Q1 2026 ChargePoint Holdings Inc Earnings Call
Ladies and gentlemen, good afternoon, My name is Keith and I'll be your conference operator for today.
At this time I would like to welcome everyone to the charge 0.1st quarter fiscal 2026 earnings conference call and webcast. All participants lines have been placed in a listen only mode to prevent any background noise. After the speakers' remarks, there will be a question and answer session I would now like to turn the call.
Speaker Change: Over to John Paul Canton.
Harsh: Harsh voice Vice President of Communications J P. Please go ahead.
Speaker Change: Good afternoon, and thank you for joining us on today's conference call to discuss charge points first quarter fiscal 2026 earnings results.
Speaker Change: This call is being webcast and can be accessed on the investors section of our website at investors <unk> charge point Dot com.
Speaker Change: With me on today's call are Rick Weller, our Chief Executive Officer, and Marty Katahdin, our Chief Financial Officer.
Speaker Change: This afternoon, we issued our press release announcing results for the quarter, which ended April 32025, which may also be found on our website.
Speaker Change: We'd like to remind you that during the conference call management will be making forward looking statements, including our outlook for the second quarter of fiscal 2026.
Speaker Change: These forward looking statements involve risks and uncertainties many of which are beyond our control and could cause actual results to differ materially from our expectations.
Speaker Change: These forward looking statements apply as of today and we undertake no obligation to update these statements after the call.
Speaker Change: For a more detailed description of certain factors that could cause actual results to differ please refer to our Form 10-K filed with the SEC on March 28, 2025 and <unk>.
Speaker Change: This release, which posted today on our website and filed with the SEC on form 8-K.
Speaker Change: Also please note that we use certain non-GAAP financial measures on this call.
Speaker Change: We reconciled to GAAP in our earnings release and for certain historical periods in the Investor presentation posted on the investors section of our website.
Speaker Change: And finally, we will be posting a transcript of this call to our Investor Relations website under the quarterly results section.
Speaker Change: Thank you I will now turn the call over to our CEO Rick Womack.
Rick Womack: Good afternoon, and welcome to charge points first quarter fiscal 2026 earnings call today I will walk you through key results for the quarter provide insights into recent market and policy developments and highlight the progress we've made on our two major priorities for the year delivering innovation and driving growth.
Rick Womack: In addition, I'll cover two significant announcements to directly support these priorities and positively influence charge points path to achieving positive non-GAAP adjusted EBITDA in a quarter of this fiscal year.
Rick Womack: Let's begin with our Q1 financial results revenue for the first quarter came in at $98 million right within our guidance range non-GAAP gross margin continues to increase quarter over quarter, reaching a new high of 31%.
Rick Womack: Notably our GAAP subscription gross margin climbed to a record 60% underscoring the strength of our SaaS focused business model.
Rick Womack: We built momentum across the business in Q1.
Rick Womack: Our DC fast charging program with General Motors has been a success.
Rick Womack: With the pace of site openings accelerating and over 500 additional ports signed off by GM for deployment.
Rick Womack: We extended multiple agreements with Mercedes Benz reinforcing our long term relationship.
Rick Womack: Our theft resistant charging cable was met with strong market interest. It will go into production this summer for our own hardware models.
Rick Womack: <unk> energized our software management solution for Cps is now actively managing over 700 charge your models from over 85 different vendors are charging hardware.
Rick Womack: This is a testimonial to the scale of our third party hardware integrations in total charge point now has over 352000 ports under management of which more than 35 does in our DC fast Chargers and more than 122000 and are located in Europe.
Rick Womack: With our roaming partnerships, we enable access to more than 125 million charging ports globally.
Rick Womack: Our business is proving to be resilient on the top line. Despite U S macroeconomic conditions and market uncertainty as.
Rick Womack: As well as the bottom line through the cost and operational actions, we took last year.
Rick Womack: Looking ahead regarding U S tariffs on our products, we expect only a minimal increase in the cost of goods sold.
Rick Womack: We also expect cost reductions to exceed the impact of the current tariffs. Therefore, we still expect margin improvement later in the year.
Rick Womack: The limited impact reflects the swift and effective execution of our mitigation plan.
Rick Womack: We see positive momentum on two fronts, one EV adoption and utilization.
Rick Womack: Utilization rates.
