EV charging solutions provider ChargePoint Holdings (NYSE:CHPT) missed Wall Street’s revenue expectations in Q4 CY2024, with sales falling 12% year on year to $101.9 million. Next quarter’s revenue guidance of $100 million underwhelmed, coming in 1.3% below analysts’ estimates. Its GAAP loss of $0.14 per share was in line with analysts’ consensus estimates.
Revenue: $101.9 million vs analyst estimates of $103.4 million (12% year-on-year decline, 1.4% miss)
EPS (GAAP): -$0.14 vs analyst estimates of -$0.14 (in line)
Adjusted EBITDA: -$17.31 million vs analyst estimates of -$25.54 million (-17% margin, 32.2% beat)
Revenue Guidance for Q1 CY2025 is $100 million at the midpoint, below analyst estimates of $101.3 million
Operating Margin: -53.9%, up from -80.2% in the same quarter last year
Free Cash Flow was -$4.62 million compared to -$46.21 million in the same quarter last year
Market Capitalization: $264.3 million
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
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.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, ChargePoint grew its sales at an incredible 18.9% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers.
ChargePoint Quarterly Revenue
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 history marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 5.6% 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.
ChargePoint Year-On-Year Revenue Growth
We can better understand the company’s revenue dynamics by analyzing its most important segments, Networked Charging Systems and Subscriptions, which are 51.6% and 37.6% of revenue. Over the last two years, ChargePoint’s Networked Charging Systems revenue (hardware) averaged 12.2% year-on-year declines. On the other hand, its Subscriptions revenue (software) averaged 31.2% growth.
This quarter, ChargePoint missed Wall Street’s estimates and reported a rather uninspiring 12% year-on-year revenue decline, generating $101.9 million of revenue. Company management is currently guiding for a 6.6% year-on-year decline in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 15.9% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and suggests its newer products and services will catalyze better top-line performance.
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Operating Margin
ChargePoint’s high expenses have contributed to an average operating margin of negative 80.4% 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 21.9 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 Q4, ChargePoint generated a negative 53.9% operating margin. The company's consistent lack of profits raise a flag.
Earnings Per Share
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 49.8% 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.
ChargePoint Trailing 12-Month EPS (GAAP)
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 20.6% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.
In Q4, ChargePoint reported EPS at negative $0.14, up from negative $0.23 in the same quarter last year. Despite growing year on year, this print slightly missed analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast ChargePoint’s full-year EPS of negative $0.65 will reach break even.
Key Takeaways from ChargePoint’s Q4 Results
We were impressed by how significantly ChargePoint blew past analysts’ EBITDA expectations this quarter. On the other hand, its revenue slightly missed due to weaker performance in its Subscriptions segment. Its revenue guidance for next quarter also fell short of Wall Street's estimates. Overall, this was a weaker quarter, but the stock traded up 1.5% to $0.67 immediately following the results.
