Participants

Nandan Amladi; Vice President - Finance and Investor Relations; ChargePoint Holdings Inc

Richard Wilmer; President, Chief Executive Officer, Chief Operating Officer, Director; ChargePoint Holdings Inc

Mansi Khetani; Interim Chief Financial Officer; ChargePoint Holdings Inc

Colin Rusch; Analyst; Oppenheimer & Co Inc

Mark Delaney; Analyst; Goldman Sachs & Co LLC

Mahima Kakani; Analyst; PMorgan Chase & Co

Stephen Gengaro; Analyst; Stifel Financial Corp

Craig Irwin; Analyst; Roth Capital Partners LLC

Presentation

Operator

Ladies and gentlemen, good afternoon. My name is Pam, and I'll be your conference operator for today's call. At this time, I would like to welcome everyone to the ChargePoint fourth-quarter fiscal 2025 earnings conference call and webcast. (Operator Instructions)
I would now like to turn the call over to Nandan Amladi, ChargePoint's Vice President of Finance and Investor Relations. Nandan, please go ahead.

Nandan Amladi

Good afternoon, and thank you for joining us on today's conference call to discuss ChargePoint's fourth-quarter fiscal 2025 earnings results. This call is being webcast and can be accessed on the Investor Relations section of our website at investors.chargepoint.com.
With me on today's call are Rick Wilmer, our Chief Executive Officer; and Mansi Khetani, our Chief Financial Officer. This afternoon, we issued a press release announcing results for the quarter ended January 31, 2025, which can be found on our website. We'd like to remind you that during the conference call, management will be making forward-looking statements, including our outlook for the first quarter of fiscal 2026.
These forward-looking statements involve risks and uncertainties, many of which are beyond our control and could cause actual results to differ materially from our expectations. These forward-looking statements apply as of today, and we undertake no obligation to update these statements after the call. For a more detailed description of certain factors that could cause actual results to differ, please refer to our Form 10-Q filed with the SEC on December 6, 2024, and our earnings release posted today on our website and filed with the SEC on Form 8-K.
Also, please note that we use certain non-GAAP financial measures on this call, which we reconcile to GAAP in our earnings release and for certain historical periods in the investor presentation posted on the Investors section of our website. And finally, we'll be posting a transcript of this call to our Investor Relations website under the Quarterly Results section.
And with that, let me turn the call over to Rick.

