Participants' lines have been placed in listen only mode to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Would now like to turn the call over to John Paul Canton, ChargePoint's Vice President, Communications. [indiscernible] Please go ahead.

Good afternoon, and thank you for joining us on today's conference call to discuss ChargePoint's first quarter fiscal twenty twenty six earnings results. This call is being webcast can be accessed on the Investors section of our website at investors.chargepoint.com. With me on today's call are Rick Wilmer, our Chief Executive Officer and Monte Katani, our Chief Financial Officer. This afternoon, we issued our press release announcing results for the quarter which ended April 30, 2025. Which may also be found on our website. We'd like to remind you that during the conference call, management will be making forward looking statements including our outlook for the second quarter of fiscal twenty twenty six.

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 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 ks filed with the SEC on March twenty eight, of twenty twenty five and our earnings release which posted today on our website and filed with the SEC on Form eight k.

Also, please note that we use certain non GAAP financial measures on this call. Which we reconcile 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 be posting a transcript of this call to our investor relations website under the Quarterly Results section. Thank you. I will now turn the call over to our CEO, Rick Wilmer.

Good afternoon, and welcome to ChargePoint's first quarter fiscal twenty twenty six earnings call.

Today, I will walk you through key results for the quarter, provide insights into recent market and policy developments, and highlight the progress we've made on our two major priorities for the year. Delivering innovation and driving growth. In addition, I'll cover two significant announcements that directly support these priorities and positively influence ChargePoint's path to achieving positive non GAAP adjusted EBITDA in a quarter of this fiscal year. Let's begin with our Q1 financial results. Revenue for the first quarter came in at $98,000,000 right within our guidance range. Non GAAP gross margin continues to increase quarter over quarter reaching a new high of 31% Notably, our GAAP subscription gross margin climbed to a record 60% underscoring the strength of our SaaS focused business model. We built momentum across the business in Q1. Our DC fast charging program with General Motors has been a success. With the pace of site openings accelerating and over 500 additional ports signed off by GM for deployment. We extended multiple agreements with Mercedes Benz reinforcing our long term relationship. Our theft resistant charging cable was met with strong market interest. It will go into production this summer for our own hardware models. De energized, our software management solution for CPOs, is now actively managing over 700 charger models from over 85 different vendors of charging hardware.

This is a testimonial to the scale of our third party hardware integrations. In total, ChargePoint now has over 352,000 ports under management of which more than 35,000 are DC fast chargers. And more than 122,000 are located in Europe. With our roaming partnerships, we enable access to more than 1,250,000 charging ports globally. Our business is proving to be resilient on the top line despite U. S. Macroeconomic conditions and market uncertainty. As well as the bottom line through the cost and operational actions we took last year. Looking ahead, regarding U. S. Tariffs on our products, we expect only a minimal increase in the cost of goods sold. Also expect cost reductions to exceed the impact of the current tariffs. Therefore, we still expect margin improvement later in the year. The limited impact reflects the swift and effective execution of our mitigation plan. We see positive momentum on two fronts. One, EV adoption and two, utilization rates. EV adoption continues on a steady upward trajectory. A trend which has held for more than a year. Despite political turbulence dampening consumer and capital spending North American EV sales were up 16% year over year for Q1 according [indiscernible] In Europe, EV momentum rebounded strongly with the same dataset reporting 22% EV sales growth year over year for Q1, a significant surge.

The European Green Deal mandates all new cars sold there be zero emission by 2035 reinforcing the EU's trajectory of ED adoption. All of this forms a strong leading indicator for the charging industry. The trends we observed last quarter remain intact. The market is actively planning and inquiring, but wise purchasing is being impacted by economic uncertainty Inevitably, with more EVs on the road, existing infrastructure is under mounting pressure. A recent report by Perrin Data concluded that many U. S. Cities are approaching maximum charge utilization during peak hours. With five major markets past or approaching a staggering 40% utilization rate. This strain is a positive signal for our customers who monetize charging, there is a growing concern for EV drivers facing long waits at occupied stations. We believe this will lead to the installation of more chargers and ChargePoint will be ready capitalize on that demand. Despite the growth to come, the market has recently seen a attrition and the voluntary exit of major players. Even Chinese competitors coming under the scrutiny of the federal government. These developments, while natural for a new industry at our stage, create a meaningful opportunity for ChargePoint to gain market share.

