ChargePoint Holdings, Inc.

Ladies and gentlemen, good afternoon. My name is Beau, and I'll be your conference operator for today's call. At this time, I would like to welcome everyone to the ChargePoint third quarter fiscal 2023 earnings conference call and webcast. All participant lines have been placed in listen-only mode to prevent any background noise. After the speaker's remarks, there will be a question and answer session. I would now like to turn the call over to Patrick Hamer, ChargePoint's vice president of capital markets and investor relations. Patrick, please go ahead.

Good afternoon, and thank you for joining us on today's conference call to discuss ChargePoint's third quarter fiscal 2023 results. The call is being webcast and can be accessed on the investor section of our website at investors.chargepoint.com. With me on today's call are Pasquale Romano, our Chief Executive Officer, and Rex Jackson, our Chief Financial Officer. This afternoon, we issued our press release announcing results for the quarter, which can also be found on the website. We'd like to remind you that during the conference call, management will be making forward-looking statements, including our fiscal fourth quarter and full fiscal year 2023 outlook. 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 10Q filed with the SEC on September 8, 2022, and our earnings release posted today on our website and filed with the SEC on Form 8K. Also, please note that we use certain non-GAAP financial measures on this call. which we reconciled to GAAP in our earnings release for historical periods in the investor presentation posted on the investor section of our website. And finally, we'll be posting the transcript of this call to our investor relations website under the quarterly results section. And with that, I'll turn it over to Pasquale.

Thank you, Patrick, and thank you, everyone, for joining our eighth earnings call as a public company. We had another record quarter with strong growth yielding $125 million in revenue, the low end of our guidance range, up 93% year-over-year and 16% sequentially. The difference between $125 million in revenue and our guidance midpoint was largely made up of production constraints on our most mature AC product as a result of supply-driven redesign. The delay in shipping this high-margin product held our margin improvement for the quarter to one point. We have now shipped the shortfall and more in November. Demand again exceeded supply for the quarter resulting in additional growth and backlog. We are on track to retrieve our revenue target for the year and Rex will provide more color on revenue and particularly on gross margin in his comments. As we manage the revenue and gross margin challenges presented by supply chain constraints, logistics disruptions, and new product introductions, I'd like to comment on operating expenses. As our OPEX this year shows, we've significantly slowed our operating expense trajectory. We are managing OPEX as a key driver of turning cash flow positive in the fourth quarter of calendar 2024 and think we have made and are making the right choices in investing to achieve our market position. As we have commented previously, we have invested ahead of the market for many years, and our revenue growth has been and continues to be correlated with the availability of electric vehicles. With the continuing announcements by manufacturers of new EVs for consumers and fleets, we believe the global vehicle industry has passed the point of no return. Spending ahead of revenue has enabled us to engage across our key verticals in North America and increasingly in Europe. Our spending has enabled us to build out a broad product portfolio and core functions within the company to support those product lines in our geographies. And though we have the typical challenges ahead to scale rapidly, we expect to grow operating expenses opportunistically and thus to continue to show improved operating leverage as we've done this year. Focusing for a moment on R&D, ChargePoint believes a broad product portfolio is essential because you have to be everywhere drivers go to be relevant. We have achieved Major recent releases of our highly modular Express Plus DC product line, which powers our global fleet and passenger car fast charge solutions, and introduced the CP6000, our newest commercial and AC fleet product line, expanding our capabilities in the geographies we serve. With these products in production, we expect to shift a higher percentage of R&D spend to evolutions of our platforms and to continue investments in our cloud software, which comprehensively drives our entire ecosystem for drivers, commercial station owners, fleets, and a large array of ecosystem partners. Given our pace of growth, we will of course continue our investments in sales and in our channel relationships, which combined give us industry-leading reach. A useful growth indicator in this area is the number of bookings in a quarter that exceed $1 million. Last year, we averaged one booking over $1 million per quarter. This year, we have seen steady increases in the number of bookings exceeding 1 million within a quarter, which is a reinforcing trend supporting our land and expand strategy. In the third quarter alone, we had 11 bookings to end customers of over $1 million. We continue to add customers at a rapid clip. Our consistent expansion within existing customers was over 65% of our billings for the quarter, consistent with historical trends. And we now count 80% of the 2021 Fortune 50 as customers and 64% of the 2021 Fortune 500. Lastly, on investments, in support of the remarkably increasing scale of the business, we will be adjusting spend proportions in favor of business systems, sales automation, customer lifecycle management, support operations tools, and installer and channel partner platforms. We believe that the breadth of our product lines, backed by the right systems infrastructure, are significant competitive advantages. In Rex's commentary, he will address buildings by vertical, but I wanted to comment briefly on some of the progress in Europe in fleet, Two key enablers we believe critical to ChargePoint's revenue growth outpacing North American consumer EV arrival rates. In Europe, we have been acutely supply constrained. Until the introduction of the CP6000, we did not have our own AC product from most countries. Despite the limitation, we have been winning logos at an impressive rate and are encouraged by the reception of the new solution. In fleet, the demand has been strong, but the market has been vehicle limited. We are seeing impressive growth in fleet where vehicles are being delivered and in scenarios where customers are anticipating deliveries. For example, short haul and last mile billings are up over 475% year-over-year, and transit is up 180% year-on-year. Our install base of network ports under management grew to over 210,000, a year-over-year increase of 30% and sequential increase of 6%. Of those, over 65,000 are in Europe and over 16,700 are DCFAST, an increase of more than 1,000 DCFAST ports quarter over quarter. I'll remind you that port center management is one way to track progress in our commercial and fleet verticals, as this represents the install base generating and annual software subscription. As a reminder, we do not include home chargers for single family residences in our network port count, but we continue to see strong demand for residential. Complementing this, our roaming reach is now over 400,000 ports in North America and Europe. Combined, that's over 600,000 ports available through our platform. Rex will elaborate on guidance, but in short, the breadth and scale of our business model, combined with accelerating driver demand for EVs, has allowed us to narrow our annual revenue guidance range with a higher midpoint than we gave in March. and reiterated at each quarterly call. This growth is despite persistent supply chain headwinds. While these headwinds continue, we are seeing signs of freight cost decline and component shortages concentrating. Looking at some of the environmental statistics that are so critical to all of us, we estimate that our network is now fueled approximately 5 billion electric miles to date. We estimate the drivers utilizing our network have avoided approximately 200 million cumulative gallons of gasoline and over 940,000 metric tons of greenhouse gas emissions. In conclusion, we continue to focus on execution. We strongly believe we have the right products and the right business model. We are growing rapidly across our three verticals and two geographies, so we simply need to do everything bigger and better to maximize our opportunities and generate maximum returns for our shareholders. We believe that with each passing quarter, we add to the remarkable technology team, customer relationships, channels, structure, and other competitive advantages we have been building over the 15-year history of the company. Rex, take us through the financials.