Ladies and gentlemen, good afternoon. My name is Heena, and I will be your conference operator for today’s call. I would like to welcome everyone to the ChargePoint Third Quarter Fiscal 2022 Earnings Conference Call and Webcast. All participants’ lines have been placed in a listen-only mode to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. I would 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 of fiscal 2022. This call is being broadcast over the web and can be accessed on the Investors 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 third quarter of fiscal 2022 ended October 31, 2021, which can also be found on our website. We would like to remind you that during this conference call, management will be making forward-looking statements, including our fiscal fourth quarter and full year 2022 outlook and our expected investment and growth initiatives. 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 September 10, 2021, 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 financial measures for the current quarter in our earnings release and for historical periods in our investor presentation posted on the Investors section of our website. And finally, we’ll be posting the transcript of our call to our Investor Relations website under the quarterly results section. And with that, I’ll turn it over to Pasquale.

Thanks, Pat, and thank you all for joining us today. I’ll provide a business update, including details of our strong Q3 execution against plan before turning it over to Rex for financials. As I stated previously, our success is tied to the arrival of electric vehicles and this quarter we saw continued momentum in EV sales in both the passenger and fleet categories. According to BloombergNEF, as many as 2.9 million electric vehicles are expected to be sold across North America and Europe this year, an increase of approximately 67% from 2020. And accordingly, we are seeing strong demand from auto dealers for charging infrastructure, an indicator that they are prepping for high volume EV sales. Our strong financial performance throughout this year is the result of investments in a product and go-to-market strategy we have made over many years to be able to capture associated demand across commercial, fleet and residential verticals in both North America and Europe. Historically, our revenue has only been limited by a sufficient breadth of and quantity of vehicle options available to consumers and fleets, and this reinforces that ChargePoint is the equivalent of an index for the electrification of mobility. Our Q3 revenue of $65 million was at the high end of the guidance range we provided on September 1. This positions us to raise our expectations for the fourth quarter and full year, despite what continues to be a dynamic supply chain environment. I’d like to call your attention to a number of indicators at the scale we are delivering. First, we added more commercial and fleet customers in Q3 than any other quarter in the company’s history. It is clear that our customers are preparing for the future as evidenced by 89% year-on-year growth in our commercial business. We finished the quarter with approximately 163,000 network ports, inclusive of both acquisitions. Within that, the European port count was approximately 45,000, and globally the DC fast charge port count was approximately 11,000. We continue to work with the industry to enable drivers to roam across networks in North America and Europe. This quarter, we crossed through over 290,000 roaming ports accessible to drivers using their ChargePoint account in addition to the ports directly on our network. Fleet billings in the quarter increased over 69% sequentially and over 198% year-on-year. I’ll remind you we acquired ViriCiti, a leading eBus and commercial vehicle management provider, and we also announced the expansion of our partnership with WEX, a leading fleet payment solutions company. The partnership will provide fleet customers ready access to the largest EV charging network for on-route charging needs and enable depot and at-home charging along with easy employee reimbursement. Demand for our residential solutions continues to be robust. Residential billings for the third quarter were up 63% year-on-year and 50% from the last quarter. In Europe, we saw revenues up over 190% year-over-year. As a reminder, we closed the acquisition of has to be, an e-mobility provider with a leading charging software platform in the European market at the end of Q3. Our established and growing channel, which provides unique leverage and efficiency, is growing proportionally with the balance of our business as well, and overall, the scale of our network is generating a positive environmental impact with over 3.3 billion electric miles driven to date. By our estimates, drivers have avoided over 132 million gallons of gasoline and over 529,000 metric tons of greenhouse gas emissions. Our mission requires world-class talent and I’m pleased ChargePoint continues to be a destination for top professionals. We ended the quarter with more than 1,300 employees, including the ChargePointers that joined us through the two recent acquisitions. And on the policy front, the passing of the Infrastructure Investment and Jobs Act includes up to $7.5 billion to accelerate the build-out of charging along highways and in our communities. This is evidence that U.S. policy leaders are committed to an electric future. We are working with policymakers at the federal and state level to shape this. While there are other state and utility programs in place, now this new stimulus will likely manifest significantly beginning in 2023. Lastly, I would like to welcome former U.S. Secretary of Transportation and Labor, Elaine Chao to our Board of Directors. Her appointment brings depth from both public and private sectors and further strengthens the Board composition, which already includes leaders from technology, automotive, and the investor community. Now I’ll turn this over to Rex to discuss financials before we move to Q&A. Rex, over to you.

