Blink Charging Co.

Greetings. Welcome to the Blink Charging Third Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Vitaly Stalia, VP of Capital Markets and FPMA. You may begin.

Thank you, Holly, and welcome everyone to Blink's Third Quarter 2024 Earnings Call. With us today, we have Brendan Jones, President and CEO, Michael Battaglia, our Chief Operating Officer and CEO-elect, and Michael Rama, Blink's Chief Financial Officer. The discussion today will include non-GAAP references. These are reconciled to the most comparable U.S. GAAP measures in the appendix of our earnings deck. You may find the deck, along with the rest of our earnings materials and other important content, on Blink's Investor Relations website. Today's discussions may also include forward-looking statements about our expectations. Actual results may be different from those stated. The most significant factors that could cause actual results to differ are included on page two of the Third Quarter 2024 Earnings Deck. Unless otherwise noted, all comparisons are -over-year. Please follow our announcements on Blink's Investor Relations website for future events for investors. And now, I'd like to turn the call over to Brendan Jones, Blink's President and CEO. Brendan, please go ahead.

Thanks, Vitaly, and good afternoon for everyone, and thanks for joining us here today. During the Third Quarter 2024, we continued to execute on our strategic priorities and initiatives. Our total company revenue was $25.2 million with service revenue, representing $8.8 million, or approximately 35% of the total company revenue. The gross margin in the Third Quarter was 36%, significantly exceeding our full-year 2024 target guidance of 33%. Now, during the Third Quarter, we contracted, sold, or deployed 6,978 chargers globally, representing a 17% increase -over-year and a 70% increase sequentially. What is notable here is that the majority of this growth comes from L2 chargers built by Blink, where we command higher margins than third-party manufacturing units, further validating our vertically integrated model. On the energy side, Blink dispersed nearly 37 gigawatts of energy across all Blink networks globally, compared to 16 gigawatts in Q3 of 2023. This is 126% -over-year growth, is largely driven by demand for charging in our markets and the increased number of units deployed on our networks. Sequentially, we saw energy disbursement grow 12% in just one quarter, compared to 33 gigawatts dispersed in Q2 of 2024. But what we think is most important to highlight is the progress we've made and continue to make to establish Blink as a more profitable and better positioned company for future growth. In Q3, we reduced our cash burn by $3.6 million or a reduction of 27% compared to Q3 of last year. Year to date, we reduced our cash burn by $45 million or 50%. And let me repeat this again. We reduced our cash burn by $45 million from last year's cash spend, and this excludes financing activities. So the efficiency and cost control initiatives we've outlined and began implementing over a year ago are delivering meaningful cost reductions, and we are pursuing additional opportunities to drive continued efficiencies moving forward. Now, if we jump to slide five, you will see that what makes Blink unique is our owner operated portfolio of chargers that so strongly contribute to our gross margin in 2024. As of 30th, we had 6,442 owned and operated chargers, and that is 28% growth versus the same period last year. As a reminder, in our owner operated model, we install, maintain, and also receive the lion's share of the revenue generated by our chargers. This substantial increase in operated units is one of the main drivers of service revenue growth in the third quarter. Among these numbers, DC fast chargers have been gaining more and more momentum. In fact, revenue generated by Blink owned and operated DC fast chargers went up 544% year over year. That is a huge number. As of September 30th and across all our networks now, we had a total of 1,278 DC fast chargers, which provide important data on location, pricing, and utilization. We use this data to inform Blink on how to successfully deploy Blink-owned DC fast chargers across the U.S. and in Europe. Now, if we look at product sales, on our first and second quarter earnings calls, we noted lower product revenues, and we stated that this would continue through the third quarter. As expected, our third quarter product net revenues reflected muted delivery activity. That said, product sales were faced with a very challenging comp in 2024, as we saw significantly stronger DC fast charger sales, particularly to automotive dealerships in 2023, compared to this year. Most dealers who wanted to acquire chargers have them now. We have been replacing dealership sales by focusing on other sales verticals, such as multifamily dwellings, commercial fleet, local and state governments, offices, hospitals, and schools, which provide Blink with a more profitable and sustainable revenue stream. Given the shift in product sales, as you can see on page six, we're now adjusting our full year overall guidance to $125 million to $135 million. We are maintaining our gross margin target of approximately 33%, and we expect to achieve positive adjusted EBITDA in the second half of 2025. As we examine the first three quarters of 2024, Blink is encouraged by the improving EV sales trends, especially in September and October. We believe the EV sales increases will create future sales opportunities for Blink. According to Kelley Blue Book, EV sales in the US grew 11% year over year in the third quarter and reached record highs in terms of both sales, volume, and share of the US auto market. An estimated 346,000 EVs were sold in Q3 in the US, which is an increase of 5% from Q2 of 2024. Globally, EVs accounted for .9% of all new car sales in the third quarter, up from a previous high of 7.8 in Q3 of 2023. With this promising EV industry data, we are energized about capturing the corresponding potential demand for EV charging infrastructure as clients look to provide charging services for their growing fleets, employees, customers, and constituents. For the last several quarters, as promised, we have focused on optimizing Blink to establish systems and processes to ensure that is resilient when faced with charging market conditions. While the job is not done, our team has made excellent progress towards that goal as evidenced by the significantly reduced cash burn compared with the reduction in compensation and G&A. With that stated, I will now pass it on to Mike Pataglia and he will go over some additional details for the third quarter. Mike?