Rick Womack: EV adoption continues at a steady upward trajectory.
Rick Womack: The trend, which is held for more than a year, despite political turbulence dampening consumer and capital spending North American EV sales were up 16% year over year for Q1, according to real emotion.
Rick Womack: In Europe, EV momentum rebounded strongly with the same dataset reporting 22% EV sales growth year over year for Q1, a significant surge.
Rick Womack: European Green deal mandates all new cars sold there be zero emission by 2035, reinforcing that you use trajectory of <unk> adoption.
Rick Womack: All of this forms a strong leading indicator for the charging industry. The trends we observed last quarter remain intact. The market is actively planning an inquiry, but widespread purchasing is being impacted by economic uncertainty inevitably with more evs on the road existing infrastructure is under mounting pressure.
Rick Womack: A recent report by parent data concluded that many U S cities are approaching maximum charge utilization during peak hours.
Rick Womack: With five major markets past or approaching a staggering 40% utilization rate.
Rick Womack: <unk> is a positive signal for our customers, who monetize charging but it is a growing concern for EBIT drivers facing long waits at occupied stations.
Rick Womack: We believe this will lead to the installation of more charters in charge point will be ready to capitalize on that demand.
Rick Womack: Despite the growth to come the market has recently seen attrition and voluntary exit of major players.
Rick Womack: Even Chinese competitors coming into the scrutiny of the federal government. These.
Rick Womack: These developments, while natural for a new industry at our stage create a meaningful opportunity for charge point to gain market share.
Rick Womack: We are not waiting for the growth to come to US we are actively pursuing at this.
Rick Womack: This brings me to the most exciting announcement of the year, so far our new partnership with Eaton.
Rick Womack: One of the world's largest intelligent power management companies.
Rick Womack: The cornerstone of this partnership is innovation, which will drive growth.
Rick Womack: Goal is to make electrified transportation simple and economically a no brainer.
Rick Womack: Charging deployments are increasingly complex with a significant portion of them requiring grid upgrades.
Rick Womack: We are integrating charging and electrical equipment into a single solution, which addresses a major gap in the market.
Rick Womack: Together charge point, and Eaton will deliver EV charging electrical infrastructure energy management and engineering services as the market's only end to end EV charging and power management solutions.
Rick Womack: These fully integrated solutions will get our customers up and running faster simultaneously lowering their costs and are available for order now.
Rick Womack: The next phase of partnership will offer co develop future technologies to further drive down costs improve efficiency and advanced bidirectional power flow technology to fully optimize feed X capabilities.
Rick Womack: This will enable customers to use <unk> as another distributed energy resource that they can integrate into their energy infrastructure to help power operations.
Rick Womack: First innovations from this effort are set to be announced in September.
Speaker Change: So what does this do for charge point business in.
Speaker Change: In addition to a compelling and highly differentiated offering we now have access to eaton's formidable go to market engine.
Speaker Change: Which does nearly $25 billion in annual sales across more than 160 countries.
Rick Womack: We anticipate that the relationship will drive incremental revenue growth for charge points. This partnership cements charge point as the enabler of the entire ecosystem from the grid to the dashboard of the vehicle and everything in between.
Rick Womack: Our second major announcement of the quarter once again aligned with our goal of delivering innovation.
Rick Womack: The announcement of our new AC hardware architecture.
Rick Womack: This is the first product line developed utilizing our lower cost co development structure and I will enter the market at a highly competitive price points, while still increasing our margins.
Rick Womack: This new architecture underpins a range of upcoming models that will rollout over the next year, serving home commercial and fleet use cases.
Rick Womack: These products will represent a major portion of our hardware volume.
Rick Womack: By bringing a generational leap and our technology to market at an affordable price point, we anticipate greater volume in the U S, where we have the number one AC market share and considerable market penetration in Europe, where we have not had a product in this category to date.
Rick Womack: First charger part of our European take home fleet solution is expected to begin production in July.
Rick Womack: Growth and innovation remain the year two priorities of our strategic plan and we are making progress on both.
Rick Womack: We entered year two ahead of schedule position.
Rick Womack: Positioning us to realize the benefits of our streamline cost structure and revitalized product portfolio in year three.
Rick Womack: Our partnership with Eden unlocks immediate growth opportunities by combining our EV charging leadership with their complementary solutions and their commercial scale.