We are not waiting for the growth to come to us. We are actively pursuing it. This brings me to the most exciting announcement of the year so far. Our new partnership with Eaton, one of the world's largest intelligent power management companies. The cornerstone of this partnership is innovation, which will drive growth. Our goal is to make electrified transportation simple and economically a no Charging deployments are increasingly complex, with a significant portion of them requiring grid upgrades. So we are integrating charging and electrical equipment into a single solution which addresses a major gap in the market. Together, ChargePoint and Eaton will deliver EV charging, electrical infrastructure, energy management, and engineering services as the market's only end to end EV charging and power management solutions. These fully integrated solutions will get our customers up and running faster, simultaneously lowering their costs and are available for order now. The next phase of partnership will offer co developed future technologies to further drive down costs, improve efficiency advance bidirectional PowerFlo technology to fully optimize V2X capabilities. This will enable customers to use EVs as another distributed energy resource that they can integrate into their energy infrastructure to help power operations.

The first innovations from this effort are set to be announced in September. So what does this do for ChargePoint's business? In addition to a compelling and highly differentiated offering, now have access to Eaton's formidable go to market engine. Which does nearly $25,000,000,000 in annual sales across more than 160 countries. We anticipate that the relationship will drive incremental revenue growth for ChargePoint. This partnership cements ChargePoint as the enabler of the entire EV ecosystem from the grid to the dashboard of the vehicle and everything in between. Our second major announcement of the quarter once again aligned with our goal of delivering innovation, was the announcement of our new AC hardware architecture. This is the first product line developed utilizing our lower cost co development structure and it will enter the market at a highly competitive price point while still increasing our margins. This new architecture underpins a range of upcoming models that will roll out over the next year serving home, commercial and fleet use cases. These products will represent a major portion of our hardware volume. By bringing a generational leap in our technology to market at an affordable price point, we anticipate greater volume in The US where we have the number one AC market share and considerable market penetration in Europe where we have not had a product in this category to date.

The first charger, part of our European take home fleet solution, is expected to begin production in July. Growth and innovation remain the year two priorities of our strategic plan and we are making progress on both We entered year two ahead of schedule. Positioning us to realize the benefits of our streamlined cost structure and revitalize product portfolio in year three. Our partnership with Eden unlocks immediate growth opportunities by combining our EV charging leadership with their complementary solutions and their commercial scale. Our new AC hardware architecture is the first of several high impact innovations planned for this year. Designed to expand market share, drive volume and improve margins. Combined with our operational excellence, we are laying the groundwork for meaningful financial upside as the year moves on. I will now turn the call over to our CFO, Manzi Khitani, to cover our financials in more detail.

Thanks, Rick. As a reminder, please see our earnings press release where we reconcile our non GAAP results to GAAP. Our principal exclusions, our stock based compensation, amortization of intangible assets, and certain costs related to restructuring and acquisitions. Revenue for the first quarter was 98,000,000 within our guidance range. Network charging systems at 52,000,000 accounted for 53% of first quarter revenue. This was almost flat sequentially despite Q1 typically experiencing a seasonal dip and was down 20% year on year. Subscription revenue at 38,000,000 was 39% of total revenue essentially flat sequentially mostly due to fewer days in Q1 which impacts prorated revenue recognition and up 14% year on year due to the recurring revenue generated from a higher installed base. Other revenue at 8,000,000 was 8% of total revenue down 31% sequentially and down 8% year on year. Other includes various revenue items which tend to be lumpy. And were significantly lower this quarter primarily as a result of lower one time project revenue which is recognized based on completion rate. Turning to verticals, which we report from a billings perspective, first quarter billings percentages were commercial 71%, fleet 13%, residential 12%, and other 3%. From a geographic perspective, North America made up 85% of revenue and Europe was 15%.

Europe was lower than normal due largely to weakness in Germany. This was partially made up in North America which was slightly higher compared to last quarter even though the first quarter is typically seasonally lower and despite significant macroeconomic headwinds. Non GAAP gross margin was 31%, improving by one percentage point sequentially and up seven percentage points year on year. This is attributable to higher margins in both hardware and subscription as well as subscription revenue growing as a percentage of total revenue. Hardware gross margin increased sequentially despite the impact of incremental tariffs and freight incurred in Q1. Subscription margins reached a record high of 60% on a GAAP basis and were even higher on a non GAAP basis due to economies of scale and continued optimization of support costs.

