ChargePoint, one of the largest EV charging infrastructure providers in the U.S., has completed the business combination with Switchback Energy Acquisition Corporation (a publicly traded special purpose acquisition company - SPAC), announced several months ago.
As a result, the company is now listed on the New York Stock Exchange:
"The Business Combination was approved by Switchback stockholders on February 25, 2021. The New York Stock Exchange ticker symbols for the shares of common stock and the warrants of the combined company, renamed ChargePoint Holdings, Inc., are expected to be changed to “CHPT” (NYSE:CHPT) and “CHPT.WS” respectively, beginning on March 1, 2021."
Besides being a publicly-traded company, ChargePoint expected to get more than $450 million in net proceeds. The enterprise value is estimated at $2.4 billion.
In the presentation for investors, released by the way of going public, ChargePoint highlights its business model, which consists of hardware, software and associated services:
The company addresses all charging segments, including residential (home charging), commercial (public charging) and fleets (depot charging).
The charging solutions include both AC charging points and DC chargers. The ChargePoint public charging network consists mostly of AC charging stations.
ChargePoint business model
ChargePoint has an interesting approach, in which a high share of profits comes under the software category.
As we understand, once a customer installs a charging station (CT4000 Dual-Port station, Level 2 AC, for example), he is expected to spend (over a period of seven years) an equivalent of the station cost to remain included on the ChargePoint public charging network.
The company noted some $145 million of revenues in 2019, but expects to achieve $135 million in 2020 due to the COVID-19 impact. The revenues will increase in the future.
The number of charging ports shipped in 2019 amounted to 32,136, which is $4,514 per unit (but we must remember that many charging stations have more than one port and that a high portion of revenues is not related to the hardware).
The gross margin in 2020 is expected to be 24%, which sounds pretty high, especially since it should further improve to more than 40% in just several years.
However, if we dig deeper into the financial information, things are not so rosy. The company was forced to cut costs, including salary cuts and bonus elimination, as the operating costs were too high compared to the revenues.
In 2019 (year ended on January 31, 2020), ChargePoint noted close to $145 million of revenues and gross profit of $18 million, but after applying the operating expenses of over $150 million, it was actually at a net loss of over $134 million.
In 2020, the expected revenues of $135 million should allow it to achieve a gross profit of $33 million (24%), but the total operating expenses at $140-150 million suggest that the scale of the network is not yet big enough to be profitable. The net losses might be around $107 million.
To become profitable, the sales/network size/network utilization would have to be several times bigger than it is now. ChargePoint expect to be profitable around 2025, once revenues reach about $1 billion annually.