Sept. 10, 2021, 4:20 p.m. EDT

10-Q: CHARGEPOINT HOLDINGS, INC.

(EDGAR Online via COMTEX) -- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of the results of operations and financial condition of ChargePoint Holdings, Inc. ("ChargePoint" or the "Company") should be read in conjunction with ChargePoint's condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report and the audited consolidated financial statements for the year ended January 31, 2021 and the related notes included in the Company's Registration Statement on Form S-1 filed with the SEC on July 12, 2021. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. ChargePoint's actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" in Part II, Item 1A of this report. Overview ChargePoint designs, develops and markets networked electric vehicle ("EV") charging system infrastructure ("Networked Charging Systems") and cloud-based services which enable consumers the ability to locate, reserve, authenticate and transact EV charging sessions ("Cloud" or "Cloud Services"). As part of ChargePoint's Networked Charging Systems, subscriptions and other offerings, it provides an open platform that integrates with system hardware from ChargePoint and other manufacturers, connecting systems over an intelligent network that provides real-time information about charging sessions and full control, support and management of the Networked Charging Systems. This network provides multiple web-based portals for charging system owners, fleet managers, drivers and utilities. ChargePoint generates revenue primarily through the sale of Networked Charging Systems, Cloud Services and extended parts and labor warranty ("Assure"), which are typically paid for upfront. Assure also includes proactive monitoring, fast response times, expert advice and robust reporting. The ChargePoint as a Service ("CPaaS") program combines the customer's use of ChargePoint's owned and operated systems with Cloud Services, Assure and other benefits available to subscribers into one subscription. ChargePoint targets three key customer markets: commercial, fleet and residential. Commercial customers have parking places largely within their workplaces and includes retail, hospitality, and parking lot operators. Fleet includes municipal buses, delivery and work vehicles, port/airport/warehouse and other industrial applications, ridesharing services, and is expected to eventually include autonomous transportation. Residential includes single family homes and multifamily residences. Since ChargePoint's inception in 2007, it has been engaged in developing and marketing its Networked Charging Systems, subscriptions and other offerings, raising capital and recruiting personnel. ChargePoint has incurred net operating losses and negative cash flows from operations every year since its inception. As of July 31, 2021, ChargePoint had an accumulated deficit of $682.1 million. ChargePoint has funded its operations primarily from sales of its solutions, with proceeds from the issuance of redeemable convertible preferred stock and common stock and historically from borrowings under its prior loan facilities. Recent Developments Acquisitions On July 20, 2021, the Company entered into a definitive agreement to acquire all of the outstanding shares of has.to.be gmbh ("has.to.be" or "HTB") for approximately Euro 250.0 million in cash and Company common stock subject to adjustments. has.to.be is an Austria-based e-mobility provider with a European charging software platform. The acquisition is intended to expand the Company's access to the European market. The Company currently expects the transaction to close as early as October 2021.

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        COVID-19
        In March 2020, the World Health Organization (the "WHO") characterized
        COVID-19
        as a pandemic. The impact of
        COVID-19,
        including changes in consumer and business behavior, pandemic fears and market
        downturns, and restrictions on business and individual activities, has created
        significant volatility in the global economy and led to reduced economic
        activity. The spread of
        COVID-19
        has disrupted ChargePoint's supply chain and heightened its freight and logistic
        costs, and has similarly disrupted manufacturing, delivery and overall supply
        chain of vehicle manufacturers and suppliers, which has led to fluctuations in
        EV sales in markets around the world. These ongoing supply chain challenges and
        heightened logistic costs decreased gross margins in the three and six months
        ended July 31, 2021 and ChargePoint expects gross margins will continue to be
        adversely affected by increased component, freight and logistic expenses through
        the remainder of the fiscal year.
        As a result of the
        COVID-19
        pandemic, ChargePoint initially modified its business practices (including
        reducing employee travel, recommending that all
        non-essential
        personnel work from home and canceling or reducing physical participation in
        sales activities, meetings, events and conferences), implemented additional
        safety protocols for essential workers, and implemented temporary cost cutting
        measures in order to reduce its operating costs. The Company may take further
        actions as may be required by government authorities or that it determines are
        in the best interests of its employees, customers, suppliers, vendors and
        business partners.
        While the ultimate duration and extent of the
        COVID-19
        pandemic depends on current and future developments that cannot be accurately
        predicted, such as the extent and effectiveness of containment actions and
        vaccinations, it has already had an adverse effect on the global economy, the
        ultimate societal and economic impact of the
        COVID-19
        pandemic remains unknown. The effect of the
        COVID-19
        pandemic can also vary over time and across the geographies in which ChargePoint
        operates. For example, variations in work-from-home policies can cause
        fluctuations in ChargePoint's revenues, and the Company believes that since
        people are not yet fully back to work it has not yet seen the full return of
        commercial customer demand for its products. The conditions caused by the
        COVID-19
        pandemic, such as more permanent work-from-home policies, are likely to continue
        affecting the rate of global infrastructure spending, and thus to continue to
        adversely impact ChargePoint's gross margins as the Company's commercial
        business contributes higher margins than its residential and fleet businesses.
        Further, the
        COVID-19
        pandemic could continue to heighten supply chain pricing and logistics expenses,
        and could, for example, adversely impact ChargePoint's gross margins through
        heightened supply chain expenses, and could adversely affect demand for
        ChargePoint's platforms, lengthen its sales cycles, reduce the value, renewal
        rate or duration of subscriptions, negatively impact collections of accounts
        receivable, reduce expected spending from new customers, cause some of its
        paying customers to go out of business and limit the ability of its direct sales
        force to travel to customers and potential customers, all of which could
        adversely affect its business, results of operations and financial condition.
        