Great. Thanks, Brendan. Let's start with our operational results for this quarter. So, on slide 8, you can see that cumulatively, as of the end of Q3 of 2024, Blink has contracted, sold, or deployed over 105,000 chargers since the company's inception, with 76% of these deployed in North America. As Brendan mentioned, in this quarter alone, we added 6,978 contracted, sold, or deployed chargers to our cumulative number. What's important to mention here is that not all of these contracted chargers have been recognized into revenue yet due to revenue recognition rules. So, a portion of the contracted chargers will be reflected in product revenues in future quarters. Furthermore, on slide 9, we continue to take advantage of our scale and geographical presence to grow our pipeline. According to the U.S. Department of Energy, Blink is the third largest charging network in the United States. We are also one of the leading providers in Western Europe. And we believe that as the number of EVs grow, so will the demand for Blink's chargers and network services. And so far, we're seeing encouraging news from auto OEMs. For example, Tesla recently reported that it expects 2025 sales growth of more than 20%. That's significant considering Tesla represents about half of EV market share in the U.S. and Tesla drivers represent our number one population plugging into Blink charging stations. On a similar note, General Motors has reported that it is finally reaching scale on EV production. GM is now America's second best-selling EV brand behind Tesla with Q3 deliveries up 60% year over year. And further, an increasing number of affordable pre-owned EVs are also making their way onto U.S. and European streets. So, on slide 10, we continue to offer a full suite of hardware, network, and support products and services that reflect our core competency of vertical integration capabilities. Our Blink manufactured series 7 and 8 chargers are our best-selling level 2 models which are produced here in the USA at our Bowie, Maryland production facility. We have one of the newest networks in the industry that was built on microservices tech stack that is very adaptable to our fleet customers. And our service and warranty offerings increase uptime and improved experiences for our customers and hosts. Now, if we move over to slide 11, you can see a representative group of our customer base including many recognizable names across multiple vertical markets. And as we've said before, we deploy the right charger at the right place at the right time. And to that end, turning to slide 12, during the third quarter, we announced our collaboration with WEX to enhance the integration of EV charging into mixed energy suites. This initiative will improve fleet management as commercial drivers will experience enhanced access to dependable and convenient EV charging solutions as WEX's services are accepted at 95% of retail fuel locations nationwide. Additionally, we formed a strategic alliance with Create Energy to establish a one-stop shop for innovative grid management products that utilize things like solar and battery storage into charging deployments. And following the close of the quarter, Blink was awarded a $2 million grant by the state of Illinois for the deployment of our owned and operated EV level 2 and DC fast chargers. And our subsidiary Envoy Technologies, a provider of car sharing services and community-based electric vehicles teamed with Unlimited Real Estate Group to bring car sharing at Fiat House, a new collection of residences in New Jersey. Envoy also introduced the option for Lucid Air EVs as part of its broader car share program. Finally, a few days ago, we announced the establishment of a 100 million pound special purpose vehicle in the UK for the deployment of Blink charging infrastructure in conjunction with UK government levy incentive funds. So levy is very similar to the US NEVY program. We see this as a tremendous opportunity to grow our business in the UK and Europe and eventually in the US. In the United Kingdom, we started to make progress on acquiring levy-funded contracts. For example, the West Yorkshire Combined Authority ranked Blink as number one out of 25 applicants, which we're certainly very proud of. So we made a great deal of business development progress this quarter, and we continue to aggressively pursue contracts and strategic partnerships to enhance our market position. And I'd also like to discuss the efforts we've taken to restructure Blink in our continuously evolving market. Before the start of this year, we established and communicated our company-wide optimization and process improvement strategy, and we've been executing on these initiatives throughout the year. A key indicator of our successful efforts is our cash firm rate, which, excluding any financing activities in the first nine months of the year, was reduced by $45 million. That is a reduction of 50% over the same period last year. Said differently, we reduced our -to-date cash firm by half. Another KPI related to our optimization efforts is our improved total operating expenses, which saw a 22% -to-date reduction, excluding non-cash impairment charges. The key drivers of this improvement were a 37% reduction in compensation expenses and a 10% reduction in G&A expenses. But we're not done yet. So in September, we announced planned cost reduction activities designed to further position Blink for both short-term and long-term success. These actions anticipate reducing global personnel count by 14%, which is expected to be completed during the first quarter of 2025. We anticipate that this action will result in annualized savings of about $9 million. We are also proactive in deploying new and innovative ways to increase revenue and further reduce costs. For example, we're very excited about our cooperative agreement with Stable Auto to employ their artificial intelligence and machine learning technology to improve utilization and efficiencies among our existing Blink-owned stations and future deployments. The potential benefits are impressive. For example, if AI predicts substantial upticks in demand and utilization, we will enhance revenue opportunities through competitive pricing or increase throughput by adding high-power DC fast chargers to those sites. The model has already proven effective by increasing our revenue across more than 60 locations to date. And as Brendan said earlier, we've been disciplined in our approach to adopting practices and processes that will improve Blink's agility in responding to changes in our industry and markets. We've made excellent progress to date and will continue to execute on the strategies and priorities that will make Blink an even stronger company. So with that, I'll turn it over to Michael Rama, our CFO, to go over financial results. Michael?

