What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-04-01 compared with 2023-04-03 · 145 added, 149 removed, 274 unchanged (52% of the section changed)

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ChargePoint’s actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” included under Part I, Item 1 A.

ChargePoint designs, develops and markets networked EV charging system infrastructure (“Networked Charging Systems”) connected through cloud-based services (“Cloud” or “Cloud Services”) which (i) enable charging systems owners, or hosts, to manage their Networked Charging Systems, and (ii) enable drivers to locate, reserve and authenticate Networked Charging Systems and to transact EV charging sessions on those systems.

ChargePoint designs, develops and markets networked electric vehicle (“EV”) charging system infrastructure (“Networked Charging Systems”) connected through cloud-based services (“Cloud” or “Cloud Services”) which (i) enable charging systems owners, or hosts, to manage their Networked Charging Systems, and (ii) enable drivers to locate, reserve and authenticate Networked Charging Systems and to transact EV charging sessions on those systems.

ChargePoint’s Networked Charging Systems, subscriptions and other offerings provide an open platform that integrates with system hardware from ChargePoint and other manufacturers, connecting systems over an intelligent network that provides real-time information about charging sessions and full control, support and management of the Networked Charging Systems.

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ChargePoint generates revenue primarily through the sale of Networked Charging Systems, Cloud Services and extended parts and labor warranties (“Assure”).

The Company also generates revenue, in some instances, by providing customers use of ChargePoint’s owned and operated systems, Cloud Services and Assure into a single multi-year or annual subscription (“ChargePoint as a Service” or “CPaaS”).

The Company also generates revenue, in some instances, by providing customers use of ChargePoint’s owned and operated Networked Charging Systems, Cloud Services and Assure into a single multi-year or annual subscription (“ChargePoint as a Service” or “CPaaS”).

Each of Cloud Services, Assure and CPaaS is typically paid for upfront and revenue is recognized ratably over the term of the subscription period.

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ChargePoint has incurred net operating losses and negative cash flows from operations in every year since its inception.

As of January 31, 2023 and 2022, ChargePoint had an accumulated deficit of $1,156.8 million and $811.7 million, respectively.

ChargePoint has funded its operations primarily from customer payments, the issuance of redeemable convertible preferred stock and convertible notes, exercise proceeds from options and warrants, borrowings under loan facilities and proceeds from the Reverse Recapitalization.

As of January 31, 2024 and 2023, ChargePoint had an accumulated deficit

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of $1,614.4 million and $1,156.8 million, respectively.

ChargePoint has funded its operations primarily from customer payments, the issuance of common stock, redeemable convertible preferred stock and convertible notes, exercise proceeds from options and warrants, borrowings under loan facilities and proceeds from the Reverse Recapitalization.

Recent Developments

September 2023 Reorganization

In September 2023, the Company implemented a reorganization plan to reduce its operating expenses and increase efficiencies (the “September 2023 Reorganization”).

The Reorganization entailed a reduction in force of approximately 10% of the Company’s global workforce at the time, and other actions to reduce expenses.

During the twelve months ended January 31, 2024, the Company incurred $15.6 million of employee severance, termination and employment-related exit cost, as well as accelerated depreciation of right-of-use assets and other facilities and contract termination charges.

As of January 31, 2024, restructuring-related liabilities were $0.5 million.

The majority of the remaining restructuring-related liabilities, which includes employee severance and benefits and facilities-related exit costs, will be disbursed in the first quarter of fiscal 2025.

January 2024 Reorganization

In January 2024, the Company implemented an additional reorganization plan to reduce its operating expenses and further increase efficiencies (the “January 2024 Reorganization”).

The January 2024 Reorganization entailed a reduction in force of approximately 12% of the Company’s global workforce and other actions to reduce expense.

The Company incurred $9.9 million of employee severance, termination and employment-related exit costs and $2.7 million of facility exit costs, including impairment charges and accelerated depreciation of right-of-use assets.

As of January 31, 2024, restructuring-related liabilities were $10.6 million.

These remaining restructuring-related liabilities, which primarily includes employee severance and benefits, will be disbursed in the first quarter of fiscal 2025.

Refer to Note 14, Restructuring , in the notes to the consolidated financial statements included in this Annual Report.

Key Factors Affecting Operating Results

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Growth in EV Adoption

ChargePoint’s revenue growth is directly tied to the number of passenger and commercial EVs sold, which it believes drives the demand for charging infrastructure.

The market for EVs is still rapidly evolving and although demand for EVs has grown in recent years, there is no guarantee of such future demand.

ChargePoint believes its revenue growth is tied to the number of passenger and commercial EVs sold, which it believes drives the demand for EV charging infrastructure.

The market for EVs is still rapidly evolving and although demand for EVs has grown in recent years, the rate of EV sales is highly volatile and there is no guarantee of future demand for EV sales.

Factors impacting the adoption of EVs include but are not limited to:

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availability of services for EVs;

consumers’ perception about the convenience and cost of charging EVs;

consumers’ perception about the convenience, reliability and cost of charging EVs;

and increases in fuel efficiency of internal combustion engine vehicles.

Further, numerous EV auto manufacturers have recently announced delays in their previously announced plans to migrate their manufacturing production to be solely or primarily EVs.

In addition, macroeconomic factors, including governmental mandates and incentives and the impact of rising interest rates, inflation and a potential economic recession, could impact demand for EVs, particularly since they can be more expensive to purchase than traditional gasoline-powered vehicles.