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                                             July 31,
        Networked Charging Systems      2021          2020              Change
                                               (dollar amounts in thousands)
        Three months ended            $ 40,874      $ 21,368      $ 19,506       91.3 %
        Percentage of total revenue       72.8 %        61.1 %
        Six months ended              $ 67,674      $ 41,025      $ 26,649       65.0 %
        Percentage of total revenue       70.0 %        60.6 %
        


Networked Charging Systems revenue increased during the three and six months ended July 31, 2021, compared to the three and six months ended July 31, 2020, primarily due to higher demand from customers resulting in higher volumes of systems delivered across all of ChargePoint's major product families.

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                                             July 31,
        Subscriptions                   2021          2020              Change
                                              (dollar amounts in thousands)
        Three months ended            $ 12,082      $  9,811      $ 2,271       23.1 %
        Percentage of total revenue       21.5 %        28.1 %
        Six months ended              $ 22,906      $ 18,815      $ 4,091       21.7 %
        Percentage of total revenue       23.7 %        27.8 %
        


Subscriptions revenue increased during the three and six months ended July 31, 2021, compared to the three and six months ended July 31, 2020, primarily due to growth in the number of charging systems connected to ChargePoint's network.







                                            July 31,
        Other revenue                  2021         2020               Change
                                               (dollar amounts in thousands)
        Three months ended            $ 3,165      $ 3,778      $   (613 )      (16.2 )%
        Percentage of total revenue       5.6 %       10.8 %
        Six months ended              $ 6,051      $ 7,893      $ (1,842 )      (23.3 )%
        Percentage of total revenue       6.3 %       11.7 %
        


Other revenue decreased during the three and six months ended July 31, 2021, compared to the three and six months ended July 31, 2020 mainly due to fewer regulatory credits transferred.

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        Other
        Cost of other revenue includes depreciation and other costs for ChargePoint's
        owned and operated charging sites, salaries and related personnel expenses,
        including stock-based compensation, as well as costs of professional services.
                                                                   July 31,
        Cost of networked charging systems revenue            2021          2020               Change
                                                                     (dollar amounts in thousands)
        Three months ended                                  $ 35,384      $ 20,408      $ 14,976        73.4 %
        Percentage of networked charging systems revenue        86.6 %        95.5 %
        Six months ended                                    $ 59,126      $ 39,024      $ 20,102        51.5 %
        Percentage of networked charging systems revenue        87.4 %        95.1 %
        


Cost of Networked Charging Systems revenue increased during the three and six months ended July 31, 2021, compared to the three and six months ended July 31, 2020, primarily due to an increase in the number of Networked Charging Systems delivered.







                                                    July 31,
        Cost of subscriptions revenue           2021         2020              Change
                                                      (dollar amounts in thousands)
        Three months ended                    $  7,830      $ 4,452      $ 3,378       75.9 %
        Percentage of subscriptions revenue       64.8 %       45.4 %
        Six months ended                      $ 13,470      $ 9,225      $ 4,245       46.0 %
        Percentage of subscriptions revenue       58.8 %       49.0 %
        


Cost of subscriptions revenue increased during the three and six months ended July 31, 2021, compared to the three and six months ended July 31, 2020, primarily resulting from an increase in stock-based compensation and ChargePoint expanding its network of charging systems.







                                            July 31,
        Cost of other revenue          2021         2020              Change
        . . .
        


Sep 10, 2021

COMTEX_393128560/2041/2021-09-10T16:20:07

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