Richard Wilmer

Thank you for joining ChargePoint's fourth quarter fiscal 2025 earnings call. Today, I will walk through key financial results for the quarter, our recent business highlights, and discuss the anticipated shifts in the US policy as they pertain to ChargePoint. We continue to execute on our mission for operational excellence in the fourth quarter and are pleased with the results. We delivered significant sequential improvement in adjusted EBITDA as well as cash usage.
Revenue was $102 million, above the midpoint of our guidance range. Subscription revenue increased 14% year on year to $38 million in Q4. Our gross margin increased to 30% on a non-GAAP basis. Q4 non-GAAP OpEx was $52 million, which is down 42% from our high point of $89 million in Q2 of fiscal year 2024. Cash consumption reduced significantly compared to last quarter, and our ending cash balance was up by $5 million from the end of Q3.
We have rationalized our cost structure, and we will continue to operate efficiently. These improvements demonstrate significant progress toward our goal of achieving positive non-GAAP adjusted EBITDA for a quarter in fiscal 2026. We finished the year with 342,000 charging ports managed by our software, of which 120,000 are in Europe and more than 33,000 are DC fast chargers. These ports drive our subscription revenue.
To demonstrate our scale between managed and roaming ports, we provide ChargePoint drivers with access to more than 1.2 million charging ports worldwide. EV adoption continues despite recent narratives to the contrary.
According to the research firm, Row Motion, 2024 was a record year for global EV sales volume with North America up 9%. The firm's January 2025 data reported North American sales up 22% year over year and Europe, including the UK, up 21%. EV sales were a natural leading indicator for our industry. As more EVs hit the road, the more chargers are needed to fuel them.
Dozens of new EV models are expected to arrive this year, further expanding selection for consumers. These EVs boast features which were previously unavailable, and they are coming to market at price points closer to those of internal combustion vehicles. We believe free market forces will drive organic EV adoption in the absence of subsidies.
Global automotive manufacturers, most recently Kia on February 27, have reconfirmed their commitment to EVs, whether they continue to invest in internal combustion or not. Many institutions across industries such as retail, hospitality, and logistics are fully committed to reducing their carbon footprint. EVs remain a major part of their plans to do so. EV charging will remain the essential enabler of the transition to e-mobility.
Charging sessions on the ChargePoint network continued to grow sequentially with approximately 27 million sessions delivered in the fourth quarter. In our 17-year history, the ChargePoint network has delivered more than 322 million sessions, of which almost 30% took place during the last fiscal year. As I have said previously, we believe this demonstrates how existing EV charging infrastructure is under pressure.
Additional charging capacity is moving from a want to a need. We are still seeing institutions procure charging as a marketing tactic to attract customers, a loyalty tactic to retain them or both. Charging infrastructure has lagged behind EV adoption and it needs to catch up.
We continue to make progress on our three-year business plan. To recap year one, we restructured, revised our product road map, set our leadership team in place, and put tremendous focus and effort into operational excellence. As we often say internally, focus plus effort equals results. And that is becoming apparent in the results we are delivering. We completed year one of our plant early and have a head start on year two.
Year two of the plan prioritizes growth and innovation. Our next-generation software and hardware products will deliver substantial innovation to the market, which in turn, we believe, will result in further growth. A very well-received innovation as our recently announced anti-vandalism technology, one of the industry's biggest pain points is station vandalism, particularly the theft of charger cables. To combat the issue, we have developed a cut-resistant cable and are offering it to the entire industry so we can collectively fight crime.
This innovative approach to hardware development remains one of our four strategic cornerstones, and the hardware road map is not just limited to features and components. The first of several planned product announcements for 2025 will take place soon.
Year three of the business plan will be reaping the benefits of this completely revamped product portfolio, which includes our next-generation software platform that will drive profitable growth.
In terms of growth, like with innovation, there were tangible results in Q4. The biggest highlight was a collaboration with General Motors GM Energy division. Together with ChargePoint customers, we plan to open a significant number of GM Energy-branded DC fast-charging locations this year. ChargePoint is uniquely placed to deliver this for GM, thanks to our market position and our relationships with the industry.
The program is intended to offset upfront investment with an owner-operator subsidy. This enables our customers to reduce their ROI threshold and accelerates the growth of their network. It will drive sales of ChargePoint solutions in parallel. As proof of its appeal, we managed to open the first location within four weeks of finalizing the program.
While there is much in the news regarding the uncertainty of US federal funding for DC fast-charging infrastructure, there is still funding available at the state and utility level. In Q4, we completed six fast-charging corridors across the state of Colorado, doubling charger coverage on those roadways. We are also near completion of a series of fast-charging locations in New York State. Neither of these large-scale projects is federally funded.
Despite operating in a turbulent macro environment, we believe the transition to electrified transportation is inevitable. I will now touch on the policy direction of the new US administration and the possible implications for ChargePoint, beginning with tariffs.
Over the past two years, we have geographically diversified our manufacturing and warehousing relationships. We manufacture globally and have the capability to increase production at any of these facilities, including those located in the United States. The proposed tariffs on raw materials are inconsequential relative to the total cost of manufacturing our products.
Regarding the future of the National Electric Vehicle Infrastructure program, which represents the US federal funding being pulled back, ChargePoint does not own and operate charging infrastructure. We do not sell electricity to drivers nor are we reliant on federal funding. Overall, NEVI-related deals represented an insignificant portion of our revenue in 2024.
Therefore, we do not anticipate these changes to have a material effect on our business going forward. In conclusion, ChargePoint is leading the EV-charging industry, retaining our significant market share. We have rationalized our cost structure to improve our financial performance for our shareholders. ChargePoint is the most diversified business in the EV-charging sector by use case and geography.
We have an expansive customer base across AC home, AC commercial, and DC high-speed charging, spanning both Europe and North America. Our dependence on federal projects is minimal, and everything is in place for growth this year. We are confident we can deliver.
I will now turn the call over to our CFO, Mansi Khetani.