Rick Womack: Our new AC hardware architecture is the first of several high impact innovations planned for this year designs.
Rick Womack: Designed to expand market share drive volume and improved margins.
Rick Womack: Bind with our operational excellence, we are laying the groundwork for meaningful financial upside as the year moves on I.
Rick Womack: I will now turn the call over to our CFO, Marty kutani to cover our financials in more detail.
Marty Kutani: Thanks Jake.
Marty Kutani: Please see our earnings press release, where we reconcile our non-GAAP results to get.
Marty Kutani: Hop into the exclusion of stock based compensation amortization of intangible assets and certain costs related to restructuring and acquisition.
Marty Kutani: Revenue for the first quarter was 98 million within our guidance range.
Speaker Change: Hey, Curt charging system at $52 million accounted for 53% of first quarter revenue.
Speaker Change: It was almost flat sequentially. Despite Q1, typically expediency of season their guests and was down 20% year on year.
Speaker Change: Subscription revenue at $38 million with 39% of total revenue essentially flat sequentially, mostly due to fewer days in Q1, we can fax related revenue recognition and up 14% year on year due to the recurring revenue generated from Ohio.
Thanks.
Rick Womack: Although revenue at 8 million with 8% of total revenue down, 31% sequentially and down 8% year on year.
Rick Womack: Other includes Debbie is revenue items, which tend to be lumpy and were significantly lower this quarter, primarily as a result of lower one time project revenue, which is recognized based on completion date.
Rick Womack: Turning to political which redeployed from the billings perspective first quarter billings percentages play.
Rick Womack: <unk>, 71% fleet, 13% residential up 12% and 3%.
Rick Womack: So let me geographic perspective, North America made up 85% of revenue in Europe was 15%.
Rick Womack: Europe was lower than normal due largely to weakness in Germany.
Rick Womack: This was partially made up in North America, which was slightly higher compared to last quarter, even though the first quarter is typically seasonally lower and despite significant macroeconomic headwinds.
Rick Womack: non-GAAP gross margin was 31% improving by one percentage points sequentially and up seven.
Rick Womack: 10 percentage points year on year.
Rick Womack: This is attributable to higher margins in both hardware and subscription as well as subscription revenue growing as a percentage of total revenue.
Rick Womack: Hardware gross margin increased sequentially, despite the impact of incremental tariffs and freight incurred in Q1.
Rick Womack: Subscription margins reached a record high of 60%.
Rick Womack: GAAP basis, and would even higher on a non-GAAP basis due to economies of scale and continued optimization of similar costs.
Rick Womack: Based on currently available information, we expect the financial impact of tariffs on our Cogs to remain minimal.
Rick Womack: I expect gross margins to continue around the current range and to further improve later in the year.
Rick Womack: non-GAAP operating expenses were $57 million up 9% sequentially and down 15% year on year.
Rick Womack: As mentioned previously this quarters Opex included the impact of annual raises and investments in certain key areas of the business.
Rick Womack: We will continue to manage opex growth.
Rick Womack: non-GAAP adjusted EBITDA loss was $23 million.
Rick Womack: This compares with a loss of $17 million in the prior quarter and a loss of $36 million in the first quarter of last year.
Rick Womack: Stock based compensation was $18 million up from $15 million in the prior quarter and down from $22 million year on year.
Rick Womack: Our inventory balance increased by $3 million to $212 million.
Rick Womack: The impact of foreign exchange rates on inventory held by our international subsidiaries.
Rick Womack: However, we saw a decrease in inventory units across most products as we continue to assess it.
Rick Womack: We anticipate that inventory balance will reduce gradually throughout the year. So thank you for your cash.
Rick Womack: Speaking of cash we ended the quarter with $196 million in cash on hand.
Rick Womack: Q1 tends to be the quarter with highest cash usage due to the timing of some large annual payments.
Rick Womack: We will continue to rigorously manage cash and we have access to $150 million revolving credit facility, which remains undrawn.
Rick Womack: Have no debt maturities until 2028, and we have existing capacity on our ATM.
Rick Womack: Turning to guidance.
Rick Womack: For the second quarter of fiscal 2026, we expect revenue to be 90 million to $100 million.