Thank you, Mike, and good afternoon, everyone. Turning to slide 15, total revenue in the third quarter of 2024 was $25.2 million, compared to $43.4 million in the same period, 2023. Product sales in the third quarter of 2024 were $13.4 million, compared to $35.1 million in the same period, 2023. Third quarter 2024 service revenue, which consists of charging service network fees and car sharing revenues, was $8.8 million, an increase of 30%. For the first nine months of 2024, service revenue was $25 million, a 35% increase compared with the same period of 2023. Gross profit for the third quarter of 2024 was $9.1 million, or 36%, compared to $12.8 million, or 29% for the same period last year. Gross profit for the first nine months of 2024 was $33.3 million, or 35%, compared to $29.6 million, or 30% for the same period last year. The increase in Q3 and -to-date 2024 gross margin is primarily due to Blink's shift in product mix towards L2 chargers when compared to 2023. Our Blink-built L2 chargers command a lower average transaction price than DC fast chargers, but a higher margin. Based on our analysis today, we believe Blink generates the highest gap gross margin in industry among comparable peers and competitors. In addition, as Brendan and Mike emphasized earlier on the we continue to significantly reduce our total operating expenses. Operating expenses in the third quarter of 2024 were $97.3 million, compared to $123.3 million in the prior year period. Operating expenses in the nine months ended September 30, 2024, were $159.6 million, compared to $210.3 million in the same period in the prior year. Operating expenses in Q3 and -to-date include non-cash goodwill impairment charges of $69.1 million. It is very important that I mention here that the impairment charges are non-cash, and they do not, I repeat, they do not impact the operations of our business in any shape or form. Excluding these impairment charges from our operating results from the third quarter, our total business operating expenses decreased -over-year to $28.2 million. For the nine months ended September 30, 2024, Blink total operating expenses excluding non-cash impairment charges were $90.5 million, a -to-date -over-year reduction of $25.6 million, or