Based on currently available information, we expect the financial impact of tariffs on our COGS to remain minimal. And expect gross margins to continue around the current range and to further improve later in the year. Non GAAP operating expenses were 57,000,000 up 9% sequentially and down 15% year on year. As mentioned previously, this quarter's OpEx included the impact of annual raises and investments in certain key areas of the business. We will continue to manage OpEx closely. Non GAAP adjusted EBITDA loss was 23,000,000 This compares with a loss of $17,000,000 in the prior quarter and a loss of $36,000,000 in the first quarter of last year. Stock based compensation was $18,000,000 up from $15,000,000 in the prior quarter and down from $22,000,000 year on year. Our inventory balance increased by $3,000,000 to $212,000,000 due to the impact of foreign exchange rates on inventory held by our international subsidiaries. However, we saw a decrease in inventory units across most products as we continue to sell through. We anticipate that inventory balance will reduce gradually throughout the year helping to free up cash. Speaking of cash, we ended the quarter with $196,000,000 in cash on hand. Q1 tends to be the quarter with highest cash usage due to the timing of some large annual payments.

We will continue to rigorously manage cash, and we have access to $150,000,000 revolving credit facility which remains undrawn we have no debt maturities until 2028 and we have existing capacity on our ATM. Turning to guidance, for the second quarter of fiscal twenty twenty six, we expect revenue to be 90,000,000 to 100,000,000 We are guiding with caution due to the continued changes in the macro environment including tariff uncertainty as well as our near term focus on operationalizing our partnership with Eaton. While there is always a possibility of headwinds from deterioration in macro conditions, we expect revenue upside later in the year from the introduction of our new AC hardware that Rick outlined better performance in Europe, and growth from our new partnership with Eaton. We continue to focus on revenue growth gross margin expansion and cost management to achieve our stated goal of being adjusted EBITDA positive in a quarter during fiscal twenty twenty six. We will now open the call for questions. At this time, We request that you limit yourself to one question and one follow-up. Our first question comes from the line of Colin Roth with Oppenheimer. Your line is open.

Thanks so much guys. With the Seaton partnership and what you're seeing in terms of the market and the new AC product, can you talk a little bit about the pipeline of activity and how we be thinking about a return to growth here, on the top line for the new systems?

Yes. Thanks, Colin. I think there's a variety of forces at play, some positive. Some causing caution. Obviously, the macroeconomic conditions, tariff and general uncertainty. We're seeing you know, some customers get conservative with spending in cash. There's obviously uncertainty around, you know, policies supporting electrification and transportation, particularly in The U. S. Which I think are also headwinds. On the other hand, very excited about our partnership with Eaton We fully expect that to drive incremental growth and there's a lot of work to do this quarter in particular to operationalize this relationship. And we fully expect to hit our stride and have this again fully operationalized as we enter our fiscal Q3. So variety of factors at play.

Okay. And then in terms of international expansion, you know, ex Europe, you know, is Eden able to help you guys get into some incremental geographies where you haven't been operating to date. And and how should we think about the potential for the opportunity in Central And South America, other parts of North America where you're not maybe fully loaded? It seems like you've you've got pretty pretty good coverage in The US and Canada, but maybe you're missing something. And then, you know, potentially places like Australia and others, where you could see some some incremental sales.

Yeah. Eaton definitely has the capabilities to do that.

At this point in time, we're focused on North America and Europe. We believe with the combined product portfolio what we have to offer in Europe and North America, we've got plenty of TAM to address in those two geographies. But, again, the possibility definitely exists to penetrate new geographies as we move forward in the partnership.

And then just a final one on the cadence of the inventory reduction, Monty. Should we be thinking about that as kind of low single digit millions, mid single digit millions of inventory consumption on a quarterly basis? Just wanna get a a better sense of of how to get that that number you know, on a trajectory basis and what's the the right target for you guys in terms of, you know, kind of the the right image that you wanna be carrying on a on a ongoing basis?

Yeah. So, you know, obviously, there are a lot of factors. That inventory balance will depend on is the depends on the mix of sell through, you know, the mix of production. And etcetera.

So know, all we can say right now is that we expect gradual reduction probably in the second in the second quarter. With, you know, a a a more meaningful reduction coming in the second half. As as we see revenue growth.

Okay.

I'll I'll hop back in queue. Thanks, guys.

Thank you.

Press 1 on your telephone keypad. That's all the question for today. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.