at faster rates as long as we're generating these returns. Thanks for the detail. Your next question comes from a line from Andres Sheppard from Cantor Fitzgerald. Your line is open. Hi. Hi, good morning everyone.

Speaker Change: Clearly, you know, if we installed no more stalls next year and reaching EBITDA breakeven, we would actually be cash flow positive at that point or cash flow breakeven. But with the economics and the returns that I think these stalls present, I think shareholders would expect us to continue to deploy at faster rates.

Speaker Change: as long as we're generating these returns.

Speaker Change: Thanks for the details.

Speaker Change: Yep.

Speaker Change: Your next question comes from a line of Andrew Shepard from Cantor Fitzgerald. Your line is open.

Operator: Thanks for taking our questions and congratulations on the quarter. A lot of our questions have been asked by now, but maybe to take a step back, I'm wondering if you could elaborate on the 20% average utilization rate that you've experienced. In your view, how does this compare with the industry average, and what do you attribute to this 20% average usage? Thank you.

Andrew Shepard: Hi. Hi, good morning everyone. Thanks for taking our questions and congratulations on the quarter.

Andrew Shepard: You know, a lot of our questions have been asked by now, but maybe to take a step back, I'm wondering if you could elaborate on the 20% average utilization rate that you've experienced.

Speaker Change: You know, in your view, how does this compare with the industry average and what do you attribute to this 20% average usage? Thank you.

Badar Khan: Well, we've seen tremendously strong underlying demand, that is, both in terms of growth in the sales of battery electric vehicles, and again, to point out, the majority of our network today are non-Tesla vehicles, which we've seen new sales of non-Tesla vehicles grow 35% year over year, Q2 versus Q2 last year. We're also seeing multiple tailwinds that we expect to continue to see for the That's growing the share of public charging, so that's electrifying, you know, rideshare that's electrifying affordable vehicles, attracting people without charging at home. Over time, autonomous vehicles, faster charge rates, the earlier question, actually encourage people to charge at public locations because they're able to charge much faster.

Speaker Change: Well, you know, we've seen tremendously strong underlying demand.

Speaker Change: That is both in terms of growth in the sales of battery electric vehicles, and again, to point out,

Speaker Change: The majority of our network today are non-Tesla vehicles, which we've seen new sales of non-Tesla vehicles grow 35%.

Speaker Change: year-over-year, Q2 versus Q2 last year.

Speaker Change: We're also seeing multiple tailwinds that we expect to continue to see for the foreseeable future. That's growing the share of public charging.

Speaker Change: So that's electrifying, you know, rideshare that's electrifying, affordable vehicles, attracting people without...

Speaker Change: Charging at home, over time, autonomous vehicles, faster charge rates, the earlier question, actually encourages people to charge on public locations because they're able to charge much faster.

Badar Khan: So all those things are driving underlying demand. That's why throughput on our network has grown four times faster than the growth in VIO. That's what's driving utilization from 11% to 20%. And, as Stephanie said, that's 21% for the month of June.

Speaker Change: So all those things are driving underlying demand. It's why throughput on our network has grown four times faster than the growth in VIO.

Speaker Change: That's what's driving utilization from 11% to 20%.

Speaker Change: And I think as Stephanie said, that's 21% for the month of June. And so we're very pleased with that.

Badar Khan: And so we're very pleased with that. In addition, as I said on the call, we are now deploying reasonably sophisticated campaigns to encourage customers to charge at all hours of the day, where we don't experience queuing issues that maybe less sophisticated charge point operators are experiencing. Got it, that's helpful. But I guess, specifically to Evgo, you know, how does that 20% average utilization rate for DC fast charging in public locations compare to, say, the industry average, in your view?

Stephanie Lee: In addition, as I said on the call, we are now deploying reasonably sophisticated campaigns to encourage

Stephanie Lee: customers to charge at all hours of the day where we don't experience queuing issues that maybe less sophisticated charge point operators will are experiencing today.

Speaker Change: Got it, that's helpful. But I guess, you know, specifically to EVgo, you know, how does that 20% average

Speaker Change: utilization rate for DC fast charging in public locations compared to maybe the industry average in your view. Thank you.

Badar Khan: Thank you. Well, I don't know if anybody has the data to be able to answer that question definitively, but my expectation is that we have better, stronger utilization rates for a number of reasons. A, we are deploying these sophisticated programs to be able to get customers to charge throughout the day through subscription programs, marketing efforts, and pricing programs. And B, our locations tend to be in urban and suburban locations versus highway locations.

Speaker Change: Well, I don't know if anybody has the data to be able to answer that question definitively. My expectation is that we have better, stronger utilization rates for a number of reasons.

Speaker Change: A, we are deploying these sophisticated programs to be able to get customers to charge throughout the day through subscription programs, marketing efforts, the pricing programs.

Speaker Change: and B, our locations tend to be in urban suburban locations versus highway locations and we've been deploying some very sophisticated algorithms to choose sites that have the best performance.

Badar Khan: And we've been deploying some very sophisticated algorithms to choose sites that have the best performance, which keeps getting better over time. In terms of the chart I showed, in terms of new vintage stalls, having higher throughput, daily throughput than prior years. So I think for all those reasons, I expect that we're performing better than the market average. And that concludes our question and answer session. I will now turn the call back over to CEO Badar Khan for some closing remarks. Great, thank you.

Speaker Change: which keeps getting better over time through part of the chart I showed in terms of new vintage stalls having higher throughput daily throughput than prior years. So I think for all those reasons I expect that we're performing better than the the market average.

Speaker Change: And that concludes our question and answer session. I will now turn the call back over to CEO Badar Khan for some closing remarks.

Badar Khan: Well, look, thank you, everyone. We've had, I think, yet another great and record quarter that continues to have strong underlying demand and multiple tailwinds that public fast charging operators will continue to benefit from for years to come. Evgo has reached a level of scale where we now have multiple sources of competitive advantage over the dozens of smaller operators in the States. And based on the trajectory value of economics, I think you can clearly see that we are on a path to EBITDA break even in 2025.

Badar Khan: Great, thank you. Well look, thank you everyone. We've had, I think, yet another great and record quarter that continues to be strong underlying demand and multiple tailwinds that public fast-charging operators

Badar Khan: continue to benefit for years to come. EVgo has reached a level of scale where we now have multiple sources of competitive advantage.

Speaker Change: over the dozens of smaller operators in the States.

Badar Khan: And more importantly, with the operating leverage that we have in the business, there's very strong EBITDA growth and return potential. And I look forward to providing more updates to you on future goals. Thanks very much, everyone. This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: and the trajectory of our unit of economics. I think you can clearly see that we are on a path to EBITDA break-even in 2025. And more importantly, with the operating leverage that we have in the business,

Speaker Change: There's very strong EBITDA growth and returns potential and I look forward to providing more updates to you on future calls Thanks very much everyone

Speaker Change: This concludes today's conference call. Thank you for your participation. You may now disconnect.