22

% in comparison with the same period in 2023. Our cash burn for the third quarter of 2024, excluding financing activities, was $10.1 million, a reduction of $3.6 million, or 27% compared to the third quarter of 2023. As mentioned before, -to-date, we reduced our cash burn by $45 million, or 50%. We view this as the most significant metric in our avoidance and optimization efforts. Adjusted EBITDA for the third quarter of 2024 was a loss of $14 million, compared to a loss of $11.7 million in the prior year period. Adjusted EBITDA for the first nine months of 2024 was a loss of $38.9 million, compared to a loss of $43 million for the same period of 2023. Earnings per share for the third quarter of 2024 was a loss of $0.86 per share, compared to a loss of $1.74 per share in the prior year period. In the nine months ended September 30, 2024, the earnings per share was a loss of $1.24 per share, compared to a loss of $3.02 per share in the same period of the prior year. Please note that the impact of the non-cash impairment charges to our goodwill negatively impacted Q3 immunodate earnings per share by $0.68 and $1.54 respectively. Now, adjusted earnings per share for the third quarter of 2024 was a loss of $0.16, compared to $0.16 in the prior year period. In the nine months ended September 30, 2024, the adjusted earnings per share was a loss of $0.47 per share, compared to a loss of $1.15 per share in the same period of the prior year. As for the balance sheet, cash and cash agreements at September 30, 2024, was $64.6 million, compared to $73.9 million at the end of the second quarter of 2024. This concludes my prepared remarks. I could turn the call back over to Brendan for a few final comments. Go ahead, Brendan.

Thanks, Michael. This quarter, the link has continued to deliver on our promise to structurally adjust the company. We continued our shift towards vertical integration and taking advantage of the scale and higher margins of the products that are built and manufactured by Blink. We continue to increase re-incurring service revenue by 30% -over-year this quarter and 35% -to-date, with service revenue representing nearly one-third and growing of our total revenue. Our Blink-owned and operated charge account grew by 28% -over-year to enable this shift to higher margin and sustainable service revenue. When it comes to product revenues, we transition our product sales from one-time lower margin sales to longer-term sustainable and more profitable sales. As we respond and adjust to changing market conditions, our significantly reduced cash burn and focus on continuous improvement combined with revenue enhancement will position Blink as a truly prosperous company. We have what we believe is the best team in the industry, and with our vertically integrated -to-market model, we believe that Blink is well positioned to drive long-term growth and value for our stakeholders. We'd like to thank our team across the globe who is implementing our plan and taking care of our customers. And we also want to thank our customers and drivers for trusting Blink with their charging needs and being part of this transportation and energy revolution. Now with that, I believe you're ready to engage in some questions. So let's transition to that.

Yeah, hey, hey, uh, before we go into questions, I just want to jump in for a quick moment. And for everyone on the call, I just want to acknowledge that today is Brendan's last Blink earnings call as he moves toward his very much well-deserved retirement at the end of 2025. And while he'll stay involved as a board member and advisor, the entire Blink team would like to thank him for his leadership during the past five years. And Brendan is certainly a well-respected expert in the EV and charging industries. And the company and team here have all benefited immensely from his knowledge and mentorship, including me personally. So thank you, Brendan. We wish you all the best in your retirement. And now we can, with that, we can, we can go ahead with questions.

Certainly. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that's star one to ask a question. Please hold while we poll for questions. Your first question for today is from Craig Irwin with Roth Capital Partners.