Mansi Khetani

Thanks, Rick. As a reminder, please see our earnings press release where we reconcile our non-GAAP results to GAAP. Our principal exclusions are stock-based compensation, amortization of intangible assets and certain costs related to restructuring and acquisitions. We are very pleased with our Q4 results. All the focus and effort we put into operational excellence throughout last year is bearing fruit, and our Q4 results were a proof point of that.
We delivered significant improvements to our gross margin profile and brought OpEx down to appropriate levels, which materially reduced adjusted EBITDA loss. This reduction in adjusted EBITDA loss, combined with a reduction in inventory and better working capital management, resulted in significantly reduced cash usage for the quarter.
As we have mentioned before, we expect total cash usage to continue to be close to adjusted EBITDA loss or better as we sell through inventory. We saw this in Q4 and expect the trend to continue. Revenue for the fourth quarter was $102 million, above the midpoint of our guidance range, which was $95 million to $105 million.
Network charging systems at $53 million accounted for 52% of fourth quarter revenue. This was flat sequentially and down 29% year on year. Looking ahead, we believe we will start seeing improvement in these year-on-year growth rates.
Subscription revenue at $38 million was 38% of total revenue, up 5% sequentially and up 14% year on year due to the recurring revenue generated from a higher installed base. Other revenue at $11 million was 11% of total revenue, up 4% sequentially and up 33% year on year.
From a geographic perspective, North America made up 81% of fourth quarter revenue and Europe was 19%, consistent with recent quarters. Non-GAAP gross margin was 30%, improving four percentage points sequentially and eight percentage points year on year. This is attributable to higher hardware margins due to improved costs and higher subscription revenue. We expect margins to continue around this range going forward and further improve in the back half of the year subject to revenue mix.
Non-GAAP operating expenses were $52 million, down 11% sequentially from $59 million in the third quarter and down 30% from $75 million in the fourth quarter last year. This OpEx level is now appropriate for our business needs. However, we do expect a modest increase going forward due to annual salary increases and investments in certain key areas of the business.
Non-GAAP adjusted EBITDA loss was $17 million, a fifth consecutive quarter of improvement. This compares with a loss of $29 million in the third quarter and a loss of $45 million in the fourth quarter of last year.
Stock-based compensation was $15 million, down from $21 million in the third quarter and down from $25 million year on year.
Our inventory balance decreased by $13 million to $209 million, the second consecutive reduction from an all-time high in the second quarter of fiscal year 2025. This reduction in inventory freed up cash and helped reduce our cash usage in the quarter. As we have mentioned on prior calls, selling through existing inventory releases working capital and generates cash, which occurred this quarter, and we expect this to continue in the future.
We ended the quarter with $225 million in cash on hand, up $5 million sequentially. Our cash used for operating activities declined significantly to just $3 million during the quarter, down from $31 million in Q3. This was due to lower operating expenses, higher gross margin, reduced inventory, and other improvements to working capital. Note that due to our capital-light business model, cash used for operations as shown on our statement of cash flows is very close to total cash consumption for the quarter.
While we continue to rigorously manage cash, we have access to a $150 million revolving credit facility, which remains undrawn, we have no debt maturities until 2028, and we have existing capacity on our ATM.
With respect to full fiscal year 2025 results, revenue was $417 million, non-GAAP gross margin was 26%, and non-GAAP operating expenses were $243 million. From a geographic perspective, North America was 81% of full year revenue and Europe was 19%. For additional full year fiscal 2025 results, see the press release issued earlier today.
Turning to guidance. For the first quarter of fiscal 2026, we expect revenue to be $95 million to $105 million. This is almost in line with Q4 at the midpoint despite Q1 typically being a seasonally lower quarter.
In conclusion, we believe Q4 was a pivotal quarter for us. Our results reflect the ongoing benefits of all the measures we took over the past year in terms of gross margin improvement and OpEx reductions, all of which improved adjusted EBITDA loss. We are entering fiscal 2026 with streamlined operations, a significantly reduced cash burn profile, and a strong balance sheet.
Continuing on our fiscal 2025 trends, we will focus on operational excellence and execution to achieve our goal of being adjusted EBITDA-positive in a quarter during fiscal 2026. We will now open the call for questions.

