ChargePoint (CHPT)

EV charging solutions provider ChargePoint Holdings (NYSE:CHPT) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 8.8% year on year to $97.64 million. Next quarter’s revenue guidance of $95 million underwhelmed, coming in 12.4% below analysts’ estimates. Its non-GAAP loss of $0.12 per share was significantly 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).

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, ChargePoint grew its sales at an incredible 18.1% 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. ChargePoint’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 11.2% 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.

ChargePoint also breaks out the revenue for its most important segments, Networked Charging Systems and Subscriptions, which are 53.3% and 38.9% of revenue. Over the last two years, ChargePoint’s Networked Charging Systems revenue (hardware) averaged 22.9% year-on-year declines. On the other hand, its Subscriptions revenue (software) averaged 26.7% growth.

This quarter, ChargePoint missed Wall Street’s estimates and reported a rather uninspiring 8.8% year-on-year revenue decline, generating $97.64 million of revenue. Company management is currently guiding for a 12.5% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 17.3% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and indicates its newer products and services will fuel better top-line performance.

Gross profit margin is a critical metric to track because it sheds light on its pricing power, complexity of products, and ability to procure raw materials, equipment, and labor.

ChargePoint has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 17.7% gross margin over the last five years. That means ChargePoint paid its suppliers a lot of money ($82.26 for every $100 in revenue) to run its business.

ChargePoint’s gross profit margin came in at 28.7% this quarter, marking a 6.6 percentage point increase from 22.1% in the same quarter last year. ChargePoint’s full-year margin has also been trending up over the past 12 months, increasing by 20.9 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).

ChargePoint’s high expenses have contributed to an average operating margin of negative 78.9% 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 30.7 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.

ChargePoint’s operating margin was negative 55.1% this quarter. 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 ChargePoint’s full-year earnings are still negative, it reduced its losses and improved its EPS by 43.8% 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 ChargePoint, its two-year annual EPS growth of 21.3% was lower than its four-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q1, ChargePoint reported EPS at negative $0.12, down from negative $0.11 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast ChargePoint’s full-year EPS of negative $0.39 will reach break even.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

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 57.8%, meaning it lit $57.79 of cash on fire for every $100 in revenue.

Taking a step back, an encouraging sign is that ChargePoint’s margin expanded by 38.6 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 $34.03 million of cash in Q1, equivalent to a negative 34.9% margin. The company’s cash burn slowed from $66.01 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 $127 million of cash over the last year, and its $322.2 million of debt exceeds the $195.9 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 struggled to find many positives in these results as its revenue, EPS, and EBITDA missed. Its revenue guidance for next quarter also fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 10.3% to $0.79 immediately after reporting.

Updated: June 14, 2025 at 11:31 PM EDT

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in ChargePoint.

Aside from its balance sheet, ChargePoint is a pretty decent company. First 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 0.7x. 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 its debt load falls or its profits increase.

Wall Street analysts have a consensus one-year price target of $1.15 on the company (compared to the current share price of $0.72).