Good evening, and thanks for taking my questions. First, I should say Brendan, it's been a real pleasure to work with you. You know, good luck in your retirement. And Mr. Battaglia, I'm sure you're going to do a fantastic job as CEO of this company. So very happy, very happy to have the smooth transition. My question is, my first question is really, I guess, a two-part question. Can you maybe just update everybody on the mix of level two versus level three chargers that you're selling and, you know, the amount of federal subsidies versus state subsidies that have contributed to the sales of these products over the course of the last year?

Yeah, thanks. Thanks, Craig. And thanks for the time, words to start. So regarding the mix of L2 to L3, let me talk about 2023 just a little bit, and then I'll talk about 2024. So 2023 was a very unique year in terms of the markets that we were serving. And the single biggest market that wound up being, you know, excellent for us was the automotive channel as it related to dealer infrastructure programs that were rolled out by the OEMs. Now, all of those programs had both an L2 and an L3 component to them, and it was very heavily weighted to L3 as well. So, you know, our mix last year was, you know, it's not, from a revenue standpoint, it was actually much, much higher on the L3 side. From the unit side, it obviously is still higher on the level two side, given the average selling prices. So we had a much larger mix of DC fast charger sales last year than we did this year. So when you look at our Q3 and you look at the product sales number, that was primarily impacted by lower DC fast charging sales. So the mix of product is actually healthier for Blink from a margin perspective because we're selling more L2, it's more Blink manufactured product, the margins are higher than when we sell a DC fast charger, but obviously the revenue gets impacted. So, you know, the challenge before us and what the team is working on is obviously to fill that gap more so that we can, you know, make up the full amount and beyond that revenue. Now, regarding federal and state subsidies, one of the, I would say, strengths of Blink is that we don't heavily rely on federal and state subsidies. So the vast majority of our revenue on a quarterly basis is through what I'll call non-supportive channels through federal and state or non-governmental channels. So, you know, we can follow up and certainly provide a, you know, a mixed number on that, but I can tell you it's pretty low.

Yeah, and just to elaborate a bit for you on that, Craig, so, you know, when we're talking about government programs, we have engaged in, right, and there's been, you know, a few, but they're not the majority. You know, we're going to collect, you know, somewhere around seven million dollars next quarter, but that doesn't get counted as revenue. You know, we invested the capital in prior years and last year to put those chargers in the ground in different markets. Most of them are DC fast chargers, but we're just going to capture the capital we put in and we can't count that as revenue on the books, but it does give us, you know, a reduced amount of cash we need or additional cash on the books for more capital products, but, you know, and we continue to do well, you know, with or without federal product programs.

Excellent. Thank you for that. So my next question, I guess, is, you know, driving around, I observe a lot of blink chargers in front of places like Dunkin' Donuts and Starbucks, right? You know, you're there serving customers in places where people will stop and wait and maybe just relax for a few minutes as they move about their days. Those corporate partnerships seem to be benefiting the development of your network. Can you maybe talk us through, you know, the funnel that you've developed over the last couple years and whether or not political changes are likely to impact the commitment of these different corporations, these different, obviously, not government, not state entities that have supported the deployment of your products?

Yeah, so, so, Craig, are you talking about, so I'm going to take second part of the question first. Are you talking specifically about the election change administration, things like that?

Well, no, what I'm pointing to is that, you know, hey, there's a lot of brands out there that you may or may not have announced, but, you know, we see the new blink product installed outside, right? And these corporate entities have long-term mandates for environmental responsibility that are unimpacted by the changes or anticipated changes in DC. And, you know, we can see them continuing to be actually very good customers here going forward. So can you maybe just elaborate on that and talk a little bit about, you know, the breadth of customers that you're reaching and whether or not the number of those customers and adoption rates are actually growthing over the next, you know, quarters and years?

