ChargePoint Posts Weak Revenue Targets After a Rough Q4

There was little good news to be had this week for ChargePoint Holdings investors after the company posted less-than-stellar fiscal year 2024 results and projected first-quarter sales will be down nearly a fifth from last year.

Last year was full of highs and lows for California-based ChargePoint: In Q1, it managed to slash operating losses by 27% year over year and executives were hopeful about revenue projections. But by September, the tide had turned and the company announced it was laying off 10% of its workers. October saw an improvement when ChargePoint managed to raise $230 million and secure a $150 million revolving credit facility.

Any progress, however, seemed to grind to a halt when the company reported its Q3 earnings on Nov. 16. Revenue was far below target, sliding 26% quarter over quarter, and ChargePoint was hit with a $42 million impairment charge, which quickly led to a lawsuit.

The company's gross margins plummeted in Q3 due to impairment charges from its first-gen DC fast chargers due to “legacy supply chain-related costs and supply overruns” on the product in both Q2 and Q3.

That day, CFO Rex Jackson and CEO Pasquale Romano, who had been in the position for over a decade, abruptly departed ChargePoint. Jackson was described as having “separated from the Company” while Romano “resigned […] at the request of the Board.” They were replaced by Mansi Khetani and Rick Wilmer, respectively.

Q4 didn’t bring a quick rebound: Revenue fell 24% year-over-year to $116 million. Networked charging systems, which account for most of the company’s revenue, brought in $74.0 million for the quarter, a nearly 40% plunge from a year earlier. Full-year revenue was $507 million, an 8% drop compared to fiscal 2023.

But it wasn’t all bad news as subscription revenue, ChargePoint’s highest-margin revenue stream, was up 30% compared to last year. Network uptime also improved, averaging 99.1% in January compared to 96% in August 2023.

Going forward, Wilmer said the company is focused on reducing operating expenses. His team began that journey in January by laying off 12% of ChargePoint’s workforce, mostly concentrated in hardware engineering. The move is expected to save $33 million annually.

ChargePoint will also now jointly develop its hardware with power supply manufacturer AcBel.

“Under the agreement, AcBel and ChargePoint will co-design for our portfolio and AcBel will then manufacture that hardware for ChargePoint,” said Wilmer. “The arrangement enables us to bring new hardware to market faster because the development of the hardware is integrated with the manufacturing.”

Going forward, Q1 revenue is expected to be between $100 million to $110 million, which Khetani said will reflect the “typical seasonal drop due to construction slowdowns in the winter months.” The guidance would still mean a 19% drop in revenue compared to fiscal 24, although it is expected to increase in the second half of the fiscal year, while operating expenses are expected to fall.

ChargePoint shares (Ticker: CHPT) have been on a downward trend over the past six months. The company reported earnings after the bell on Tuesday, March 5 and shares began trading at $1.89 per share on Wednesday, March 6 after closing at $2.00 per share the previous day. As of writing, the price sits at $1.94 per share.