EVgo Inc. Q3 FY2024 earnings call

• Election impact: Little to no impact on business relative to illustrative targets for $200 million in adjusted EBITDA in 3-5 years. Largest states outside California in terms of throughput remain Texas, Florida, and Arizona, with operational stalls in 40 states showing strong growth.
• DOE loan: Received a conditional commitment for a $1.05 billion loan guarantee to build ~7500 stalls over 5 years. Focused on fulfilling conditions to close the loan. Next generation charging architecture with Delta Electronics targets at least 30% reduction in gross CAPEX per stall, with first prototype expected within a year.
• Operating highlights: Record revenue quarter of $68 million, throughput more than doubled for 7th consecutive quarter. Charging network revenue nearly doubled. Grew operational stalls by 34% and on track to add over 800 new owned and operated stalls. Opened an EVgo station in 40th state. Customer accounts increased nearly 60% to over 1.2 million. Adjusted EBITDA loss improved.
• Key priorities: Improving customer experience with larger sites, more 350 kilowatt chargers, Autocharge+ gaining traction (21% of sessions initiated by seamless plug and charge), one and done metric up 5 percentage points. Driving efficiencies with next generation charging equipment and prefabricated skids. Growth priority with 56% of throughput from Rideshare, OEM, and subscription. Financing progress with sale of 30C income tax credits for $11 million in Q3 and evaluating additional non-dilutive financing.

In the third quarter, EVgo achieved a record revenue quarter with $67.5 million in revenue, a 92% year-over-year increase. Charging network revenue was $43.1 million, up 98% year-over-year from $21.8 million in Q3 2023. eXtend revenues were $21.9 million, up 109% from $10.5 million in the prior year. Operational stalls grew by 34%, with total stalls in operation approximately 3680 at the end of September 2024. Customer accounts increased nearly 60%, with over 1.2 million EVgo customer accounts. Network throughput more than doubled year-over-year to 78 gigawatt hours in Q3. Charging network margin was 32.9% in Q3 2024, improving from 28.6% in Q3 2023. Adjusted gross margin was 26.6% in Q3 2024, up 20 basis points from the prior year. Adjusted EBITDA was negative $8.9 million in Q3 2024, a $5.4 million improvement from negative $14.2 million in Q3 2023.

• Raised the midpoint of 2024 revenue guidance to a range of $250 million to $265 million due to continued strength in charging network revenues.
• Increased the midpoint of 2024 adjusted EBITDA guidance to a range of negative $38 million to negative $32 million, reflecting improvements in charging network gross margins.
• Expect full-year 2024 capital expenditures, net of capital offsets, to be in the $50 million to $65 million range, with the main use of CAPEX to add over 800 new EVgo owned stalls.
• Confident in hitting adjusted EBITDA break-even for the full year of 2025 based on EV VIO growth and network expansion/operational efficiencies.

• Federal incentives: Federal incentives like 30C and NEVI represent ~10% of full year 2024 gross CAPEX, and any reduction in size or availability of EV incentives could impact the business, though offset by EVs becoming more affordable.
• Charging industry deployment: If the charging industry fails to grow deployments at the current pace, EV VIO growth would need to be significantly lower to maintain current utilization levels.

Q: Can you touch a bit on the closing conditions for the DOE loan, how quickly you're able to satisfy them?

A: We are confident in our ability to close the loan. Conditions are largely within our control and we don't expect a lengthy close. We don't need to issue equity and the loan isn't for a complex single large site.

Q: Can you speak to the buckets contributing to the demand growth, especially in the context of sequential growth and eXtend?

A: We're seeing strong demand growth. Expect continued growth in throughput from Q3 to Q4. For eXtend, there are about 330 stalls in construction. NEVI program states that elected for President Elect Trump have been faster in deploying awards but we don't expect much impact on our business.

Q: What is the industry average utilization rate across fast charging in the United States and how does EVgo's rate compare?

A: Not aware of an industry-wide average for all DC fast operators. EVgo has invested in site selection processes, and our utilization rate has been improving. Our top 15% average daily throughput per stall is 582 kilowatt hours per day, and we're on track to update our long-term utilization target.

Q: How are you thinking about autonomous vehicles in terms of charging strategy?

A: Autonomous vehicles are expected to be electric and will charge in fast locations. We have autonomous vehicle clients and are building dedicated hubs for them, expecting to talk more about this in the future.

Q: Can you speak to the potential opportunity to serve Tesla customers once cable standardization is finalized?

A: Once NACS connector is finalized, we expect to attract roughly 60% of EV VIO not primarily charging in our network. We've proven our ability to attract customers and will target these drivers once cable standardization is complete.

Q: Would you expect to need to add much in the way of executives or employees to increase execution capacity for the DOE funded opportunity?

A: We have the ability to leverage existing infrastructure and team. We're focused on meeting EBITDA breakeven in 2025 and will be prudent in growing the business, leveraging the talent added to the team.

Q: Can you walk us through the strategy for 30C monetization going forward?

A: We're looking at the right strategy to maximize monetization. Expect continued monetization at or around the levels we've seen, whether one sale or two sales in 2025, to maximize return.

Q: Can you bifurcate the 56% of throughput from Rideshare and OEM subscription more granularly?

A: Commercial revenue, largely Rideshare, is about 24%. The 56% group includes Rideshare, free Rideshare subscription customers, and OEM charging credits, which is a high frequency, predictable load that's beneficial for underwriting the business