ChargePoint (CHPT)

EV charging solutions provider ChargePoint Holdings (NYSE:CHPT) reported Q2 CY2025 results exceeding the market’s revenue expectations, but sales fell by 9.2% year on year to $98.59 million. On the other hand, next quarter’s revenue guidance of $95 million was less impressive, coming in 11.5% below analysts’ estimates. Its GAAP loss of $2.85 per share was 27.3% below analysts’ consensus estimates.

Company Overview

The most prominent EV charging company during the COVID bull market, ChargePoint (NYSE:CHPT) is a provider of electric vehicle charging technology solutions in North America and Europe.

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 electric vehicle charging industry include Blink Charging (NASDAQ:BLNK), EVgo (NASDAQ:EVGO), and Wallbox (NYSE:WBX).

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Luckily, ChargePoint’s sales grew at an incredible 21.5% compounded annual growth rate over the last five years. Its growth beat the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. ChargePoint’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 15.6% over the last two years. ChargePoint isn’t alone in its struggles as the Renewable Energy industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.

We can dig further into the company’s revenue dynamics by analyzing its most important segments, Networked Charging Systems and Subscriptions, which are 51.1% and 40.5% of revenue. Over the last two years, ChargePoint’s Networked Charging Systems revenue (hardware) averaged 30.1% year-on-year declines. On the other hand, its Subscriptions revenue (software) averaged 22% growth.

This quarter, ChargePoint’s revenue fell by 9.2% year on year to $98.59 million but beat Wall Street’s estimates by 3.3%. Company management is currently guiding for a 4.6% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 14.6% over the next 12 months, an improvement versus the last two years. This projection is admirable and indicates its newer products and services will catalyze better top-line performance.

ChargePoint has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 18.3% gross margin over the last five years. Said differently, ChargePoint had to pay a chunky $81.72 to its suppliers for every $100 in revenue.

In Q2, ChargePoint produced a 31.2% gross profit margin, marking a 7.6 percentage point increase from 23.6% in the same quarter last year. ChargePoint’s full-year margin has also been trending up over the past 12 months, increasing by 16.8 percentage points. If this move continues, it could suggest an environment where the company has better pricing power and stable or shrinking input costs (such as raw materials).

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

ChargePoint’s high expenses have contributed to an average operating margin of negative 78.1% 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, ChargePoint’s operating margin rose by 48.3 percentage points 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 Q2, ChargePoint generated a negative 59.8% operating margin.

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 ChargePoint’s full-year earnings are still negative, it reduced its losses and improved its EPS by 48.8% annually over the last five 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 ChargePoint, its two-year annual EPS growth of 25.3% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q2, ChargePoint reported EPS of negative $2.85, up from negative $3.22 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street expects ChargePoint to improve its earnings losses. Analysts forecast its full-year EPS of negative $11.79 will advance to negative $7.76.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

ChargePoint’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 55.3%, meaning it lit $55.28 of cash on fire for every $100 in revenue.

Taking a step back, an encouraging sign is that ChargePoint’s margin expanded by 46.3 percentage points during that time. In light of its glaring cash burn, however, this improvement is a bucket of hot water in a cold ocean.

ChargePoint burned through $7.45 million of cash in Q2, equivalent to a negative 7.6% margin. The company’s cash burn slowed from $55 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.

ChargePoint burned through $79.49 million of cash over the last year, and its $322.6 million of debt exceeds the $194.1 million of cash on its balance sheet. This is a deal breaker for us because indebted loss-making companies spell trouble.

Unless the ChargePoint’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 ChargePoint until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet.

We were also glad its revenue outperformed Wall Street’s estimates. On the other hand, its revenue guidance for next quarter missed and its EBITDA fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 1.7% to $10.69 immediately after reporting.

Updated: November 8, 2025 at 10:32 PM EST

Before investing in or passing on ChargePoint, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

Aside from its balance sheet, ChargePoint is a pretty decent company. To kick things off, its revenue growth was exceptional over the last five years. And while its operating margins reveal poor profitability compared to other industrials companies, its rising cash profitability gives it more optionality. On top of that, its expanding operating margin shows the business has become more efficient.

ChargePoint’s forward price-to-sales ratio is 0.5x. Certain aspects of its fundamentals are attractive, but we aren’t investing at the moment because its balance sheet makes us uneasy. Interested in this company and its prospects? We recommend you wait until it generates sufficient cash flows or raises money.

Wall Street analysts have a consensus one-year price target of $11.69 on the company (compared to the current share price of $9.77).