Wallbox N.V.

Hello, everyone, and welcome to Wallbox's third quarter 2025 earnings conference call and webcast. At this time, all participants' 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. Analysts who wish to ask a question can place themselves into the queue by pressing star 1. I would now like to turn a call over to Michael Wilhelm from Wallbox. Michael, please go ahead.

Thank you, and good morning and good afternoon to everyone listening. Thank you for joining today's webcast to discuss Wallbox's third quarter 2025 results. This event is being broadcast over the web and can be accessed from the investor section of our website at investors.wallbox.com. I'm joined today by Enrique Asuncion, Wallbox CEO, and Luis Boada, Wallbox CFO. Earlier today, we issued our press release announcing results from the third quarter ended September 30th, 2025, which can also be found on our website. Before we begin, I would like to remind everyone that certain statements made in today's call are forward-looking, that may be subject to risks and uncertainties relating to future events and or the future financial performance of the company. Actual results could differ materially from those anticipated. The risk factors that may affect results are detailed in the company's most recent public filings with the SEC, including in the annual report on Form 20F for the fiscal year ended December 31, 2024, filed on May 6, 2025. We will be presenting unallotted financial statements in IFRS format that reflects management's best assessment of actual results. Also, please note that we use certain non-IFRS financial measures on this call, and reconciliations of these measures are included in the presentation posted on the investor section of our website. Also, a copy of these prepared remarks can be obtained from the investor relation website under the quarterly results section, so you can more easily follow along with us today. So with that out of the way, I will turn it over to Henrique.