Yeah, okay, got it. So, you know, first of all, our, not to go into too much detail, but our sales team is kind of structured in two different ways. One is we have a dedicated business development team and then we have a territory sales team. And the business development team specifically is dedicated to exactly what you're talking about. So we identify the vertical markets that we believe are strong areas for EV charging and we have a strategic account plan and obviously this development team goes after those. So, you know, whether it is big hotel chains or whether it is C stores like you kind of pointed out and retail like Dunkin' Donuts and things like that. So we have an existing book of business that is really quite strong in terms of the logos and we have obviously had that up on the screen during the presentation. And so our objective is to do more with our existing customer base at the same time that we're looking for opportunities to expand into large scale organizations. So our objective is always to approach a brand that has, you know, that really has a strong footprint around the country and then present to them our multiple business models that fit whatever it is they're looking to do. Now, one of the things that's been really encouraging for us this year is the increased number of DC fast chargers that we've deployed under our owner operator model. So we've always historically been a level two focus company with owner operator chargers and we will continue to be focused in that area. But we have a pretty substantial core number of charging stations right now on the DC side that we're very encouraged by the results and you mentioned Dunkin' Donuts, it's actually a great example of we have a few stores with DC fast chargers at Dunkin' and they're doing really, really well. So our pipeline continues to grow among those larger corporate accounts at the same time that our territory sales teams are looking for those more local opportunities in their areas.

Yeah, so let me, if I may add a couple comments to that because I think it's a great question Craig. You know, when we look at, you know, what we call additionality and that's the existing base of customers we have today, we had last year and we keep growing into the future, you know, there's definitely was an impact this year as it related to, you know, the declines we saw in EV vehicle sales that started, you know, in late Q1 were definitely prevalent in Q2 for sure because that was decreased sales year over year. And what happens with the commercial side as different from the residential side, there's a bit of a lag effect. When they start seeing the news that EV sales are increasing, they're much more resident to then engage in more commercial contracts to add to the amount of chargers they have at their workplace, at their retail locations, you know, along the highway, etc. So that's why it's really, really important right now that blank is on point as all the good news happens right now around sales and the projections because you're going to see an uptick in the installation of commercial chargers, which is you know, we do in-home chargers, but in-home chargers, you know, the margin is much looser. That's more of a direct impact when you sell the car and then you see an increase in home. Commercial, it waits for the units to operate to increase. It looks at the sales trend, then, you know, our customers and clients, they say, okay, we need to add chargers or we need new chargers. And that's what we're expecting now as we move forward.

Perfect, perfect. Last question, if I may, is around cash. You got about 65 on the balance sheet and you guys have made huge progress this year. You know, in your release, you say a 45 million dollar reduction in cash use this year versus last year. Can you maybe talk us through the key things for everyone to look at as we look at the continued progress you make on, you know, reducing cash needs each to the end of the year and over the next few quarters?

Yeah, so Craig, you know, as Michael Raba mentioned, we burned about 9 million in flash in Q3, which was, you know, down significantly, not just from last year, but from prior quarters. That was a result of, you know, really the cost reduction and aggressive cost reduction actions that we employed. They came from two areas. One was compensation expense, which was down 37%, and other GNA expenses, which were down 10%. So when you look at our 9 million dollar cash burn and you look at the cash that we have on hand, we have a nice runway ahead of us that we don't have to tap the markets for any capital in the short run. So, you know, we feel pretty good about where we are, and the good news is that we have options. We have options in the future should we need to raise more capital.

Excellent. Well, I'll say congratulations on the gross margins. That really is a bright spot, and it points to you guys showing discipline in the market. Thanks for taking my questions.

Your next question is from Samir Joshi with HC Wainwright.

Hey, good afternoon, and Brendan, thanks for all you have done for the company. It has been good to have worked with you. And of course, Mike, welcome to the new role. I just have a few questions. The announcement on the Axel Throver 100 million pound SPV being set up. Can you just explain a little bit how it will work, and is there a way or is there a chance that you would do something like that in other geographies?

Yeah, so thanks, Samir. So all I'll start and then allow Michael Lama to jump in as he'd like. So this SPV with Axel Throver is an off balance sheet legal entity that is funded a couple of different ways. In this instance, it has its purpose is to support the levy program in the UK. And again, as I kind of briefly mentioned in the comments that the levy program in the UK is very, very similar to the NEVI program in the US. So there is funding that is coming from levy, which will populate the SPV. And then Axel Throver and investors will fund the balance. And then it gives us the ability to sell charging stations into the SPV, recognize that revenue, and then also to recognize ongoing network services, things like that, potentially some revenue from utilization, things like that. So Michael, anything to add to that?