Thanks, Pasquale, and good afternoon, everyone. First, my comments are non-GAAP, where we principally exclude stock-based compensation, amortization of intangible assets, and the effects of the valuation of our stock warrants. This quarter we also exclude professional service fees related to acquisitions. For a reconciliation of these non-GAAP results to GAAP, please see our earnings release. Second, after a quick review of our results, I will provide revenue estimates for Q4 and the full year. Third, consistent with our prior calls and as you can see in our earnings release, we report revenue along three lines: networked charging systems, subscriptions, and other. Networked charging systems represent our hardware sold with our Cloud Services solutions. Subscriptions include those Cloud Services, Assure warranties, or ChargePoint-as-a-Service offerings where we bundle our solutions into a recurring subscription, and now software revenue from our ViriCiti and has to be acquisitions. Other consists of energy credits, professional services, and certain non-material revenue streams. Q3 revenue was $65 million, up 79% year-over-year at the high end of our previously announced guidance range of $60 million to $65 million and up 16% sequentially. We are very pleased with this performance despite a number of supply chain challenges, and demand in the quarter we could not meet has given us a good start on Q4. Networked charging systems at $48 million was 73% of total revenue for the quarter, consistent with Q2 and grew 111% year-over-year and 16% sequentially. Subscription revenue at $13 million was 21% of total revenue and up 24% year-on-year and 11% sequentially. As I mentioned last quarter, the delta in growth rates between networked charging systems and subscription revenue is a function of two main factors: mix and time lag. In Q3, mix again favored DC network charging systems and home, which have a lower ratio of subscription to network hardware revenue. Second, for most of our solutions, we begin recognizing revenue for subscriptions at a fixed time after the associated hardware shipments to accommodate installations, using a time lag of at least a quarter. Our deferred revenue from subscriptions, representing recurring revenue from existing customer commitments and payments, grew nicely finishing the quarter at over $120 million. Other revenue at $4 million, representing 6% of total revenue, increased 37% year-on-year and 30% sequentially as driver activity and associated credits picked up during the quarter. Turning to verticals, as you know, we look at verticals from a billing perspective, which approximates the revenue split. Billings by vertical for Q3 were: commercial 69%, fleet 16%, residential 13%, and other 2%, reflecting outperformance in both fleet and residential. We’re very pleased to see strong growth. Total billings were up 96% year-on-year and 25% sequentially, and particularly commercial was up 89% year-on-year in a COVID-impacted community environment. From a geographic perspective, Q3 revenue from North America was 89% and Europe was 11%, representing a slight percentage gain in European contribution, driven by both organic growth and acquisition contributions. In the third quarter, our European business delivered $7 million in total revenue, almost tripling from last year’s third quarter and up 41% sequentially. Turning to gross margin, our non-GAAP gross margin for Q3 was 27%, a 4-point improvement over Q2, reflecting continued improvements in our cost of goods sold and positive margin contribution from our European acquisitions. We estimate elevated logistical costs and supply chain constraints cost us approximately 2% of additional networked charging system margin. Our non-GAAP operating expenses for Q3 were $63 million, a year-over-year increase of 61% and a sequential increase of 18%. Included in the quarter was an additional $2 million in operating expenses attributable to our two acquisitions. As we have said, we continue to invest heavily in product development, customer acquisitions, operations, scaling, and other areas to drive our leadership position in this rapidly evolving and growing market. Stock-based compensation in Q3 was at a normalized level of $16 million, down from $28 million in Q2. Of the $28 million of stock-based compensation in the second quarter, approximately $14 million was attributable to services performed prior to the second quarter and included grants to employees who joined the company during the preceding 12 months, as well as incentive awards to key personnel, in both cases delayed, while the company executed the SPAC transaction. Q3 did not have any such adjustments. With respect to contributions from our two European acquisitions, I mentioned in our September earnings call that we expect the Q4 revenue contribution of approximately $4 million and Q4 operating expenses of approximately $8 million to $10 million. This continues to be true. In Q3, the revenue contribution from the acquisitions was approximately $2 million, comprised of subscription, hardware, and other, reflecting the fact that we owned these assets for only a portion of Q3. Looking at cash, we finished the quarter with approximately $366 million, down from $618 million at the end of Q2, reflecting cash spent on operations and $210 million paid for acquisitions in the quarter. After giving effect to the acquisition of has to be and ongoing employee issues during the quarter, we have approximately 331 million shares outstanding. Turning now to guidance, demand for our solutions in Q3 continued to outstrip our expectations and production ramp. COVID keeps the markets guessing, and employers continually have to adjust return to work plans. But with the strong third quarter, a healthy backlog to start the fourth quarter, and continuing broad pipeline build across all verticals, we are moving our Q4 and full-year guidance up. For fiscal Q4, we expect total revenue of $73 million to $78 million at midpoint, an increase of 78% versus Q4 of last year and a sequential increase of over 16%. For the fiscal year, we’re taking our revenue guidance up from $225 million to $235 million to $235 million to $240 million at the new midpoint representing a 62% increase year-on-year. And with that, it concludes our prepared remarks and we’ll turn it over to Q&A.

Certainly. The first question is from the line of Shreyas Patil with Wolfe Research. You may proceed.

Thank you very much. Pat, you mentioned that you anticipate the federal stimulus to have a more significant impact in 2023. Can you provide some context on the type of funding these additional dollars might support in terms of new chargers being installed? Also, could you remind us what you are currently observing regarding funding from utilities and certain states for charging infrastructure?

Thanks. Thanks, Shreyas. Good to hear your voice. And so it’s a complicated question. The Federal Infrastructure Bill is, much of the money, not all of that, much of the money is going to flow through states and the states have to design their programs. That’s why we’re estimating that we won’t see much of that in 2022. We may see some of the back half of the year, it’s hard to predict. And in terms of how much money is going to flow actually in that year versus subsequent years is, right now it’s too hard to call. I’m not trying to be evasive; if you look at the, I will give you an example, the VW Appendix D program that was implemented in an analogous way, it was money that flowed from the Federal Government on the federal portion of the settlement anyway to all states but California; California had its own settlement carve out. It has taken multiple years for that to roll through; some states are quick to define a program, some are slower. So that’s why it’s challenging for us. And then the color of the program in terms of the exact constraints are going to influence the installation costs versus the equipment costs, et cetera, so really hard to call. The sum total of money, like I said, we don’t expect to be the next year. I also want to draw your attention to one other thing: that the budget reconciliation and other associated conversations about where the government is trying to generate stimulus in other areas for EV charging, that could have faster effects. But again, it’s too hard to pin that down right now. In terms of your question with respect to mutual funding effectively amounts. Rex, do you want to comment on that? I don’t know if you have a current number?

I actually do not have a current number. My apologies.

Yeah. So just to remind everyone that represents approved utility programs, and then those programs roll out over multiple years, not all the funds are relevant to our revenue even in those programs. So in previous quarters, we’ve reported similar or analogous to a backlog number associated with the sum total of approved utility programs that are running in the United States. It’s not necessarily our backlog. But it’s sort of analogous in that domain from the industry’s view and we don’t have an update for you right now.

Pat, I want to ensure I ask about the available programs, as that's how I interpreted the question.

Total. Yeah. Yes.

We have a billings amount for utilities. However, when it comes to the overall programs, it totals in the hundreds of millions of dollars. The exact figure is also in the hundreds of millions.

Okay. And then, Rex, just looking at OpEx, sorry, go ahead, was there something.

No. Go ahead.

Looking at operational expenses, they increased slightly as a percentage of revenue in the third quarter compared to the second quarter, but research and development costs rose more significantly. Could you discuss the key priorities that are driving R&D expenditures? Also, how should we assess the potential for operational expense leverage in the coming quarters or even into next year?

The operating expenses figure is quite broad since we are heavily investing in sales and marketing as a newly public company. Our primary focus is on significant product releases this year. Notably, we made a major fleet announcement a few months ago, which marks a pivotal moment for the company, and there is a considerable amount of energy dedicated to this initiative. Additionally, we have exciting plans for Europe that will be revealed soon, and we are channeling substantial effort into what we believe to be our key differentiator: the software platform. We are making a strong push at this time, recognizing that we operate across various sectors in both North America and Europe. Given the current industry climate, we are committed to this strategy; we believe it will yield positive results and steady improvements in that ratio next year. While I can't provide an exact number as it's still evolving, I anticipate we will see consistent leverage in the upcoming year that should please you.

Okay. And then just last housekeeping for me, could you give us a sense of the non-GAAP gross margin between network and software and service? I just wanted to confirm that. Thanks.

That's challenging. On the subscription side, as you may know, we incorporate our driver and host support into our subscription revenue, which typically stays in the 50s. Other figures fluctuate depending on various components. So, if you do the calculations, you can deduce the hardware figures by analyzing the overall numbers, but that’s a topic for further discussion.

Thank you, Mr. Patil. The next question is from Greg Wasikowski with Webber Research & Advisory. You may proceed.

Hey. Good afternoon, guys. Nice to be on the call. Thanks for taking the questions.

Thank you.

I wanted to ask about your targets for market share in Europe and the pathway for reaching those. Specifically, the balance between an organic versus an inorganic approach, given the relatively more fragmented market over there and just thinking through, what does that do to the cash flow profile and/or tapping your own equity currency? Yeah, just wondering how you’re thinking about the path of least resistance and while you’re evaluating opportunities in Europe? Thanks.

That's a great question. Our market share targets are set as high as possible, and we aim to achieve that. In North America, we've performed quite well, and in Europe, we've made significant progress in recent years without setting any limits on our potential. We’ve completed two acquisitions in different industries. One is focused on expanding and consolidating our customer base as well as enhancing our fleet capabilities, which is ViriCiti, and the other is central to our commercial operations in Europe, serving various sectors. Regarding growth, we are open to both organic and inorganic opportunities as they arise. However, we don't believe an entirely inorganic approach is necessary to increase market share, considering the early stage of the EV market. We possess a robust, diversified product portfolio that spans multiple verticals across both continents, providing us with substantial leverage. If the right opportunity comes along, like ViriCiti, which aligns with our business model and brings valuable technology and customers, we would definitely consider it, as it could lead to exciting new products.

Thank you for your insights. I have a more theoretical question regarding site owners' choices between Level 2 and Level 3 charging, especially in locations with shorter stay durations like grocery stores, malls, and parks. Early discussions suggest varied opinions on what future EV drivers might prefer. While you provide both options and have a stronger presence in Level 2, I'm interested in understanding your conversations with new site owners about their decision-making process. Additionally, are any current Level 2 customers considering upgrades to a DC solution?

There’s a lot of misinformation, and many people are comparing this to gasoline. The important point is that when you switch to electric drive, a depot is no longer your primary source of fuel, meaning you don’t wait for the low battery light to drive somewhere to recharge. This is especially true if you have access to charging at home, work, or street-side parking. We have observed that driver habits strongly influence behavior; while there are always outlier cases, they typically have unique reasons for their choices. It isn’t solely about speed; charging becomes quicker with increased usage. It actually aligns with how long vehicles are parked and the amount of energy needed throughout the day. For example, if you go to a nearby grocery store, you aren’t focused on your battery level; instead, you might take advantage of some extra mileage while shopping. Conversely, if you stop at a grocery store off the highway specifically because it has a fast charger, that’s a different situation where you need to refuel. These scenarios differ greatly and are often confused. Local shoppers prefer not to use a fast charger; again, it’s about finding the right fit. If you fail to align these correctly, like using a grocery store for charging without a proper setup, it could lead to significant financial mistakes regarding the construction and equipment costs compared to the number of customers you can accommodate. It’s a complex issue because an incorrect choice can be costly. If you just want to top up while in town, installing a fast charger can be expensive and demand a lot of electrical capacity, leading to a poor decision. However, if you are set up to serve highway drivers beyond battery range, having a combination of Level 2 chargers for local customers and fast chargers for long-distance drivers is very effective. We consult with our clients to help them understand how to properly allocate resources based on the likely scenarios in their parking lots, considering that the capacity for parking spaces and the cost of a fast charger can be substantial, especially if primarily serving local clients. This is a very different scenario from establishing gas stations and has no connection to that traditional market at all.

Okay. Appreciate the color. Thanks, guys.

Thank you, Mr. Wasikowski. The next question is from the line of Colin Rusch with Oppenheimer. You may proceed.

Hey. This is Brendan on for Colin. First one for me, would you be able to give us a bit of color on early progress on acquisition integration in Europe and maybe any insight on initial returns for cross-selling opportunities there?

I mean, I’ll give you generalities, because we’re not coming to the typical specifics. But in both acquisitions, we’re newer to the has to be and frankly in ViriCiti one, because it’s earlier innings, because that closed a couple months past one ViriCiti one did. But on both, we’re making good progress on integration. On the fleet side, we’re already co-selling. And we have customers that, like I said, we’ve done some customer consolidation and we’ve had customers that have used ViriCiti for different functionality from and had our charging solution and ViriCiti vehicle solution. And where that’s the case, we are already moving the ball down the field to integrate the two solutions. With that said, it’ll take some time to get things integrated in an orderly way. We are in earlier innings, would have to be, but we’ve already got some customer activity going on, where 1 plus 1 is already equaling 3, where we can bring additional functionality either to their customer base or ours, vice versa. So we’re already making nice progress there.

Awesome. And just, secondly, on the supply chain and pricing, are you seeing the need to redesign products or particular subsystems in order to help the resiliency of the supply chain? And how active have you guys been in terms of passing additional costs to customers?

I was amused by your comment. We are extremely proud of the efforts made by our engineering and supply chain teams. As you have observed, we have consistently delivered better-than-expected results over several quarters. It's quite challenging to achieve this in a supply chain constrained environment, where we need to lay forecasts into our supply chain even in normal conditions with a significant amount of visibility for the year. Achieving positive results despite unexpected commitments across the industry indicates that our organization is effectively responding to these challenges. This includes quickly qualifying substitute components and making rapid software adjustments. Our team is doing an excellent job of ensuring that our supply chain continues to function smoothly, although it does present some challenges, as we could have utilized those resources in other areas. Rex, I will let you address the question regarding pass-through pricing.

Yeah. Brendan, very good question. So, without getting into any specifics, we definitely have a program in place for passing through some level of our increased logistics days, which I referenced in that gross margin comments. And there may be some price adjustments for not too distant future to take account of what’s going on in the supply chain. So we definitely have some good news ahead. No, nothing major reflected in…

Okay.

It’s mostly perspective.

Also, Colin, I want to remind you of two things. Rex, first of all, in your prepared remarks, you mentioned that the supply chain issues resulted in about a 2-point impact on gross margin compared to what we could have achieved.

That’s right.

Verify that. Yeah. And so, Colin, we had that working against us, but we still turned in strong improvement in gross margin quarter-over-quarter and turned in results on the high side. So you can imagine internally what that took to achieve.

Thank you, Mr. Rusch. The next question is from the line of Gabe Daoud with Cowen. You may proceed.

Thanks, and good afternoon, everyone. Maybe just kind of back to the supply chain, can you give us a sense of how much visibility you have into fulfilling orders over the next several quarters and maybe just any thoughts around or commentary around inventory that’s on hand currently?

I will let Rex comment on inventory. Regarding visibility, it's not just supply chain visibility that many companies mention. In Greece this quarter, we faced an unplanned decommit, which occurs, and we respond accordingly. Currently, we are engaged in extensive pre-planning, trying to source parts from multiple suppliers that we anticipate might be problematic. However, our communications with the supply chain regarding the firm orders we are placing for products extend well into this year and into next year as well. Rex, would you like to add anything?

Yeah. From an inventory standpoint, as you know Gabe, first of all, again, thanks for joining us.

Hi, Rex.

We are seeing a complete picture. Not all of our inventory is reflected on our books. As I mentioned last quarter, I hoped that inventory would increase due to the current supply chain challenges. However, there was actually a slight decline in inventory from last quarter. If we are able to build our inventory moving forward, we will, but we haven’t been able to do that yet.

Got it. That makes sense.

Yeah.

And Gabe, that’s not weakness; that’s just continued upside materializing.

Yeah. Gabe, one of the…

Okay.

I mean, our bank, because it’s kind of odd to have a CFO say, hey, let’s increase our inventory level. We have a, obviously, broad portfolio, but we have very minimal obsolescence risk. So if you’re trying to ramp the business and you got supply chain challenges you’re trying to make, building inventories as fast as it’s a smart thing to do. So that’s what we’re trying to do.

This is Gabe. The modularity of our platform is becoming increasingly relevant as we manage a wide range of use cases with our hardware, while maintaining a limited number of internal components. Although this may result in different orderable part numbers, it's primarily a matter of configuration. This approach has been beneficial. Architecturally, our product line faces some challenges due to supply chain constraints, but it is performing better than many others.

Got it. Very helpful color.

Yeah.

Thank you, everyone. As a follow-up, we touched on the fleet aspect, specifically regarding the ViriCiti deal. There is evident competition, especially in the software sector, due to the energy management requirements. Does this present a more complex operation? We've seen competition escalate with the recent acquisition announcements. Could you provide insights into conversations happening in the U.S. and Europe, along with the overall demand emerging from the fleet channel, and your expectations for its progression in the upcoming quarters?

Gabe, we're seeing tremendous interest from fleets on all fronts, and it's all positive. In our view, we believe we offer the most comprehensive software solution in this area, especially with the integration of ViriCiti, which enhances our capabilities in vehicle management. Additionally, we are a full-service provider, able to assist with design, building, consultancy, and project management, including utility infrastructure consultation. We offer complete functionality across the board and are experiencing significant cross-vertical leverage. For example, many fleets with a take-home aspect for parking and charging operations are looking to reimburse contractors who take vehicles home. This trend is particularly strong among fleets aiming to reduce capital expenditures or real estate costs. Given our focus on these areas, especially in Europe, we have developed solutions that cater to leasing codes for both company cars and commercial fleet leasing. Our extensive functionality makes us a one-stop shop for these needs, and as Rex noted, we are continuously investing heavily in research and development to enhance our offerings.

Great. Great. That’s really helpful. Thanks, guys.

Thank you.

Thank you, Mr. Daoud. The next question is from the line of Ryan Greenwald with Bank of America. You may proceed.

Let me first ask one more on the supply chain? Do you guys talk about this 2 bps impact from the elevated logistical costs? I think you guys quoted 300 bps last quarter. Could you just give a bit more color on the evolution of the bottlenecks quarter-over-quarter and anyway to help frame the amount of demand in the pipeline that you guys weren’t able to meet?

Yeah. Right. So you definitely have the numbers correct. It was a 3-point swing last quarter, 2 point swing this quarter. The heaviest component of that is actually logistics to think expedite these putting it on a plane versus putting it on a boat, and that’s the biggest driver there. And I think that, obviously, we’re going to continue to battle that a bit as you look forward. And so the second part of your question was?

Anyway to help frame the amount of demand in the pipeline that you guys weren’t able to meet this quarter?

I would like to add that there was a positive spillover from Q3 to Q4. It wasn't a huge impact, and I'm hesitant to provide a specific figure. However, it's important to note that there was enough demand in the quarter to be noteworthy. While it wasn't a massive number, it was significant enough to push us above the high end of our range.

Got it. Appreciate that. And then in terms of the drivers of the revenue increase versus the plan that you guys laid out last quarter, sounds like momentum across the board. But anything you can say in particular in terms of the contribution versus the prior forecast?

Question, are you saying that our mix shift at all quarter-on-quarter?

Drivers of the revenue increase from last quarter? What kind of shaken out better than planned in the last quarter?

It is broad-based across the three verticals, and the mix has been quite consistent with Q2. We have seen excellent performance from home, even though that doesn’t represent a significant revenue number since it’s a relatively low-cost product compared to our other offerings. Our CPE250, which includes our DC products, has performed very well, and workplace has done reasonably well relative to our expectations for the post-COVID period. From a mix perspective, it remained consistent. The commentary I provided received a slight boost from our acquisitions in Europe. Overall, there haven't been any significant shifts; it has remained stable.

I will leave it there. Thanks, guys.

New customer acquisition was super strong in the quarter and then the distribution of what they buy, again, consistent. So it’s just really good growth across the board.

Thank you, Mr. Greenwald. The next question is from the line of James West with Evercore. You may proceed.

Hey. Good afternoon, guys. Let’s go…

Hi, James.

You mentioned fleet growth in your prepared remarks. On the commercial side, there has been significant year-over-year growth. You noted that fleets are coming from all directions, which is positive. Is there a change happening with fleet? Are we seeing an increase in overall demand or have we reached a tipping point, or are we simply gaining more market share? What do you think is driving the evolution in the fleet segment?

I believe it's quite straightforward. What I would like to express is that we are gaining market share, but compared to a few years ago, there was little opportunity because of the limited number of vehicles available. When manufacturers aren't shipping vehicles in substantial quantities, and we're restricted to small pilot programs, the impact is minimal. As I’ve mentioned in previous earnings calls, the revenue generated from fleets does not reflect the potential we’ve captured. As we establish pilot programs and build our relationships with fleet customers, they will grow alongside us as we gain their trust. There’s a significant amount of work required to initiate a pilot, which includes integrating with various business systems and ensuring a high level of functionality. These customers are also very particular about requiring reliable service. Therefore, the challenge lies in the operational expenses compared to the immediate financial returns; this is more of an investment phase rather than a consistent revenue stream. The important takeaway is that we are still in the process of laying groundwork.

Wow!

We are putting in a lot of effort, and considering the size of our business and the operating expenses we can allocate, we believe this gives us a significant advantage moving forward because we have the means to invest in this work. Our healthy commercial business allows us to operate in this manner.

Thank you, Mr. West. The next question is from the line of Bill Peterson with JP Morgan. You may proceed.

Yeah. Good afternoon, guys, and nice job on the quarterly execution here. I had a question. You answered the prior question about the mix from the second quarter to the third quarter. I guess, based off your backlog and midway through the quarter, can you give us some directionality on how you see home versus commercial versus fleet. And I guess embedded in that, is there any sort of seasonality we should think about in that context?

It’s difficult to predict whether growth will surpass seasonal trends and alter the usual patterns. Typically, we observe seasonality related to construction cycles in the northern hemisphere, where we operate. This includes a notable slowdown during winter in some regions. However, the current level of growth makes it challenging to foresee the extent of any offset. Additionally, I want to highlight that revenue mix and unit volume mix are not the same due to significant price point differences among residential, commercial, and fleet businesses. The fleet business is divided, similar to commercial, which is primarily observing some fees. In the case of mid-tier and heavy vehicles, there’s a substantial LBC business, and their usage duration affects the shared DC power conversion infrastructure. This results in difficulties reconciling unit volume within the fleet segment, as matching unit volume to revenue is especially complex at this early stage where averages have yet to stabilize. Overall, I believe residential accounted for 13% of our billings recently.

Correct. That’s right.

Okay.

So…

Yeah. So that gives you an order of magnitude. It’s not revenue. It’s billings. But you could determine what the correlation is there. That gives you an idea of order magnitude of that one segment and relative to the rest of our business. And I can tell you that the unit volume there to generate that percentage of business has to be quite high relative to say the unit volume in our commercial business.

Thank you, Mr. Peterson. The next question is from the line of Tyler Bailey with Needham & Company. You may proceed.

Hey, guys. This is Tyler in for Vikram here. Just one last quick one for you related with the supply chain and the mix for that last question, but I guess due to some of the supply chain issues you’re seeing, Is there any potential for a shift in mix to prioritize some of your profit margin segments?

We tend not to. We don’t financially engineer our margin. And the reason is, our customer today is a customer for a very long time because of the re-buy nature of this. So shaping is dangerous. We try to take all the business we can service, and obviously, inventory levels and lead times may impact our ability to win a deal in the future who knows, but so far, so good and not having an impact on things. But remember, the customer’s initial buys usually a fraction of their ongoing buys and you have a lot of time over the life of that customer to mature and evolve the product they need to buy today, so if they buy a product today that’s under supply chain pressure. Well, you want that customer anyway, because most of the products they’re going to buy are going to be well past when all of this clears.

Okay. That’s helpful.

Yeah. And…

Appreciate it. And then one last quick one, sorry…

I don’t think there’s a lot of big just that we could into fast forward exactly. But we could or would want to engineer backwards or forwards and the fact that our mix has been fairly consistent Q2, Q3 and will probably be consistent in Q4 just means we’re…

Sure. That’s helpful. Thank you. Appreciate it. Thanks for taking the questions and congrats on the quarter guys.

Thank you.

Thank you, Mr. Bailey. The next question is from the line of Stephen Gengaro with Stifel. You may proceed.

Thanks. Good afternoon, gentlemen. Two questions from me.

Hi, Stephen.

First, when you look at your opportunity in Europe, any sense how we should think about sort of relative growth rates in Europe over the next couple of years versus the U.S. market?

Relative growth rates of the market itself or our growth rate?

So your growth rates relative to the market are clear. But do you believe that the European business grows at about the same rate as your U.S. operations, or do you think it differs significantly due to the maturity of the market and product lines?

I don’t believe the product lines are fundamentally different between the two markets. There are some variations, but they don't significantly differ in the long term. We're facing some initial challenges in our business in Europe, but we're addressing them. I think that over the next few years, due to the regulatory and policy environment in Europe, we are likely to see a higher percentage of electrification in new car sales compared to the United States. It will take time before we see a significant penetration of electric vehicles in the installed base. An interesting fact is that if every car sold tomorrow were electric, it would take over 20 years to replace the existing car base in North America and Europe. This indicates how large this market is. In the next couple of years, we are where many customers want to be, and a lot of market positions are developing. However, the volume will continue to rise over a long period to cater to that installed base. Thus, we find the two markets are generally similar. In our business, we expect to gain market share in Europe more rapidly than in the U.S. since the market share in the U.S. is already quite high. Additionally, there is a greater percentage of ports under management in Europe because we are acquiring customers who already have some hardware installed that don’t have our products. Conversely, the software side shows a higher percentage in the U.S. Although it’s not 100%, it is significantly greater, making the average revenue from ports under management lower in Europe at the start, as not all customers are using our hardware. This complicates the analysis.

I understand and appreciate that comment. Regarding another point, you mentioned during the call the similar one-quarter lag on subscriptions due to the time from installation. That number has been fairly consistent, correct? We should consider it as a guidepost moving forward.

Rex?

Yes, that is certainly accurate. There is a one-quarter lag, and when comparing networked solutions to our subscription revenue, the outcomes vary significantly on a percentage basis. For example, when selling a home unit with a lower percentage of software content compared to a commercial unit, the difference becomes apparent. Additionally, in our DC line, the equipment costs are high enough that software represents a smaller percentage relative to those figures, meaning that the product mix can greatly influence the subscription percentages.

Thank you, Mr. Gengaro. The next question is from the line of David Kelley with Jefferies. You may proceed.

Good afternoon, guys. Thanks for taking my questions. Maybe if you could talk a bit about the visibility to workplace ramp and your customer’s propensity for re-buys at the moment. Just curious how that is trending recently given COVID continues to factor into corporate planning here into 2022?

I would really appreciate your thoughts on when we might be going back to work-from-home, just joking. Rex, if you’d like to address this, the underlying idea is that it’s challenging to predict our return to the office. What I can emphasize is that the industry's growth rate and the number of cars entering the market are significant, even though workplaces haven’t fully returned to pre-pandemic levels in a proportional sense due to lower work utilization. There are many more cars on the road, and we're still seeing fairly solid numbers. Additionally, different areas of the country have varying workplace needs and policies regarding how they handle the increased administrative load of having employees in the office more frequently. So, there are noticeable hotspots. It's not completely absent. As for what the new normal will look like, that remains uncertain. Rex, do you want to add anything regarding the other question?

The only addition I would make is regarding our Q4 guidance. The assumption here is that workplaces will not see a significant return in Q4. With everything happening, including updates received today, it’s hard to envision that people will be back in the office by the end of January. Therefore, our current mix is expected to remain consistent, which is reflected in our guidance numbers that we believe are strong. We are optimistic about workplaces returning next year, although we are not forecasting that will happen yet. Such a development would greatly benefit our business, and we hope for it. However, for now, we remain cautious about the near-term outlook.

Philosophically, whenever there’s uncertainty, we adopt a conservative approach because it ensures safety. As Rex mentioned, we will bill as much inventory as we can because currently, there’s no risk of over-billing, especially with our minimal scrap and obsolescence risks. We plan to bill as much inventory as possible, hoping for positive outcomes from factors like early stimulus funds or a quicker recovery from COVID. If those circumstances surprise us positively, that would be fantastic. However, we are not going to base our company's strategy around optimistic expectations since we do not have control over that aspect of the situation.

Okay. Got it. That’s helpful color. Thanks, guys.

Thank you.

Thank you, Mr. Kelley. That concludes the question-and-answer session. I will now turn the call back over to Pasquale Romano for closing remarks.

Thank you all for the questions and a warm welcome to those new participants in our earnings calls. It's great to have you here with us, and I appreciate the wonderful questions today. I want to take a moment to acknowledge the ChargePoint team for their hard work managing our progress in a dynamic supply chain environment and the favorable market conditions that have emerged. This has been very beneficial for our employees. We are also progressing well with the integration of two exceptional teams from our recent acquisitions into the ChargePoint family. I want to express my gratitude to the ChargePoint team who are listening; your contributions are invaluable. We are truly excited about the future for our industry, company, and investors, which we believe looks very promising. We are encouraged by the broad support in the market across all sectors. As electric vehicles become more prevalent, we expect this will drive substantial growth for us. Thank you once again, and we look forward to speaking with you next quarter.