Question and Answer Session

Operator

(Operator Instructions) Colin Rusch, Oppenheimer.

Colin Rusch

Can you talk about what the optimal working capital balance looks like for you guys? It looks like you probably have some inventories that you can draw down, but receivables and payables are probably around the right levels here. I just want to get a sense of getting that in mind.

Mansi Khetani

Yeah/ Hi, Colin. So typically, if you look at quarters before, last few years where we had this huge supply chain issue, where we started that -- right that started building up our inventory, if you look at quarters prior to that, we actually generate positive working capital. And this is mostly because of the SaaS effect of our subscription revenue.
We get paid upfront for the entire portion of the contract value. And that's why the revenue balance is high, and that generates actually cash for us, which helps working capital in a significant way. Going forward, though, I think it balances out with inventory needs, payables, et cetera. But this is not a business that requires a significant amount of investment in working capital.

Colin Rusch

Great. And then just a broader question, given the rationalization of a lot of the players in the space. Can you talk a little bit about the competitive landscape and how that's shifting and how you see potential share gains coming through the balance of this calendar year?

Richard Wilmer

Yeah. I think that, Colin, we're watching it very carefully. Obviously, different players in the market, whether they're in North American or Europe and depending on how they play and how much they depend, for example, on government subsidies, are impacted in different ways. We've all seen some participants go out of business, some other players exit the business. And we're, again, paying attention to it very carefully.

Colin Rusch

Great. Thanks so much.

Operator

Mark Delaney, Goldman Sachs.

Mark Delaney

Yes, good afternoon. Thank you very much for taking my question. Nice to see the margin progress. Last quarter, you spoke about green shoots in demand as you consider factors like the scope of projects, the timing as to when your customers wanted to deploy incremental charging capacity. Could you give a bit more on you're seeing in terms of the project pipeline for this coming fiscal year and what that might mean for your revenue growth?

Richard Wilmer

Yeah. As we've discussed, this is the year where the two big themes are revenue growth and innovation, and we fully expect to capitalize on both. In terms of demand, again, I alluded to this in the prepared remarks, but what we really believe is that improved vehicle selection, both the form factor of the vehicles and the price points of the vehicles are really going to help pick up demand. We saw that in the growth numbers year over year. And again, we really believe free market forces will win the day and are firmly convinced based on all kinds of data, including firsthand experience, that EVs are just superior to internal combustion vehicles.
And we've now hit a 10% market penetration in a big portion of the US and most of Europe. And at that level of penetration, you've now got enough EVs on the road that people that have not experienced them or seen them are now seeing friends drive them. They're having an opportunity to try them themselves. And as people are getting experience the superiority of the product, they're just going to switch. So like we mentioned, we believe the move to EVs is inevitable. It's going to happen regardless of whatever government programs support the growth of the industry or not.
With that said, we've got a lot of commercial institutions that are in parts of the world where there's a lot of EVs on the road, and they fully realize that if they don't offer EV charging, the people that they care about aren't going to come to their institution. So we're seeing strong demand continuing in commercial.
In the case of fleet, we're now starting to see real tangible data that's showing that fleet customers are actually lowering their cost of operations and exceeding, quite frankly, their expectations with an electrified fleet compared to an old internal combustion fleet. So there's a lot of positive signs that are translating into business for us.

