ChargePoint's stock swung wildly after releasing earnings, the company's CEO gives his take

Mar 19, 2023

ChargePoint shares swung wildly following the release of the EV charging company's first quarter results. ChargePoint President and CEO Pasquale Romano joins Yahoo Finance Live to break down the company's earnings report and the possible competition from the Ford-Tesla supercharger deal.

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AKIKO FUJITA: Well, ChargePoint shareholders have been on a wild ride in the last couple of weeks from an earnings sell-off to a big gain on an upgrade. Joining us now is Pasquale Romano, ChargePoint CEO President, and our very own, Pras Subramanian. It's good to talk to you today.

You know, it feels like last week, a bit of whiplash when you think about the upgrade that ChargePoint got from Bank of America and then the sell-off that we saw in the stock on the back of what the Street saw as a disappointing sales outlook. Talk to me about what the demand picture looks like for you right now, especially as we've seen gas prices come in lower and maybe the enthusiasm for EVs slow down just a bit.

PASQUALE ROMANO: So I think what we have is a phenomena in the EV industry, where the overall auto sector may be a bit soft. But EVs are a growing percentage of new car sales. And that's offsetting it substantially. And just to give you a data point, our Q1 revenue results that we announced, those were a 59% growth measured relative to Q1 of last year. So even in what is a choppy macro, with respect to the overall economy, you've got a tremendous amount of growth.

We are bolted right up against EV penetration, because it's what drives demand for our products. So we're effectively an indicator of where EVs are going and what kind of demand they're driving across the charging sector.

PRAS SUBRAMANIAN: Hey, Pasquale. It's Pras here. So looking at the kind of charge point outlook, you guys are hopefully going to grow more, add more availability, add more chargers, how do you-- is that sort of going to address customer complaints about reliability and things like that when it comes to locations?

PASQUALE ROMANO: Yeah. So to remind you of-- and all the folks out there of our business model, we don't actually own the chargers. We effectively sell them to businesses. And then they pay us a subscription fee to keep it on the ChargePoint network. But what we also offer all of those customers is our Assure program.

And that is our parts in labor, you know, we take care of it, so you don't have to worry about it charging program to make sure effectively that the chargers are in good working condition. We also take care of making sure drivers understand what chargers are up and running and which aren't via our mobile application. And we're going to continue to innovate and push the boundaries there to make what is a truly mission critical infrastructure for drivers, just seamless and transparent.

So lots of effort historically on the company and lots more effort on a go-forward basis on that subject.

AKIKO FUJITA: One of the big announcements we got in the space most recently, Ford and Tesla announcing that partnership that allows for drivers to use the Tesla infrastructure as well. How does that or does it take any market share away from ChargePoint? Do you see that as a direct threat to sort of the gains that you've made in the market so far?

PASQUALE ROMANO: No, we don't see it as a threat at all. In fact, if you look at what Tesla's represent on a market share basis in the install base of vehicles out there, they're driving the overwhelming utilization of even ChargePoint chargers out there, because it's just an adapter that allows any car to be used with any station. There are effectively two connector types out there in the United States. The one that Tesla developed long before there was a standard and then the standard that is-- that emerged that the overwhelming majority of the auto industry uses.

And Teslas have been using via adapters our chargers since the beginning of revenue at ChargePoint and, frankly, represent again the lion's share of market share out there. On a go-forward basis, we'll innovate technologically to make sure that it's easy for all drivers to use ChargePoint stations. So we don't see it as anything meaningfully different, because we have effectively, as I've said, co-existed with that ChargePoint, with that supercharger network since the beginning of revenue at ChargePoint.

PRAS SUBRAMANIAN: Hey, Pasquale, just to clarify-- sorry. Are you saying that ChargePoint will have native NACS plugs at locations or people will continue to use the adapters to-- for Tesla users, with your chargers?

PASQUALE ROMANO: So we have-- we have fully modular cables on our fast chargers. In fact, our newest products changing a cable type in a holster on the product is actually quite simple. And we've done that to leave the flexibility. Now, what we're-- stay tuned, because we're looking to innovate here. We don't want our customers to have to assign a particular-- or business customers to have to assign a particular parking space to a connector type, because you'll never get that mix right. And that mix will change over time. You want to make sure that any car can park in any parking space and use the charger, because that's just what's simple for consumers. That's just what consumers want.

So we're looking to innovate there to make sure that we can adequately support both standards and potentially even go beyond the consumer having to carry that adapter in their car. Although those adapters are widely available. I happen to have one in my Tesla. And so it's something that I think consumers are used to. Right now, we'd like to do a little better.

AKIKO FUJITA: I want to follow up on the point that Pras made earlier about the reliability issue. I mean, ChargePoint, I will say just from personal experience, most of the time they're working. But I'm constantly amazed at how few chargers that are out there are working. And I wonder why you think that is. I mean, we're sort of in this space where we've got EVs that now make up about what 5% or higher in terms of market share of the overall car market. And yet the infrastructure itself seems to be the biggest, biggest headwind to getting more adoption.

PASQUALE ROMANO: Yeah. It's hard for me to speak for other manufacturers. But what I can say that we do is we take reliability very seriously. We've got a massive investment in a long-term reliability test lab. We put all our existing field products as well as anything new. Or any changes we'll make to existing products in the field, we put them through a very, very tortuous set of tests to make sure that they don't break in the first place.

With that said, you're always going to get some amount of field breakage. It's impossible to have zero breakage in infrastructure. That's out there, that could be effectively backed into by a car or what have you. So for us, it's now all about detection of that as rapidly as possible. Remember, all our chargers are connected to our back office. So we see them all as to whether they're healthy or not. We've improved our on-charger diagnostics and sensors to really look and enable a very proactive monitoring of chargers that are out there.

And with that said, there are some things that our electronics can't see. And we rely on our drivers and some future innovation that we haven't announced yet to really report as rapidly as possible to us when there's an issue. So we can then take care of it as quickly as possible.

AKIKO FUJITA: OK. Well, we hope to have you back on the show when you're ready to make that announcement. Pasquale Romano from ChargePoint, it's good to talk to you today. And our thanks to Pras as well.

PASQUALE ROMANO: Thank you very much.

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