EVgo (EVGO)

Electric vehicle charging company EVgo (NASDAQ:EVGO) reported Q1 CY2025 results beating Wall Street’s revenue expectations, with sales up 36.5% year on year to $75.29 million. The company’s full-year revenue guidance of $360 million at the midpoint came in 2.3% above analysts’ estimates. Its GAAP loss of $0.09 per share was in line with analysts’ consensus estimates.

Company Overview

Created through a settlement between NRG Energy and the California Public Utilities Commission, EVgo (NASDAQ:EVGO) is a provider of electric vehicle charging solutions, operating fast charging stations across the United States.

Renewable energy companies are buoyed by the secular trend of green energy that is upending traditional power generation. Those who innovate and evolve with this dynamic market can win share while those who continue to rely on legacy technologies can see diminishing demand, which includes headwinds from increasing regulation against “dirty” energy. Additionally, these companies are at the whim of economic cycles, as interest rates can impact the willingness to invest in renewable energy projects.

Competitors in the in the electric vehicle charging industry include ChargePoint (NYSE:CHPT), Blink Charging (NASDAQ:BLNK), and Wallbox (NYSE:WBX)

Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, EVgo grew its sales at an incredible 75.9% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. EVgo’s annualized revenue growth of 95.9% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. EVgo recent performance stands out, especially when considering many similar Renewable Energy businesses faced declining sales because of cyclical headwinds.

This quarter, EVgo reported wonderful year-on-year revenue growth of 36.5%, and its $75.29 million of revenue exceeded Wall Street’s estimates by 1.4%.

Looking ahead, sell-side analysts expect revenue to grow 39.5% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is noteworthy and indicates the market sees success for its products and services.

EVgo’s gross margin is slightly below the average industrials company, giving it less room to invest in areas such as research and development. As you can see below, it averaged a 29.9% gross margin over the last five years. Said differently, EVgo had to pay a chunky $70.13 to its suppliers for every $100 in revenue.

EVgo produced a 12.4% gross profit margin in Q1, marking a 24 percentage point decrease from 36.4% in the same quarter last year. EVgo’s full-year margin has also been trending down over the past 12 months, decreasing by 4.5 percentage points. If this move continues, it could suggest a more competitive environment with some pressure to lower prices and higher input costs (such as raw materials and manufacturing expenses).

EVgo’s high expenses have contributed to an average operating margin of negative 103% over the last five years. Unprofitable industrials companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

On the plus side, EVgo’s operating margin rose over the last five years, as its sales growth gave it operating leverage. Still, it will take much more for the company to reach long-term profitability.

In Q1, EVgo generated a negative 44.4% operating margin. The company's consistent lack of profits raise a flag.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Although EVgo’s full-year earnings are still negative, it reduced its losses and improved its EPS by 4.8% annually over the last four years. The next few quarters will be critical for assessing its long-term profitability. We hope to see an inflection point soon.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For EVgo, its two-year annual EPS declines of 5.3% show it’s continued to underperform. These results were bad no matter how you slice the data, but given it was successful in other measures of financial health, we’re hopeful EVgo can generate earnings growth in the future.

In Q1, EVgo reported EPS at negative $0.09, in line with the same quarter last year. This print beat analysts’ estimates by 2.2%. Over the next 12 months, Wall Street is optimistic. Analysts forecast EVgo’s full-year EPS of negative $0.41 will reach break even.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

EVgo’s demanding reinvestments have drained its resources over the last five years, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 122%, meaning it lit $121.80 of cash on fire for every $100 in revenue.

Taking a step back, an encouraging sign is that EVgo’s margin expanded during that time. In light of its glaring cash burn, however, this improvement is a bucket of hot water in a cold ocean.

EVgo burned through $25.24 million of cash in Q1, equivalent to a negative 33.5% margin. The company’s cash burn was similar to its $35.15 million of lost cash in the same quarter last year.

As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.

EVgo burned through $92.13 million of cash over the last year, and its $168.6 million of debt exceeds the $150 million of cash on its balance sheet. This is a deal breaker for us because indebted loss-making companies spell trouble.

Unless the EVgo’s fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns.

We remain cautious of EVgo until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet.

We were impressed by how significantly EVgo blew past analysts’ EBITDA expectations this quarter. We were also glad its full-year EBITDA guidance trumped Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock traded up 6.9% to $2.95 immediately after reporting.

Updated: May 16, 2025 at 11:40 PM EDT

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

EVgo is a pretty good company if you ignore its balance sheet. For starters, its revenue growth was exceptional over the last five years. And while its projected EPS for the next year is lacking, its growth in unit sales was surging. On top of that, EVgo’s rising cash profitability gives it more optionality.

EVgo’s EV-to-EBITDA ratio based on the next 12 months is 32.7x. Certain aspects of its fundamentals are attractive, but we aren’t investing at the moment because its balance sheet makes us uneasy. We recommend investors interested in the company wait until it reduces its leverage or increases its profits before getting involved.

Wall Street analysts have a consensus one-year price target of $6.14 on the company (compared to the current share price of $3.87).

Want to invest in a High Quality big tech company? We’d point you in the direction of Microsoft and Google, which have durable competitive moats and strong fundamentals, factors that are large determinants of long-term market outperformance.

To get the best start with StockStory, check out our most recent stock picks, and then sign up for our earnings alerts by adding companies to your watchlist. We typically have quarterly earnings results analyzed within seconds of the data being released, giving investors the chance to react before the market has fully absorbed the information. This is especially true for companies reporting pre-market.