ChargePoint Holdings, Inc.

Ladies and gentlemen, good afternoon. My name is Lisa 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 2023 earnings conference call and webcast. All participants' lines have been placed in listen only 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 fourth quarter and full fiscal 2023 earnings results. This call is being webcast and can be accessed on the Investors section of our website at investors.chargepoint.com. With me on today's call are Pascal Romano, our Chief Executive Officer, and Rex Jackson, our Chief Financial Officer. This afternoon, we issued our press release announcing results for the quarter and full year ended January 31st, 2023. which can also 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 fiscal 2024. 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 8, 2022, 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 for certain 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 the call over to Pasquale.

Thank you, Patrick, and thanks to everyone for joining us today. Yesterday marked our second anniversary of being a public company, and I'd like to start by recognizing the team here at ChargePoint that has worked tirelessly to continue to evolve the company. to fulfill the enormous role we play in the energy transition. Before I get into a bit of retrospective on the full year and what the road ahead holds for us, I'll review the fourth quarter results for fiscal 2023. Our fourth quarter grew 93% year on year and 22% sequentially, making another record quarterly revenue level for the company, while improving NOMGAP margins by three points to 23%. delivering on our expectation set on our last call that we would sequentially improve gross margin. However, on that same call, we effectively raised the midpoint of our full-year guidance by $5 million. The revenue results for the full year were slightly below the original guidance midpoint and 2.5% below the revised guidance midpoint. Fourth quarter revenue results were below the guidance range and 7% short of the midpoint. This was due to a combination of special circumstances. The first is a decrease in North American commercial demand during the month of December. The second, while overall supply chain limitations have eased, they persist for certain hardware products. And lastly, we just missed shipment cutoffs for some customers that caused a larger gap between billings and revenue than historical norms. To put that in perspective, the full year revenue was $468 million. our business grew 94% this year versus last and over 90% year on year each quarter. We managed operating expenses through the year to achieve the improving operating leverage you see. And this is foundational to becoming cash flow positive in calendar 2024. We are exceptionally proud of crossing through an annualized subscription revenue benchmark of $100 million We also demonstrated growth in fleet as a major vertical globally in our European business across all verticals. Both of these outpaced the 94% growth rate of the company to gain ground as a percentage of overall revenue. A good example of our progress in fleet and the power of our ecosystem is the recent announcement of the United States Postal Service Award with our distribution partner, Rexel. Partnerships like these are critical pieces of our differentiated business model. In the fourth quarter, over 70% of billings were through our channel partners, consistent with historical results. And even with limitations on vehicle supply in the vertical, fleet is already a significant component of our revenue and a coiled spring when the vehicles are readily available. This is an essential part of our growth strategy. Participating in nearly every vertical of EV charging in both Europe and North America not only fuels our growth, but also provides resilience in the face of short-term emphasis shift across verticals and geographies. We benefited from this in COVID years and expect this diversity to be an asset as the market continues to develop for years to come. Let me give you a sense of where we have been this past year to help you gauge how well we are positioned for the future. We operate at the center of an expanding ecosystem that's highly invested in the electrification and mobility. We are now seeing that investment accelerate from those force multipliers. And this indicates that the ecosystem, not just the auto industry, is past the point of no return. Some examples. ChargePoint now has over a dozen automotive partnerships live, where ChargePoint's cloud service aggregates access to all major public charging networks in Europe and North America via the OEM's in-dash system or companion app. Partners added this year include Lexus, Mazda, Toyota, and Fisker this year. Additionally, many auto OEMs offer our ChargePoint home charger and recommend us to their dealers for their charging needs. We added numerous fleet OEMs as partners as well. We continue to work with the iOS and Android platforms as well as the native Google Car experience. We added UTA, a leading European fuel card provider, to our long list of payment partners. We added STEM and other partners to enable charging to be integrated into broader site-wide energy management. We continue to grow our channel partner network and launched our mobile application for installers as our first step in creating an education and support platform for these key players. We continue to work with governments in North America and Europe to shape policy and programs such as NEVI to remove barriers and ensure a vibrant and consistent charging market. Lastly, we announced partnerships with Volvo and Starbucks, as well as Mercedes-Benz and M&A Energy, to enable great brands serving the 30-minute retail economy with EV charging to create a fantastic road trip experience for EV drivers. Turning to network, general customer, and environmental statistics, we finished the quarter with over 225,000 active ports under management, including over 18,900 DC ports. With just under a third of our overall ports in Europe, We also provided our drivers access to over 465,000 roaming ports, with over 445,000 of those ports in Europe, significantly strengthening our EU offerings for site hosts. We now call 80% of the 2021 Fortune 50 and 55% of the 2021 Fortune 500 as customers, and over 70% of billings from existing customers consistent with historical norms and our land and expand strategy. As of the end of the quarter, we estimate that our network has now fueled approximately 5.6 billion electric miles, avoiding approximately 224 million cumulative gallons of gasoline and over 1 million metric tons of greenhouse gas emissions. While we are facing many of the same headwinds as the rest of the space, the momentum of the ecosystem in which we operate and our differentiated business model are not only driving the near-term results we've seen, but position us to capitalize on what is clearly an inevitable long-term growth cycle. I'm proud of the ChargePoint team and our partners who made this year possible. Together, we are uniquely positioned to pursue this remarkable market opportunity, and I'm confident we are on the right trajectory heading into this year. Rex, over to you. Thanks, Esquale.