I'd also add that, you know, obviously this is, you know, we're using this program to kick it off. We're evaluating other opportunities within Europe as well as seeing how this could play out in the US as well. So, you know, kind of test pilot run to see how this runs through. But I think it's an additional way to finance with no dilution and being able to still recognize, like I said, the revenues and minimize the risk, if you will.

Right, right. So the SPV will be the owner operator of this. And just a quick follow up, is there any option for financing customers to buy and install the systems or this is purely for the SPV's financing of owner operator modeling? Right.

So in this initial SPV, it's dedicated to the owner operator model for selling into the SPV and then running this program with levy. But it certainly could be, in future SPVs, it certainly could be used to what you said.

Right,

right.

Okay. Thanks for that. For the outlook for the year, there's a 10 million delta, which implies fourth quarter 10 million delta. What are some of the puts and takes that would make it go to the lower end versus the high end? Just would like to understand what is at play here between the low end to the high end.

Yeah, it's actually very straightforward, Sameer. It is all concentrated in the product sales side. So we see a good trajectory on the owner operator model as we demonstrated in Q3 and really throughout this year, our services revenue has increased very, very nicely throughout the year. We expect that to continue. So the delta, as you say, is really concentrated in the product sales side. We have some opportunities that could swing that to either end of that range.

Understood.

And then just a quick one on OPEX. I think if we take out the one-time charges, the OPEX is sort of sequentially a little bit lower also compared to the previous two quarters, actually. What is the operating expense level expected going forward and how should we be looking at it?

Yeah, Michael, do you want to jump?

Yeah, no, obviously, in Q3, it was sequentially lower in Q3 than the other quarters. However, it was mitigated a little bit by some severance and severance accruals that we had to record and pay during the quarter as we announced the cost-cutting measures. So the expectation is to still continue to see declines or definitely declines in the operating expenses. And we already came out where we talked about a 9 million annual OPEX savings in the plan. So we expect to see that push through on a move forward basis, especially as we get into 2025.

Oh, okay. So the third quarter also included some of those severance payments as well. That's correct. Yes.

Yes, it did. I would add to that. We're still executing on some of our priorities. So as Michael and Michael outlined, we saw the overall cost go down and the cash burn go significantly down. We then add in those cost savings at the 14% reduction. We then add off, everybody lose sight of sometimes, is the spin of mobility, which is right now on track. And it looks like we're going to be able to execute that either at the end of December or into Q1. That takes an additional amount of expenses off the books as well. So we have other activities. We also have additional synergies that we still haven't closed down on that it takes a long time to combine six companies. We're almost done with it, but there's still some opportunities there. When we look at this topic, it really is about how do you establish a culture of continuous improvement that as we move forward, we look for more efficient systems, more efficient ways to do business, more global in our mentality to cut cost and cut duplication across the board. And that emphasis is going to continue well into the future because now we've made it at blank. It's part of our culture. It's our identity. Now you've got to bounce back and you've got to enhance revenue simultaneously or the equation doesn't work and we're certainly working on both. Understood.

Thanks a lot for the questions.

And good

luck. Thank you.

Your next question for today is from Jawad Bayoula with Steeple.

Hey, thanks for the question. Jawad, we're on here on for Stephen Jengaro. I just had a quick question surrounding trying to get a better sense of product margins, the impact of the new Maryland facility and kind of how we should think about these margins for the next several quarters and then just had a quick follow-up after that. Thanks.