Thank you, Michael, and thanks everyone for joining us today. We will start today's call with an overview of our third quarter 2025 results, provide our perspective on the EV market, and spend time discussing our strategic progress. Luis will offer a closer look at our financial results and our key financial metrics before I close the conversation to highlight what we are focused on for the remainder of the year. U3 revenue landed at 35.5 billion euros, below our expectations, but up 2% compared to the same period last year. The largest offender has been AC sales across all global regions. In the case of Europe, there have been operational headwinds and changing product regulation creating delivery challenges, impacting the overall order intake. For the North American market, the strong contrast in terms of EV market growth between the U.S. and Canada creates a blurred view. The U.S. had one of the strongest quarters ever, while Canada had one of the slowest quarters since Q1 2023 in terms of EV sales. These market trends we see are reflected in our results. The contribution of APAC and South America has been limited as resources have been shifted to focus on our key markets. DC sales have been the highlight of this quarter, reflecting the ongoing strong recovery we have seen during 2025. This category is showing strong growth compared to both last quarter, up 40%, and last year, up 34%. We have seen progress with our commercial partners and solid demand for our new generation Supernova product, due to its solid performance and reliability. In total, during the third quarter, we delivered over 33,000 ACG units and close to 170 DC units. Gross margin was 39.8% in the third quarter, which exceeds the 37% to 39% guided range. This reflects a 200 basis points increase compared to last quarter, resulting from improved bill of material costs, higher prices, and the impact of carbon credits. Looking ahead, there are several levers we believe can be pulled to sustain and improve the gross margin, which Luis will comment on later. Moving to the organizational setup, labor costs and operating expenses landed at 22.9 million euros. This reflects a 6% improvement compared to last quarter and a 28% improvement compared to the same period last year. In the case of cash costs, which is defined as labor costs and OPEX, excluding R&D activation, non-cash items, and one-off expenses, the result is even more impressive as we achieve a 34% year-over-year reduction. I am pleased with the ongoing progress on efficiency while we are achieving consistent revenue levels, allowing us to make steps towards profitability every quarter. Going forward, we continue to balance cost reduction and investments to achieve a net positive efficiency impact. We plan to accelerate investments to reinforce our sales organization, including customer service to support revenue growth. One of the first major steps in this plan is the appointment of our new CBO, Ignasi Alarztuey. Ignasi brings experience and expertise in developing scalable commercial models and driving expansion in strategic markets. In addition, we will integrate our different sales team across product segments for a more holistic approach, centralized execution, and additional efficiency gains. Adjusted EBITDA for the third quarter of 2025 was minus 6.9 million euros, below our guided range, but improving 8% quarter over quarter. Compared to the same period last year, adjusted EBITDA lost narrowed by 58%, and this comparison is impacted by one of the items incurred in Q3 2024. The main reason for the guidance shortfall was softer than expected sales, as mentioned before. As a global player, we operate in a complex environment characterized by volatile market demand, driven by evolving subsidy frameworks and continually developing product regulations across countries and regions. To manage this, resiliency is crucial, and we believe we are well positioned for growth with a strong brand name complete product portfolio, well-known commercial partners, global reach, and a more efficient organizational structure. The main area of focus to accelerate our path to profitability is restoring revenue growth. For this reason, we are reinforcing our sales function and leveraging our existing market positioning to elevate our performance across geographies and segments. For the third quarter of 2025, Europe contributed €23.6 million of consolidated revenue, or 66% of total top line. This reflects a 3% increase in revenue for the region compared to last year, but was subdued compared to the European EV market growth. We showed solid year-over-year improvements in selected countries such as Spain, France, Belgium and the UK. However, growth for the entire region has been softer than expected. This can partly be attributed to personal headwinds and product regulations. In the quarter, the radio equipment directive came into force in the EU, which required us to switch to a new product which has additional functionality but comes at a higher price point. This product shift and the related market education time impacted overall order delivery. In addition, shipments were subdued due to longer lead times as we shifted one of our most popular products, the Pulsar Max, to a new technology platform for additional functionalities and improved cost. Overall, we believe the positive trend in the EV market for the European region will provide additional opportunities, which we believe we can capitalize on with our strategic position and complete product portfolio. North America contributed 11 million euros, or 31% of the total revenue. Compared to the same period last year, this region is up 13% and 18% at cost and effects. This is consistent with the trend we have seen in the last quarters as we continue to perform well in the North American market. However, breaking down the region in terms of revenue growth compared to last quarter, we saw growth in the US offsetting a slowdown in Canada. This performance is even more impressive considering the Canadian eating market in the third quarter is down 49% compared to the same period last year. Both APAC and LATAM remain small regions for Wallbox, now contributing approximately €160,000 or 1% and €725,000 or 2% respectively for the quarter. As mentioned last quarter, we believe these regions have significant future potential, but are currently not prioritized in our resource distribution. AC sales of 22.4 million euros, including AVL and Quasar, represented approximately 63% of our global concentrated revenue, down 16% compared to last quarter and down 5% year over year. This product category had a weak performance across all global regions, partly due to the operational frequency in Europe and the soft EV market in Canada just discussed. On the positive side, we continue to roll out the innovative Phaser II solution as commercial traction is gaining momentum and have discussions with additional OEMs to become compatible with the product. We are providing additional warranty on our Pulsar Max at no extra cost in addition to reinforcing the sales organization. This change reflects the products of standard reliability and our commitment to delivering long-term value to every customer. In addition, we have launched and expect to launch new features for additional customer value and an improved competitive edge. Earlier this year, we introduced the Time of Use Tariff, allowing customers to optimize their energy consumption, and now we introduce a State of Charge feature for additional insights into the charging status of the car. Shortly, I will share more details about these functionalities