Mark Delaney

That's very helpful. My other question was about the mix of business. I think, typically, you disclose billings by vertical. Apologies if I missed it, but could you talk a little bit more around how the mix of the business has evolved, what it came in at during the fourth quarter and any go-forward commentary? And was that a factor in the gross margin pickup as well?

Mansi Khetani

Yeah. So it makes us pretty similar to what we normally see. Commercial was 68%, fleet was 16%, residential was 12%, and the rest other was 4%. Very similar to trends in the past, nothing different there.
And the gross margin improvement was not really related to the mix here. It was more related to better hardware margins and higher subscription revenue as a percentage of overall revenue.

Mark Delaney

Thank you.

Operator

Bill Peterson, JPMorgan.

Mahima Kakani

Hi, good afternoon this is is Mahima Kakani on for Bill Peterson. Can you maybe touch on how your current sell-in rates and sell-through rates are trending? And are distributors still taking on new product now or waiting in anticipation of policy certainty, and perhaps, improving EV demand trend?

Richard Wilmer

Again, this is a year of driving growth, and we see demand out there that needs to be fulfilled. So I don't think there's been any shift in that area that's been evident to us as a result of any administration policy changes.
In terms of the way the channel is working, it's business as usual. I haven't seen any change as well in terms of the take rates or the sell-through rates of the channel. And now we've been in a place for a few quarters now where the channel inventory is normalized. So all that is operating well, and we continue to grow our channel program. That's part of the overall plan to drive revenue growth this year.

Mahima Kakani

Got it. Thank you. Can you also touch on if you expect any changes to your contract with the USPS given the GSA's recent move to remove chargers from its properties?

Richard Wilmer

So far, no news. We're still moving forward with USPS deployments. But obviously, like everything that's affected by government policy changes, we're keeping a close eye on it.
Okay, thank you. Appreciate it.

Operator

Stephen Gengaro, Stifel.

Stephen Gengaro

Thanks, good afternoon. I think two for me, but I'll start with subscription margins, which were very strong. There seems to be, the last three years, some seasonal strength in the fourth quarter. And I was wondering if that was coincidental or if there's a trend there for fourth quarter seasonality and just kind of how we should think about subscription margins going forward?

Mansi Khetani

Yeah. So the benefit we get in the fourth quarter, Stephen, is that subscription revenues tend to be higher. And obviously, the costs don't have to scale along with revenue. So we always see a nice margin boost.
However, this -- we expect this to continue, actually even improve to next year, because we're going to continue to see economies of scale as our subscription revenue keeps growing. We've mentioned in the past, we're investing in automation on that side of the business and we're expanding in low-cost regions.

Richard Wilmer

The other comment I'll make is that a major element of cost of goods sold on the subscription side or cloud hosting fees. And as Mansi mentioned, we've got the economy of scale now, where we're able to negotiate some of those costs down. And in addition, we're moving into a hybrid cloud environment where we've got more than one source for cloud services, which gives us additional leverage to drive cost of goods sold down on the revenue side.

Stephen Gengaro

Great. Thank you. And my follow-up. I was dropped off before, I apologize if you answered this. But anything on the supply chain for chargers and the tariff issues and how that could impact demand from your customers?

Richard Wilmer

So as we mentioned in the prepared remarks, luckily for us, we diversified our manufacturing footprint substantially over the last 1.5 years. We've got factories in multiple countries now, including the US. So based on everything that's announced thus far and put into play, and even to some extent, things that have been rumored to put into play, our analysis shows that we should not have a major impact on our supply chain, and therefore, COGS as a result of tariffs.

Stephen Gengaro

Great. Thank you.

Operator

(Operator Instructions) Would you like to wait for a few seconds, just in case?

Richard Wilmer

Yeah, someone just queued back up.

Operator

Mark Delaney, Goldman Sachs.

Mark Delaney

Yeah, thanks for taking the follow up questions. One I was hoping to better understand is what you're seeing in terms of the decoupling between hardware and subscription revenue. I know that created some potential opportunity for you on the software side, also, perhaps could be a headwind as well. So if you could elaborate on what you've been seeing, especially in the North America market with that dynamic.