Yeah, thanks Jawad. Good question. So there's really two elements to this. One, obviously in the third quarter we reported 36% gross margins. I'm sure you probably noticed that what we have maintained for a full year is 33%. So we think that there is potentially some upside to that, but as we go into the future we feel comfortable with where our margin profile sits at the moment. So we feel like we're going to continue to maintain what we achieved in the third quarter and then we're going to look at, hey, what are some of the margin expansion opportunities? And one of them is what I had mentioned in my comments with Steeple Auto and as we get smarter about efficiencies in Blink-owned stations and there are the revenue enhancement opportunities and those translating directly into margin. So there's certainly more things that we can do. We've actually done a very, very good job of paring down our third-party product sales. So it was very, very heavily skewed in the third quarter towards Blink manufactured product and that will continue. So there's probably a little room in there on the product sales side as we really try to transition away from third-party products nearly completely as well as some of those other things I mentioned with Steeple Auto.

That makes sense. Thank you. The follow-up was I was wondering if you could talk a little bit more about the current charger uptime across the installed base. I know a lot of people talk about the charger uptime and so I was just kind of curious about the steps you take to ensure uptime just remain tight.

Thanks. Yeah, yeah great. So there's two aspects to maintaining uptime and it's somewhat unique to Blink in that we have a population of chargers, again over 6,000, that we own and operate directly and the responsibility for the uptime of those chargers falls on Blink. We can very proactively service those chargers, replace them, whatever we need to do in order to keep them up and running and again because we own and operate them and because we derive revenue from electricity sales from those chargers we're inherently motivated to keep those up and running. So our uptime on Blink on chargers is excellent. The challenge comes when you have a population and this is an industry issue, this is not unique to Blink. The issue comes when you have a population of chargers and it's thousands of chargers out in the wild so to speak and they're owned by whoever bought them and so while our network and our systems identify which of those chargers are up or down, need maintenance, whatever it might be, we can't force a site host to either fix a charger or replace a charger. So what we do is we focus our efforts on awareness. We try to be proactive in bringing the situation to that site and providing them options. If they're not going to invest in keeping that charger up and running, oftentimes we can provide them an option for Blink to take over that charger and if it's an appropriate site that passes through our analytical models we can say you know what, we'll replace the charger for no cost and we will take over the revenue on that charger as well. So that is

also that. Thanks for the call Lara Pasadal.

Your next question is from Noel Parks with TUI Brothers.

Hi, good afternoon. You know one general question, thinking about your owner operated model versus your other delivery methods, is there an appreciable difference in sales cycle that you're seeing between those types of business?

Yeah, good question. You know generally speaking the owner operator model has a shorter sales cycle because whether it is an opportunity for what we call our hybrid model where we co-invest with the site host or it's even faster if through our turnkey model in where Blink funds in the full capex. So it's a bit shorter on the owner operator side versus the sales side.

Again I'd only add to that that you know you've got what we call site host dynamics at play. So you know if we have a big site host and he's agreed to buy chargers right and we can ship him those chargers but it's truly up to the site host while he engages with his own installation companies if he doesn't use one and get those in the ground and get them in operational and actually decide when he's going to receive the chargers and so that we can get revenue recognition. When it's an owner operator model once we ink the deal with the site host agreement with the site, we have complete control to Mike's point and we can install the chargers and as fast as we can get them permitted installed up and operating and turn them into revenue generators. So the dynamic really shifts on the model and the lead time shifts dramatically.

And you know what I'm just going to add one thing to that because it's actually a good a good segue. I want to just remind everyone that the core of Blink and our stated strategy that we've been consistent with is to continue to grow the owner operator aspect of our business so that it becomes the dominant revenue model for the company. And the reason why we want to do that is because that is typically high margin consistent recurring revenue that we believe adds a lot of value to the company. So we're going to continue to move in that direction. In fact we may continue more aggressively into that in that direction. We'll continue to do both but the goal of the company is to move in that direction and is to continue each year for the revenue mix between owner operator and sales to tilt more towards the owner operator model.

Great thanks a lot.

There appear to be no further questions in queue. I would like to turn the floor back to Vitaly for closing remarks.

Well thank you Holly and thank you all for joining us today on the call and for your interest in Blink charging and the latest quarter that we've reported. For additional questions or any other requests to meet with management or learn more about our products or facilities please feel free to email us at IR at Blinkcharging.com. And we look forward to engaging with you in the future over the coming quarters. Thanks again.

Thanks everybody.

Bye bye.

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.