Rick Womack: We are guiding with caution due to the continued changes in the macro environment, including tariff uncertainty as well as our near term focus on operational lines in our partnership with Ian.
Rick Womack: While there is always a possibility of headwinds from deterioration in macro conditions. We expect revenue upside later in the year from the introduction of a new AC hardware that Rick outlined.
Rick Womack: The performance in Europe and growth from our new partnership with Eaton.
Rick Womack: We continue to focus on revenue growth gross margin expansion and cost management to achieve our stated goal of being adjusted EBITDA positive in the quarter during fiscal 2026.
Rick Womack: We will now open the call for questions.
Rick Womack: At this time I would like to remind everyone in order to ask a question. Please press Star then the number one on your telephone keypad, we request that you limit yourself to one question and one follow up.
Rick Womack: We will pause for just a moment to compile the Q&A roster.
Speaker Change: Our first question comes from the line of call. It Ross with Oppenheimer. Your line is open.
Speaker Change: Thanks, so much guys.
Speaker Change: MS Eaton partnership and what Youre seeing in terms of the market.
Rick Womack: On the new AC product can you talk a little bit about.
Rick Womack: The pipeline of activity and how we should be thinking about a return to growth here on the top line for the new systems.
Speaker Change: Yes, Thanks Colin.
Rick Womack: I think there is a variety of forces at play some positive.
Rick Womack: Some causing caution obviously, the macroeconomic conditions tariffs and general uncertainty.
Rick Womack: Seeing.
Rick Womack: Some customers get conservative with spending in cash, there's obviously uncertainty around policy supporting electrification of transportation, particularly in the U S, which I think are also headwinds on the other hand very excited about our partnership with Eaton.
Rick Womack: We fully expect that to drive incremental growth and Theres a lot of work to do this quarter in particular to operationalize this relationship.
Rick Womack: We fully expect to hit our stride and have this again fully operationalized as we enter our fiscal Q3 so.
Rick Womack: Variety of factors at play.
Rick Womack: Okay, and then in terms of international expansion ex Europe.
Speaker Change: Is Eden able to help you guys getting into semiconductor geographies, where you haven't been operating to date.
Speaker Change: And how should we think about the potential for.
Rick Womack: The opportunity in Central South America, other parts of North America, where you're not maybe fully fully loaded.
Speaker Change: Seems like you've got pretty good coverage in the U S, Canada, but maybe I'm missing something and then potentially places like Australia and others.
Rick Womack: You could see some some incremental sales.
Rick Womack: Yes, it definitely has the capabilities to do that.
Rick Womack: At this point in time, we're focused on North America and Europe.
Rick Womack: We believe with the combined product portfolio, what we have to offer.
Rick Womack: In Europe, and North America, we've got plenty of Tam to address it in those two geographies.
Rick Womack: But again the possibility definitely exists to penetrate new geographies as we move forward in the partnership.
Speaker Change: Thanks, So much and then just a final one on the cadence of the inventory reduction.
Rick Womack: Should we be thinking about that as kind of a low single digit millions mid single digit millions of inventory consumption on a quarterly basis, just wanted to get a better sense of how to get that that number.
Rick Womack: On a trajectory basis and what's the right target for you guys in terms of.
Rick Womack: Kind of the right inventory that you wanted to carry on the ongoing basis.
Rick Womack: Yes. So obviously there are a lot of factors.
Rick Womack: That inventory balance will depend on it depends on the mix of sell through.
Rick Womack: It makes our production et cetera. So.
Rick Womack: As you can see right now is that we expect gradual reduction probably in the second in the second quarter.
Rick Womack: With.
Rick Womack: A more meaningful reduction coming in the second half as we see revenue growth.
Speaker Change: Okay I'll hop back in queue. Thanks, guys.
Rick Womack: Thank you.
Speaker Change: Again, if you would like to ask a question press star one on your telephone keypad.
Speaker Change: That's all the questions for today, ladies and gentlemen.
Speaker Change: That concludes today's call. Thank you all for joining you may now disconnect.
Speaker Change: Please wait the conference will begin shortly.
Speaker Change: Sure.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Thanks.
Speaker Change: [music].
Speaker Change: Sure.
Speaker Change: [music].
Speaker Change: Please wait the conference will begin shortly.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Sure.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Please wait the conference will begin shortly.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: [music] community.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Thank you.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].