and the expected long-term strategic impact. DC sales in the third quarter landed at 5.8 million euros or 16% of sales, resulting in a significantly higher contribution towards total revenue for the quarter as compared to previous periods. Year over year, this category is up 34% and sequentially up 40%. As discussed in the previous quarter, We saw strong progress in the recovery of the DC cells, especially due to the introduction of new generation supernovas and high demand in North America. Many clients are satisfied with the functionalities, quality and efficient installation, resulting in recurring orders. For example, in the third quarter, we have announced additional commercial partnerships in both Europe and North America with Hera Group and Surcharge Corp, respectively. In the case of Hera Group, Volvo is ready to provide 58 Supernova 120 kW DC fast chargers to be deployed across central northern Italy by the end of 2025. Surcharge Corp. is building a new public charging network in Canada, across Alberta and British Columbia. The project will establish up to 24 high-speed charging sites with 96 charging points along heat travel corridors. creating an extensive regional fast charging hub and deploying Supernova 180kW DC fast chargers. In addition, we are working on an exciting new product which is leveraging our existing DC technology. This new product will be announced soon and we believe it will revolutionize the DC fast charging concept. From a technology perspective, we anticipate this new solution based on the Supernova platform We allow for higher power delivery than we ever offered before, but still have the cost efficiency, reliability, scalability, and small footprint of our customers' value in the existing solutions. We are very excited to launch this product as it underlines our flexibility to continue to innovate and leverage our existing future-proof platform while in parallel right-size our organization and limited capex investments. The category, software, services and others remain a consistent contributor to our business, this quarter generating 7.3 million euros or 21% of the total revenue. This reflects a small decrease compared to last quarter, but an 11% year-over-year increase. If we break down this category, we see the same trend as the previous quarter. Our software activities, with the largest contributor being Electromaps, show the strongest growth, more than doubling the revenue compared to last year. Installation and service remains the largest contributor, but declined slightly compared to last quarter. We see opportunities for this category to continue to perform well as ADFLEET using our software continues to grow and we will have more and more DC fast chargers in the field. Today, we would like to provide you with another update on the innovations we are working on to become the ultimate energy partner and enhance the value of our products for our customers. Last quarter, we talked about our bi-directional charger, Wazer 2, and its capability for enhanced energy management. Now, we would like to comment on additional solutions we are bringing to the market, enabling all our chargers to provide additional energy management functionalities. As mentioned, Earlier in the call, at the beginning of this year, we have introduced the time of use tariff feature, which allow customers to input different daily tariffs provided by their utility. This information can then be used to schedule charging sessions within the Wallbox app and give customers the opportunity to optimize their energy costs based on the different tariffs available. Currently, we have time of use tariffs data from more than 40,000 customers, which allow these customers to extract more value from the charger and car. The next step, which we are introducing now, is a state of charge feature which provides the customer with insight into the battery level of the car and allows the customer to optimize the energy usage based on his driving needs. Combining the Wallbox energy meter at the home, time of use studies from the utility, the energy generation of floor panels, and the state of charge of the car The customer has all the elements to do energy management at the home, all powered by Walgreens. With this complete solution, we have more insights and control to support the customer with optimizing their energy usage, receiving tailored energy price recommendations, and in the long term, enhancing their energy security with the implementation of the Quasar 2, which is enabled by these Walgreens infrastructures. In the future, we aim to leverage this infrastructure and this integrated Wallbox solution by introducing additional intelligence powered by AI for faster data processing and completely automatized smart charging. Until now, many of these features we just discussed have been provided in collaboration with partners. But by centralizing more and more of these features within the Wallbox ecosystem, we take another step towards establishing Wallbox as a leading energy player. The EV market continued to perform well in the third quarter of this year, and in our addressable market, which we define as all regions except China, 2.1 million EVs were sold, reflecting a 39% growth compared to the same period last year. Europe, the largest EV market, continues to recover well compared to the last two years, and is up 41% compared to the same period last year. It is great to see this momentum with positive trends emerging for Wallbox in certain countries such as Spain, France, Belgium, and the UK. However, this rapid growth is not yet fully reflected in all countries, and therefore in our results. But we believe we can better capitalize on this trend going forward with the reinforcements of our sales teams. Long-term commitment to carbon emissions reductions is essential, with many European countries, including Spain and France, and various organizations, Convened under the political initiative Take Charge Europe, pushing to uphold the EU's 2035 zero emissions target, not only to decarbonise transport, but also to remain competitive globally in the long term, as many indicators show that the future is electric. In the case of the North American market, different elements impacted the growth in Q3, which was up 22% compared to last year. First, the Canadian market has been soft all year due to 100% tariffs on Chinese-made cars and the end of the ICEV incentive program. This softness was offset by strong growth in the U.S. market during the quarter, which was driven by the prevailing effect as consumers took advantage of the disappearing 30-day tax credit at the end of September. As mentioned during our last earnings call, in the U.S., EV sales still significantly depend on incentives and in addition to the charging sentiment under the new administration. We believe that in the short and mid-term, the EV market will be impacted. Therefore, we work closely together with our key commercial partners to maintain our residential EV sales. but also shifting our focus more towards commercial AC sales and further accelerating our DC sales as these categories are less correlated with EV sales and more with the charging demand of existing fleet. The fastest growing EV market was the rest of the world, which includes APA and LATAM, with 63% year-over-year growth. As we continue refocusing resources And on Europe and North America, we have not been able to benefit from this growth. But it does underline the potential of these markets in the future, as mentioned earlier in this call. Luis, I'll turn it over to you to comment further on our financial details.