Richard Wilmer

Yeah. Mark, that trend continues. We've now, I believe, have literally over 100 -- well over 100 different non-ChargePoint hardware models that we manage with our software. And we're seeing that trend of a bifurcation of a software buying decision and a hardware buying decision to continue. And we believe with our leading-edge software solutions, that puts us in a great position to continue to drive software subscription revenue that may be disassociated to some extent with our hardware sales, again, because we can manage all kinds of third-party hardware with our software.
And we're watching that trend continue.

Mark Delaney

Very helpful. Another topic I was hoping to follow up on was around permitting. I think there have been some challenges with permitting that have led to some pushouts. I don't know if you've seen any progress from that perspective that you can speak to.

Richard Wilmer

No. No substantial progress. It's kind of steady state, where you'll see some deals that you expected to close in the quarter get moved either because of permitting delays, grid upgrades, available grid infrastructure equipment. And that has -- I think the trend has kind of stayed consistent there, where it hasn't really improved or deteriorated compared to the way it's been in the last couple of quarters.

Mark Delaney

Okay. And sorry, one last one for me. Maybe talk about the mix of hardware business going forward. Mansi, you talked about pretty flattish gross margins in a comp in the second half subject to mix. So I don't know if you could elaborate on what you're contemplating there and just what we should be watching for in terms of mix dynamics, that would be helpful. And what might be a headwind?

Mansi Khetani

Yeah. Yeah. So what I meant in terms of mix was if mix significantly in one direction or the other, that might impact it. So I just wanted to qualify my commentary, if there is no mix shift expected. It's been pretty consistent actually over the last four, five quarters.
But as I mentioned, we will benefit -- or improvement in margin in the second half of the year more than what we already have seen in Q4, mostly because of improvements in hardware margins, Q2 product coming from our Asian manufacturer and subscription margins with economies of scale.

Mark Delaney

Got it. Thank you.

Operator

Craig Irwin, ROTH Capital Partners.

Craig Irwin

First thing I wanted to ask is back to office. This is something that impacts the historically very important customer base for ChargePoint. All the technology companies, particularly on the West Coast, they put in charging for their employees. Are you seeing back to office play out as a little bit of a tailwind for you guys? I know historically, it's been a high-margin mix. Is that something that could potentially benefit you over the next year or two?

Richard Wilmer

Good question, Craig. I think in general, when we think about the commercial segment, one easy way to subsegment it is into retail and nonretail. Workplace, schools, universities, sliders, et cetera, all fall into the nonretail side of that category. And we continue to see strong growth there.
I think in the workplace particularly, we see people continue to have pressure on their chargers and employees getting dissatisfied when they arrive at work, they can't find a place to charge. So we see continued growth there. Hard to say if it's actually directly correlated with return to office. But overall, both in the retail and nonretail segment of commercial, we're seeing growth.

Craig Irwin

Understood. So then, Mansi, your team has done a really good job squeezing the balance sheet for cash. Can you maybe talk about opportunities in inventories and prepaid as far as potential contributions to cash flow over the course of your fiscal '26?

Mansi Khetani

Yeah. So we will continue to see inventory coming down as we saw over the last two quarters. And as that happens, as you rightly pointed out, this will release working capital. It adds to our cash balance. We will continue to see that Payable deposits, all that stuff, is kind of stable. There will be a little bit of movement here and there, nothing major.
But the two main things that will drive cash are, one, inventory and the other one is reduction in adjusted EBITDA loss. And as that keeps improving through the year, the amount of overall cash needed will decline. Due to our capitalized business model, we have very minimal CapEx requirements. So our cash flow from operations is a very close proxy for total cash consumption.
You saw that this quarter, cash usage from operations was just $3 million versus $31 million last quarter. That's why our cash position was so strong. But as inventory keeps going down over the next few quarters, we'll keep seeing a positive impact on cash.

Craig Irwin

Understood. Thank you. Thanks again for taking my questions.

Operator

(Operator Instructions) There are no more questions at this time.
Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect