ChargePoint Holdings, Inc. (CHPT) Q2 2027 Earnings Call Transcript

Everyone, thank you for joining us and welcome to the ChargePoint Second Quarter 2027 Earnings After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Audrey Dion, Head of Investor Relations. Audrey, please go ahead.

Good afternoon, and thank you for joining us on today's conference call to discuss ChargePoint's second quarter fiscal 2027 earnings results. This call is being webcast and can be accessed on the investor section of our website at investor at chargepoint.com. With me on today's call are Rick Wilmer, our chief executive officer, and Mansi Ketani, our chief financial officer. This afternoon, we issued a press release announcing result for the quarter, ended July 31st, 2026, which can be found on our website. We'd like to remind you that during the conference call, management will make four looking statements, including our outlook for the third quarter of fiscal 2027. These forward-looking statements involve risks and uncertainties, many of which are beyond our control and could cause actual results to differ materially from our expectations. These forward-looking statements apply as of today, and we undertake no obligation to update these statements after the call. For a more detailed description of certain factors that could cause actual results to differ, please refer to our Form 10Q filed with the SEC on June 8, 2026, and our earnings release posted today on our website and filed with the SEC on Form 8K. Also, please note that we used certain non-GAAP financial measures on this call, which we reconciled to GAAP in our earnings release and for certain historical periods in the investor presentation posted on the investor section of our website. And finally, we'll post a transcript of this call on our investor relation website under the quarterly results section. Thank you. I will now turn the call over to our CEO, Rick Wilmer.

Good afternoon, and thank you for joining us. Q2 was an exceptional quarter for ChargePoint that demonstrates why we believe we are the definitive leader in intelligent electrification and e-mobility. We meaningfully exceeded the top of our guidance range, delivered record gross margins and achieved essentially zero cash burn. We also began shipping early access units of Express Solo, which is the first product based on what we consider to be the fastest, most advanced DC charging architecture ever developed. In partnership with Eaton, we are building the intelligent energy infrastructure of the future that will supercharge the energy transition, including autonomous vehicles and electric fleets we are building for what is coming not just what is here today we delivered revenue of 116 million in q2 a decisive beat above the top end of our guidance range and our strongest quarter in recent history this result represents 18 year-over-year growth and also marks our fourth consecutive quarter of year-over-year growth more than 80 percent of the fortune 50 are chargepoint customers and many of the leading fleet electrification companies in the world run on our platform this is the result of disciplined execution against our three-year strategic plan operational excellence and our steadfast commitment to innovation our gross margins hit an all-time record as a public company this quarter part of this included non-recurring tariff-free funds but even excluding that benefit the normalized gross margin still set a new record. That is the business model working exactly as designed, sustained pricing discipline, relentless focus on cost, operational excellence, and the compounding power of our higher margin software and subscription revenues. As Express Solo and our compelling new single-port AC product enter the market, we expect this trajectory to accelerate. Our industry-leading full-stack intelligent electrification platform is being validated as a driver for both growth and strong margins. We also achieved effectively zero cash burning Q2. Our capital light model is a structural competitive advantage. We grow revenue, expand margins, and do not consume significant cash on capital assets to do so. We are on a clear trajectory towards adjusted EBITDA positive. Our operating expenses this quarter reduced further compared to the prior quarter and we expect another reduction in the third quarter. This has been accomplished without compromises to execution or the scope of what we do. Guided by our excellent leadership team, AI is fundamentally changing how we operate. Our AI initiatives are compressing software development cycles, automating business processes, and enabling us to accomplish more with less. We are continuously adapting our organizational structure as a result, which means we are flatter with broader spans of control. This new operating model leads to an organization that is simultaneously accelerating growth, delivering faster, and becoming more efficient. That combination will drive sustainable operating leverage that compounds over time. A core pillar of this third year of our three-year strategic plan is driving growth. We are executing with our fourth quarter of sequential year-over-year growth, and now we aim to accelerate further. Accordingly, we are focused on revenue enablement. We are building a world-class sales and marketing engine with a significant emphasis on Europe, and we are putting elite leadership in place to run it. Our critical recent addition to our team is John Saffert, who has joined ChargePoint as Executive Vice President and Managing Director of Europe. John is a proven enterprise operator with deep regional expertise and a track record of building and scaling organizations across European markets. Our pipeline is expanding and customer confidence in our platform has never been higher. Express Solo, the first product based on what we consider to be the most advanced DC charging architecture on the planet, will be a key driver for accelerating growth. We co-engineered Express with Eaton with an uncompromising focus on performance, scalability, energy density, and economics that we believe is unmatched. Early access units have begun shipping and the demand signal from customers has been exceptional. Early access units are substantially committed. Backlog is building and the market is telling us exactly what we expected. Express is the product the industry has been waiting for. In terms of performance of Express, let me put a number on it. We recently demonstrated a 600 plus kilowatt charge on a passenger vehicle at our headquarters. We charged the car from 10% to 80% state of charge in just 11 minutes. I want to be clear, that is not a theoretical benchmark. That is not a laboratory result. It is a live demonstration on a production system based on the expressed architecture that was developed internally by ChargePoint down to every single component. This is the future of refueling and ChargePoint intends to lead it. ChargePoint Express is a platform that unlocks entirely new markets for ChargePoint, ultra high power highway corridors, autonomous vehicle fleet depots where 24-7 uptime is mission critical and premium ChargePoint operator deployments where speed, reliability and density are non-negotiable. And looking further ahead and in partnership with Eaton, we think Express's architecture positions us for emerging opportunities in adjacent markets that will require exactly the kind of intelligent, high-density power delivery that Express was designed to provide. we are building for the next decade not just the next quarter we expect that express will be a significant revenue driver as it scales as we enter into fy28 and have started taking orders and building backlog globally the long-term case for ev adoption continues to strengthen and we are seeing meaningful real-time market dynamics that support continued growth for charge point in north america the economic argument for ev ownership has never been stronger cnbc reported that average u.s gas prices were approximately four dollars and ten cents per gallon as of late july up roughly 31 from a year ago that cost differential has a direct impact on consumer purchasing decisions with cox automotive reporting used ev sales reaching 42 923 units in may of 5.5% month-over-month and 24.7% year-over-year. New EV models continue to enter the market across a widening range of price points, expanding the addressable population of EV buyers. And once consumers go electric, they stay. According to J.D. Power's 2026 U.S. Electric Vehicle Ownership Survey, 96% of EV owners would consider purchasing or leasing another EV even without the now expired federal tax credit. In Europe, there are even stronger tailwinds. EV sales climbed 33% year over year in July, with year-to-date growth of 28%. France, Germany, and Britain posted EV sales growth of 81%, 46%, and 43% respectively in July alone. In the UK, electrified vehicles filled every spot on auto traders' top 10 fastest selling used car rankings in July, which is the first time no petrol or diesel models appeared on that list. European subsidies continue to support demand, regulatory tailwinds are durable, and ChargePoint's position in Europe, strengthened by John Safford's appointment and our growing install base positions us well to benefit from this sustained growth. Let me frame the growth opportunity. We see four vectors that will define ChargePoint's trajectory, and we have a defensible position in every single one. First, autonomous vehicles. Every major AV platform will need reliable, high uptime, high throughput charging infrastructure at scale. ChargePoint is already a charging partner for leading AV companies, and Express was purpose-built for this use case. Second, truck electrification in Europe. The commercial vehicle transition is accelerating under regulatory mandate, and our product portfolio and established European presence give us a first-mover advantage. Third, Metro Transit. Our transit wins our proof points, and we see significant opportunity in this market. Fourth, charge point operators demanding super fast charging. Express fundamentally changes the economics for CPOs operating high utilization sites. The 600 plus kilowatt capability is the best in the world and it creates a value proposition that our competitors simply cannot match today. Our customer wins this quarter our strategic proof points. We announced the continued expansion of our long-standing relationship with Mercedes-Benz, extending our work together to simplify fleet electrification for Mercedes commercial customers in the UK and Germany. When one of the most iconic automotive brands in the world chooses to go deeper with ChargePoint, that tells you everything you need to know about the quality and reliability of our intelligent electrification platform. This relationship continues to grow in scope because we deliver. We announced a deal with Optimus Energy Solutions, a leading ChargePoint operator in the United States, to grow its charging network by more than 200 DC ports across the southeast. Optimus chose ChargePoint because when you are scaling a high utilization network, there is only one platform that delivers the full stack. Hardware, software, network management, and a rich suite of services. That is ChargePoint. We announced a deal with Onvo, a Pennsylvania-based travel stop company to deploy DC fast charging solutions at a dozen travel stops along major highways in the Northeast. Highway corridor charging is a strategically important and growing segment, and Onvo's deployment represents the kind of high-visibility, high-utilization infrastructure that benefits most from ChargePoint's platform capabilities. We announced a significant deployment at Portland International Airport in Oregon that is redefining how airports approach rental car electrification. Airports are an underserved and rapidly evolving market for EV infrastructure, and this installation serves as a model for how ChargePoint can address that opportunity at scale. In Rhode Island, our partnership with the Office of Energy Resources, which dates back to 2014, continues to expand. More than 140 charging ports across approximately 95 sites are now active. We recently deployed a new DC fast charging site in Newport, and additional DC fast charging sites are expected to come online as the year progresses. This long-tenured government partnership is a strong example of how ChargePoint builds durable multi-site infrastructure programs at the state and regional level. In partnership with Eaton, we also commenced a new collaboration with the Santa Monica Department of Transportation to enable the agency's transition to a zero emission big blue bus fleet by 2032. As part of Santa Monica's $56 million investment in electric transit fleet infrastructure, the project combines ChargePoint's DC fast charging solutions and powerful fleet software with Eaton's electrical infrastructure and energy management solutions to power one of the nation's most ambitious public transit electrification programs. Big Blue Bus plans to deploy 130 DC fast charging ports exclusively featuring the Express Plus line of ChargePoint equipment powered by Eaton. I want to spend a moment on our partnership with Eaton because it is becoming one of the most powerful strategic alliances in the energy infrastructure space. This is a deep co-engineered technology and go-to-market partnership that is creating products and solutions neither company could build alone. We are building jointly, selling jointly, and winning jointly across product development, go-to-market execution, and customer-facing solution design. The joint solutions we have developed address a massive unmet need in residential, commercial, and industrial deployments, where electrical infrastructure, intelligent power management software, and charging hardware must work together as one integrated system. No other partnership in this industry can offer what ChargePoint and Eaton deliver together. Customer interest in our joint offerings is accelerating. The pipeline of co-developed opportunities continues to build, and we are converting that pipeline into wins with customers who recognize that this integration is a genuine advantage. As the world's leading intelligent power management company, Eaton brings scale, global distribution, and 100-plus years of electrical infrastructure expertise. ChargePoint brings the most intelligent and performant charging platform, the best software, and relentless product innovation. Together, we are redefining the category. Turning to our key performance indicators, software-only managed ports defined as third-party hardware ports managed by the ChargePoint software platform grew to $138,750 from $135,000 last quarter. Share of ports exceeding 30% utilization at least one day in a month, an important leading indicator for expansion demand, reached 141,000 AC ports compared to slightly over 100,000 AC ports in April 2026. This increase is partly attributable to a change in how utilization is calculated for individual session times. monthly active users the equivalent of our user community increased to 1.55 million versus 1.48 million active users at the end of april chargepoint now manages approximately 422 000 ports up from 406 000 ports last quarter including more than 46 950 dc fast chargers up from 44 650 and more than 150,000 ports located in Europe, up from 145,000. Globally, ChargePoint drivers have access to almost 1.5 million public and private charging ports versus slightly over 1.4 million last quarter. In summary, our Q2 results further reinforce that ChargePoint is executing against our three-year strategic plan. We beat significantly on revenue at 116 million. we delivered all-time record gross margins and effectively burned zero cash. We began shipping Express, the most advanced DC charging architecture in the world, to meet strong early demand. We put elite leadership in place in Europe with the addition of John Safrit, and we continue to transform our organization with AI at the core, and we expanded strategic relationships with customers across CPO, fleet, government, transit, and automotive segments, including more than 80% of the Fortune 50. ChargePoint is a capital-light, AI-enabled, intelligent electrification platform with the most powerful and differentiated solutions in the industry. Growing recurring software and services revenue, the strongest strategic partnership in the space with Eaton, expanding operating leverage, and a central role in the electrification of transportation, autonomous mobility, and the broader energy transition. The fundamentals of our business and our market are compounding. The opportunity ahead of us is exceptional and ChargePoint is built to capture it. Thank you for your continued support. I'll now turn the call over to Monsi.

Thanks, Rick. As a reminder, please refer to our earnings press release for a reconciliation of our non-GAAP results to GAAP. Our principal exclusions are stock-based compensation amortization of intangible assets, and certain costs related to restructuring, settlements, and non-recurring legal expenses. Second quarter revenue came in at $116 million, above our guidance range of $100 to $110 million, up 14% sequentially and up 18% year-over-year, marking our fourth consecutive quarter of year-over-year revenue growth. The beat was mainly due to stronger-than-expected hardware shipments, particularly higher home sales. Breaking that down, network charging systems revenue was $63 million, or 54% of total revenue, up 18% sequentially, and up 25% year-over-year. Subscription revenue was $44 million, or 38% of total revenue, up 7% sequentially and up 10% year-over-year. Other revenue was $9 million, representing the remaining 8%. Turning to verticals, which we report on a Billings basis, Second quarter billings percentages were commercial 69%, fleet 11%, residential 10%, and other 11%. Geographically, North America accounted for 82% of revenue, with Europe at 18%. Non-GAAP gross margin was 38%, up 7 percentage points sequentially and up 5 percentage points year over year. Results included approximately $4 million of tariff refunds recognized as a one-time reduction to cost of goods sold. Excluding this benefit, non-GAAP gross margin would have been approximately 35%, reflecting a 3 percentage point sequential improvement and a 2 percentage point increase compared to the prior year period. The underlying margin expansion reflects continued operational improvements across the business, supported by economies of scale. Looking ahead, we expect gross margins to remain generally in line with these normalized levels for the balance of the fiscal year. Hardware gross margin was 21%, up 13 percentage points sequentially, benefiting in part from the previously discussed tariff refunds. Underlying hardware margin trends also improved as a result of ongoing operational efficiencies and mix of products sold. Subscription gross margin rose to 59% on a GAAP basis and was higher on a non-GAAP basis, demonstrating the strong profitability profile of our subscription revenue and continued leverage within the model. Non-GAAP operating expenses declined to $52 million from $54 million in Q1, representing a 4% sequential reduction and an 11% decrease year-over-year, reflecting our continued focus on cost management. In late July, we completed a company-wide cost optimization initiative that is expected to drive additional operating expense reductions. As a result, we expect non-GAAP operating expenses to be below $50 million on a quarterly basis for the rest of the year. Non-GAAP adjusted EBITDA loss narrowed significantly to $5 million compared with a loss of $19 million in the prior quarter and 22 million in the second quarter of last year. Stock-based compensation was 11 million, flat sequentially, and down from 18 million in the second quarter of last year. Our inventory balance decreased nicely this quarter to 179 million from 204 million in the prior quarter as we sold through inventory on hand. We have consistently highlighted the cash flow benefits associated with reducing inventory, and that dynamic played out as expected this quarter. As inventory levels declined, working capital was released and converted into cash, helping to fund operations while preserving our liquidity. We expect inventory to continue declining over the course of the year, which should further improve working capital efficiency and support additional cash generation. On the cash side, we ended the quarter with $96 million of cash, unchanged from Q1, reflecting essentially zero cash usage during the period. This outcome reflects the combined benefit of improved adjusted EBITDA and strong execution on our inventory reduction initiatives, as mentioned previously. Turning to guidance, for the third quarter of fiscal 2027, we expect revenue of $105 million to $115 million, representing 4% year-over-year growth at the midpoint. In summary, this quarter demonstrated significant progress across our key financial and operational objectives. We delivered sequential and year-over-year revenue growth, achieved record high gross margins, and reduced operating expenses, resulting in improved profitability, while lowering cash usage through disciplined execution and cash management. We are committed to building on this momentum and driving continued progress towards sustainable growth, greater operating leverage, and profitability in the quarters ahead.

With that, we'll open the call for questions. we will now begin the question and answer session if you would like to ask a question please press star one to raise your hand to withdraw your question press star one again we ask that you pick up your handset when asking a question to allow for optimum sound quality if you are muted locally please remember to unmute your device please stand by while we compiled the Q&A roster. Your first question comes from the line of Colin Rush with Oppenheimer. Your line is open. Please go ahead.

Thanks so much. Guys, can you talk about the sustainability of margins? You know, obviously, you know, you've made a ton of progress here. And I just want to get a sense of how much of that is related to a little bit better revenue here, moving through mix, you know, and the growth of subscriptions and how we should think about that trajectory and margins don't go forward.

Yeah, hi, Colin. Thanks for the question. So overall, on a normalized basis, margins improved to 35%, and this was mostly due to the improvement in hardware margins. Subscription margins also improved sequentially because of economies of scale. But on the hardware margin side, the increase was because of scale, because we did have higher revenue, so there was better absorption of fixed costs. But there were also improvements in warranty costs, inbound freight costs, warehousing costs, just overall improvements in all operating costs across the board. Going forward, you know, we expect margins to be in the normalized level. You know, I forgot to mention product mix was an important factor as well. We did sell more of the higher margin AC products this quarter compared to the previous quarter. So that gave us a boost to the margins. And so going forward, you know, if mix remains the same, we should expect overall margins to remain around this normalized level. If mix shifts a little bit, maybe we end up a point to lower here or there.

Thanks so much. And then, yeah, in terms of the go forward technology development, you know, now that you've kind of gotten yourself fully reset here and on track, how should we think about, you know, the product development cycles and cadence of new introductions? Is this kind of an 18-month to 24-month sort of cadence, or are there going to be incremental adjustments that we can think about on an ongoing basis?

Yeah, I think, Colin, the innovation drumbeat is going to continue as far into the future as we can see. The Express solo product that we announced is just the first version of the product off the new DC architecture. There are variants of that product targeted at different vertical markets and use cases that will go into production over the coming year and a half. And then alongside that, we've also got new innovation coming on all of our different products from our single port AC product through our dual port AC products and even future roadmap around DC beyond the express platform.

Super helpful. Thanks so much, guys.

Your next question comes from the line of Chris Thendrinus with RBC Capital Markets. Your line is open. Please go ahead.

Hi, yeah, thank you. You know, I wanted to ask maybe just about, like, customer refresh cycles and, you know, how much of the demand or product sales that you all are making maybe on the commercial side of things are new customers versus, you know, customers that are refreshing their equipment and if it's fairly low like when does that maybe start to kick in thanks yeah i mean typically uh you know business model is uh is land and expand so a large percentage of the billings in each quarter comes from prior customers uh mostly expansion there is some refreshment of you know uh older equipment but uh you know equipment is the stuff that we've

had on the ground isn't that old. So it's still largely new equipment purchased by existing customers. Obviously, we've also been adding a lot of new customers on the fleet side and on the commercial side as well and in Europe as well.

Got it. And then maybe just on the cash flow side of things, would you expect cash flow for the remainder of the year to maybe slightly improve just given, you know, continuation of inventory declines and working capital benefits, or just maybe broadly, how are you thinking about cash flow trends here going forward? Thanks.

Yeah, you know, there are lots of puts and takes, you know, on the cash flow forecast. So it's difficult to say with certainty, but, you know, we're confident overall that inventory is going to continue to come down, and that is going to continue to release cash. As we did this quarter, inventory came down and funded our EBITDA loss or capital expenses or other working capital requirements, resulting in essentially zero cash usage. Now, going forward, inventory will come down. It'll continue to be a source of cash. And then EBITDA loss, we've already brought down nicely so that further reduces the usage of cash. So, you know, this all kind of supports our progress towards cash flow breakeven, as we've noted previously, could position us to generate positive cash flow later in the year. But again, there are a lot of moving parts.

Thank you.

Your next question comes from the line of Chris Pierce with Needham. Your line is open. Please go ahead.

Hey, good afternoon, everyone. If we think back maybe a year or so ago, my timing might not be exact, but there was this idea that inventory would be cleared, which we're starting to see this quarter, and then you had sort of moved into Asian manufacturing partnerships, and those partnerships would drive higher margin equipment sales. I kind of want to understand, is that still something we should be expecting? I know Manzi talked about what we should expect the second half of the year, but is that still sort of part of the bull pieces here, or has Express Solo sort of kind of overwhelmed that? I just want to understand sort of why we don't hear about that as much anymore.

Yeah, I think we've largely executed our transition to Asian. It's fully executed, in fact, Chris. So the benefits on the existing portfolio of products that we garnered from our lower-cost manufacturing strategy are now moving through the P&L, and it's partly contributing to the positive margin results you saw us report for the Q2 quarter. Going forward, our product designs are very, very, very cost-focused, so I would expect further margin benefit from the new hardware products like Express going into the market because the fundamental cost structure that is dictated by the design, not what you do in manufacturing, although we're taking advantage of that, is just fundamentally better than what we've had in the past.

Okay, perfect. Thank you. And then, Manzi, I think you said higher home charging sales help sort of drive a portion of the revenue beat. Can you sort of isolate, should we assume that's in Europe? And if we see continued gas prices, you know, where they are, should we think of that as potential upside to guidance? Or is that too one time to sort of think about, you know, how the moving pieces kind of drive the top line?

Yeah, so this, you know, higher home sales was a phenomenon in Q2, and this was all in North America. These tend to be lumpy around large sale days like Prime Day, Black Friday, etc. So we don't expect that bump to happen again in Q3. That's why you see kind of the prudent guidance. And then there were also other, you know, areas on the revenue side, like, you know, higher professional services, we sold more regulatory credits. There's an increase in other revenue, as you see. So there were a lot of other factors driving revenue higher than guidance in Q2.

Okay, perfect.

Thanks for clarifying that.

And just lastly, I think, Rick, in your remarks, you talked about adjacent markets for Express Solo. Can you just sort of kind of give us some highlights from what markets we should be you thinking about?

Stay tuned for more news on that as we take these initiatives to further maturity.

Okay, fair enough. Thank you, everyone.

Just a reminder, if you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. Your next question comes from the line of Ete Michayali with TD Cohen. Your line is open. please go ahead.

Great. Thank you. Rick, I know the last call, you mentioned how, you know, AI initiatives were helping to kind of, on a lot of fronts, but including on the reduction of OPEX. I'm curious, as we saw the reduction in Q2 and the second half outlook, to what extent are those initiatives coming through and maybe kind of how to think about that even prospectively beyond this here?

I think the impact is now quantifiable in terms of OPEX. We've done some really impactful work around business process automation that's allowing us to get more done with less and then repurpose people that had done those jobs into other roles that are more externally facing value add rather than just running business process. We've also now doubled our productivity on the software engineering side. We're turning out twice as much code as we were previously, thanks to AI. It's also starting to turn up in our products and our services. So the way we support our customers, the amount of support calls that we take with live human beings is being influenced positively by AI. So it really is impactful across the board. It also interestingly is having an effect on the way we're set up organizationally and that it's allowing our spans of control to increase without compromising the quality of our leadership or the work, the amount of work we get done. So we're able to really flatten the organization, increase the pace of decision-making through a flatter organization without compromising, you know, the quality of the work or demanding that people work an inordinate amount of hours to do their jobs.

That's very helpful. And maybe as a follow-up on just on gross margins, it sounds like the kind of normalized gross margins, about 35% in the quarter. Maybe just remind us on kind of the path to get to maybe your target at 40%, just from here on, kind of what has to happen to go up from 35% to about 40%.

Yeah, there's a number of drivers around that, Itay. Some of those are on the services side. I think there's also opportunities around pricing on the software side that we're beginning to roll out through the course of this year. And then probably the biggest driver is going to be just the fundamental cost structure of the new hardware platforms that we're putting into the market like Express Solo.

Your next question comes from the line of Craig Irwin with Roth Capital Partners. Your line is open. Please go ahead.

Good evening, and thanks for taking my questions. First, I should say congratulations on getting out ahead of your cost structure and really handling that over the last, you know, couple years. It's been hard work, and with revenue uptick, it's nice to see the rewards. So definitely want to make note to say that. Marcy, can you talk a little bit about the gross margin benefit in the quarter from the tariff refunds. Can you maybe unpack for us what the impact of tariffs was in your April quarter, and will we see a similar tariff benefit, and is that factored in your guidance for the October quarter that we're currently in?

Yeah, thanks for the comments, Greg. So on the tariff question, so we had incurred these tariffs over the last, gosh, three, four quarters since they were implemented. We got a refund this quarter, and majority of that, which is about $4.2 million, was reflected in Q2's numbers as a one-time reduction to cost of goods sold. So if you, you know, margins on a non-GAAP basis were 38%. If you take that 4 million out, they were 35% on a normalized basis. Going forward, we don't have too much refund remaining. There's a little bit here and there. And as it comes through and as we sell through those products, we'll reflect them on the P&L. But the guidance for continued margins around that normalized level does not include any expectation of further tariff refunds.

Okay. So then just to be crystal clear on that, you seem to be expecting a reduction in tariff benefit in your upcoming quarter, but continued fundamental improvement in the product portfolio and the margins you're generating, cash impact, et cetera. Is that a clear way to put it?

Yes, that is correct.

Perfect. Thank you very much.

Your next question comes from the line of Ryan Sphinx with Be Reilly Securities. Your line is open. Please go ahead.

Hey guys, thanks for taking the questions. You talked about the early access shipments of the Express Solo. Can you just remind us how we should be thinking about that product ramping here in the coming quarters?

Yeah, good question. So production is starting now. We've got backlog that we're fulfilling with what we call early access units. If you happen to be in our neighborhood, come charge on one that is installed at the back of our building and charging cars every day. We also have one installed at an Eaton Innovation Center in Pittsburgh. So if you're in that neighborhood, feel free to go charge at that charger. And additional shipments are going out now almost every week or every other week of these early access units. and then we ramp into production starting now with production inventory available in our fiscal Q4.

Okay, I appreciate that. And then as you guys ramp, is there anything to be aware of from a supply chain perspective or otherwise that could be a potential strain for you guys as you expand here?

Generally speaking, we've got this under control. The supply chains have been affected by the AI data center build-out, Obviously, memory prices have increased. We've recognized all of that in our product costs and pricing forecasts. Silicon carbide modules are also in demand due to the data center build out, but we've got strong partnerships there and commitments to the supply chain to get what we need. So we're feeling pretty confident that we've got supply covered for the demand we see now. Thanks, Rick.

This concludes today's call. Thank you for attending. You may now disconnect.