Thank you, Enric. Good morning and good afternoon to everyone. The third quarter revenue was softer than expected and landed at 35.5 million euros. Outside our guided range, but did improve 2% year over year. There were different factors impacting the top line, but the largest factor was lower than expected AC sales in all global regions. DC sales performed very well, growing 34% compared to the same period last year and up 40% sequentially. This pro category was responsible for seeing mild growth in Europe and double-digit growth in North America. Gross margin improved significantly with 200 basis points, landing at 39.8% and exceeding our guided range. The positive trend resulted from improved bill of materials, the impact of carbon credits, higher prices, and a reduction of warranty costs. The bill of materials is improving due to the switch to a new technology platform for selected AC products, which in parallel is improving their reliability and therefore reducing the warranty cost. We expect this impact to be more clearly visible as we continue to reduce our inventory and start to deliver these new products. A new item contributing positively to our gross margin stems from carbon credits generated in the Canadian market through our existing products. The proceeds from these credits are reinvested into the eBay market, offsetting discounts on our new products. The impact of higher prices resulted from the new generation Supernovas sold in the U.S., which have better margins compared to the older versions. Overall, we believe there are different levers we can pull to stabilize gross margins and find additional improvements in the future. Q3 labor costs and operating expenses totaled €22.9 million, representing a 28% improvement compared to the same period last year. We continue to right-size the organization while investing in our sales organization, as explained by Enrique. The key objective is to improve top line revenue, but to remain lean in our operations. Cash costs, which is defined as labor costs and OPEX, excluding R&D capitalization, non-cash items, and one-off expenses, declined even further, down 34% year over year. Considering the significant efficiency measures implemented over the past two years, we are pleased that we continue to identify new areas for optimization. Consolidated adjusted EBITDA loss for the quarter was 6.9 million euros, slightly outside the guided range. This represents an 8% improvement versus the prior quarter. continuing the positive sequential trend observed throughout the year. The variance to guidance was primarily driven by software top-line performance, as all other key variables met or exceeded expectations. To reach positive adjusted EBITDA, the reacceleration of revenue growth remains critical, a goal we are pursuing by reinforcing our sales organization and strengthening commercial execution. We ended the quarter with approximately 27.7 million euros in cash, cash equivalents, and financial instruments. Loans and borrowings total 179 million euros, representing a slight sequential decrease and consisting of 67 million euros in long-term debt and 112 million euros in short-term debt. During the quarter, As part of our constructive ongoing conversations, we reached a standstill agreement with the majority of our banking pool, temporarily suspending payments of principal and interest. This agreement provides a stable framework to facilitate the development of a long-term solution of our existing debt and for our capital structure in general. Our objective is for the remaining debt holders to join these discussions as we work toward a structure that aligns with Wallbox's business plan and long-term growth objectives. CAPEX was light again this quarter and landed at 0.3 million euros, of which negative 0.1 million euros was related to investments in property, plant, and equipment. The reason for the negative impact of PPE investments is an accrual adjustment during the quarter and stricter cost controls, which resulted in higher efficiency gains than expected. Compared to the same period last year, CapEx investment decreased 82%. Inventory continued to trend downward, totaling €50.8 million at the end of Q3. This represents a 34% year-over-year reduction and a 10% decrease versus the previous quarter, equivalent to approximately 6 million euros. We are pleased with this progress as we continue to release cash from operations and the lower inventory levels position us to replenish at a more efficient bill of materials, supporting further gross margin improvement in the coming quarters. In recent quarters, we have been focused on stabilizing Wallbox's financial position. While we have made strong progress across multiple fronts, further improvements remain ahead. We will continue to prioritize sales expansion, operational excellence, disciplined cash management, inventory reduction, and limited CapEx investment. alongside constructive ongoing discussions with our banking partners to establish a long-term capital structure as soon as possible. Enric, I'll turn it back to you to provide some closing commentary.

Thank you, Luis. The third quarter of 2035 results were mixed. Revenue came in below expectations, but overachieving expectations on growth margin, efficiency gains, and operational improvement. Overall, I believe we are still heading in the right direction, especially considering strategic achievements, such as constructive progress with our banking partners, but we are now looking to accelerate this momentum. The transition continues to move forward, though at different speeds in different regions. And after a period of right-sizing the organization, we have identified where to invest in our sales organization to capitalize on that growth. In parallel, we continue to expand and improve our leading product portfolio by commercializing our bi-directional solution, Quasar 2, introducing a revolutionizing DC fast charging concept and launching new software features to develop the ultimate energy management solution. All of these give us a solid platform, together with our strong commercial partnerships, to continue to drive revenue growth and progress toward profitability. Even though we are not yet where we want to be, the positive trend is still visible and we make incremental steps each quarter. With that, I would like to discuss next quarter's guidance. For the fourth quarter of 2025, we have the following expectations. Revenue in the 36 million euros to 39 million euros range. Gross margin between 38% A negative adjusted EBITDA between 6 million euros and 4 million euros. With that, we are ready to take questions from our analysts.

Certainly. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 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. One moment please while we poll for questions. Your first question for today is from George Giannourakis with Canaccord Genuity.

Hi, everyone. Thank you for taking my question. I sort of wanted to focus on market share, particularly in Europe. You gave some explanation around some product issues that you may have had, but can you just sort of talk about how that market share is trending and how you expect it to trend over the next few quarters?

Thank you. Hi, George. Good morning. This is Enrique.

So it depends on the product line and the country. I will say that a big part of the growth in EV sales that we share, first of all, it's based on PHEVs and EVs, and PHEVs are a big part of the EV sales, or at least 50%. So the attachment rate of PHEVs versus EVs EVs in terms of chargers is not the same. So normally an EV has an attachment rate of 80% with an EV charger, and therefore this user charges at work or in a public space if they don't have a home charger. And the same happens with PHEVs where the attachment is around 30%, so it's lower attachment. And also I think it's important to remark that some of these chargers Chinese EV manufacturers like Tesla are bringing their own products and they therefore don't include it in our market share assessment when we look at the service market. With all in all, in general, we believe that in countries like Spain, France, Belgium, the UK, and Germany, our market share remains stable or trending up. And markets like the Netherlands, Italy, and the Nordics, we've seen this quarter a trend going down. If we look at the overall Europe, it will depend on the EV sales. But in general, what we are trying to do, given all these operational headwinds we've seen this last quarter with the change of platforms and so on, is to maintain it or to increase market share moving forward in AC.

Thank you. And maybe just to focus on the last question on the balance sheet, you mentioned this standstill agreement. When should we expect Maybe a little bit more of a formal analysis from the company around what should happen with the €179 million in debt. Thank you.

Hi, George. I'll take that one. As we announced, the standstill matures as of the 9th of December, and so that's what we're working towards.

So we should expect some sort of news between now and the 9th of December. Is that the guidance?

Correct. Yes. Thank you. You're welcome. Okay.

And that was it from us today. Thank you all for joining. We hope you found today's call a good use of your time. Let us know if we can help you in any way.

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