Further, geopolitical factors, such as the invasion of Ukraine by Russia, conflicts between the United States and China or between China and Taiwan may negatively impact the global automotive supply chain and reduce the manufacturing of automobiles, including EVs.

If the market for EVs does not develop as expected or if there is any slow-down or delay in overall EV adoption or manufacturing rates, ChargePoint’s financial condition and results of operations could be materially and adversely impacted.

Further, geopolitical factors, such as the ongoing conflict between Russia and Ukraine, conflicts in the Middle East, conflicts between the United States and China or between China and Taiwan may negatively impact the global automotive supply chain and reduce the manufacturing of automobiles, including EVs.

If the market for EVs does not develop as expected, if there is any slow-down or delay in overall EV adoption, or if auto manufacturers delay their EV manufacturing rates or eliminate their plans to transition to predominately EV manufacturing, the rate of EV adoption may be adversely affected and the market for EV charging may not develop and as a result, ChargePoint’s financial condition and results of operations could be materially and adversely impacted.

ChargePoint is currently a market leader in North America in commercial Level 2 Alternating Current (“AC”) charging.

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Existing competitors may expand their product offerings and sales strategies, and new competitors may enter the market.

If ChargePoint’s market share decreases due to increased competition, its financial condition and results of operations may be negatively impacted.

Historically, ChargePoint has sold its Networked Charging Systems and Cloud Services as an integrated “full-stack” offering, providing its customers with a sole-source solution for their EV charging needs, especially in the United States.

Recently, ChargePoint has seen an increase in the frequency of customers seeking to disaggregate their networked charging solutions and to implement independent hardware and charging management software solutions, particularly for national or global commercial retailers and large fleet operators.

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ChargePoint enables charge station operators to choose ChargePoint’s Cloud Services and select their choice of third-party hardware and enables e-mobility services providers to build and integrate their solutions with ChargePoint’s Cloud Services, there is no guarantee that this distributed sales model will be successful.

If ChargePoint’s market share decreases due to increased competition, or if ChargePoint is unable to compete with a disaggregate EV charging solutions sales model, its financial condition and results of operations may be materially and adversely impacted.

Furthermore, ChargePoint’s success could be negatively impacted if consumers and businesses choose other types of alternative fuel vehicles or high fuel-economy gasoline powered vehicles.

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ChargePoint is also working to grow its European business through partnerships with channel partners and car leasing companies and through its acquisitions of ViriCiti B.V.

(“ViriCiti”) and has•to•be gmbh (“HTB”) (each as described in Note 5, Reverse Capitalization and Business Combinations , to ChargePoint’s notes to the consolidated financial statements).

(“ViriCiti”) and has•to•be gmbh (“HTB”).

In Europe, ChargePoint primarily competes with other providers of EV charging station networks.

Many of these competitors have limited funding, which could cause poor customer experiences and have a negative impact on overall EV adoption in Europe.

ChargePoint’s growth in Europe requires differentiating itself as compared to these existing competitors.

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Fleet Expansion

ChargePoint’s future growth is also highly dependent upon success in fleet applications, where there is increasing competition, a high customer dependency on the expected increase in the arrival rate of new vehicles, and likely high concentrations and volatility of purchasing as fleet operators ultimately choose their key providers and make large purchases of EVs.

Any significant decline from these customers may have an adverse impact on ChargePoint’s potential for future growth.

If the Company is not successful in the fleet vertical, its financial condition and results of operations could be materially and adversely affected.

ChargePoint’s future growth is also highly dependent upon its success in EV fleet applications, where there is increasing competition, a high customer dependency on the expected increase in the arrival rate of new vehicles, and likely high concentrations and volatility of purchasing as fleet operators ultimately choose their key providers and make large purchases of EVs.

As noted above, the customer trend to make independent EV charging hardware and charging management software procurement selections is more prevalent in the fleet market.

Any significant decline in purchases from these customers or increased competition for these customers may have an adverse impact on ChargePoint’s potential for future growth.

If ChargePoint is not successful in the fleet vertical, its financial condition and results of operations could be materially and adversely affected.

Impact of New Product Releases and Investments in Growth

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Cost reductions may not occur on the timeline ChargePoint expects due to a number of factors, including but not limited to failure to meet its own estimates, unanticipated supply chain difficulties, government mandates or certification requirements.

For example, ongoing supply chain challenges, heightened logistic costs, component shortages and product transition charges decreased ChargePoint’s gross margins in the fiscal year ended January 31, 2023, and ChargePoint expects gross margins will continue to be adversely affected by increased material costs and freight and logistic expenses in the fiscal year ending January 31, 2024.

In addition, ChargePoint may accelerate its expenditures where it sees growth opportunities, which may further impact

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gross margin until upfront costs and inefficiencies are absorbed and normalized operations are achieved.

Further, ChargePoint continues to invest in prioritizing an assurance of supply of its products and new customer acquisition as part of its “land and expand” model, which in the current environment, puts pressure on gross margins and increases operating expenses.

In addition, ChargePoint may accelerate its expenditures where it sees growth opportunities, which may negatively impact gross margin until upfront costs and inefficiencies are absorbed and normalized operations are achieved.

Further, ChargePoint has historically invested in prioritizing an assurance of supply of its products and new customer acquisition as part of its “land and expand” model, which puts pressure on gross margins and increases operating expenses.

ChargePoint also continuously evaluates and may adjust its expenditures, such as new product introduction costs, based on its launch plans for new products, as well as other factors including the pace and prioritization of current projects under development and the addition of new projects.

As ChargePoint attains higher revenue, it expects operating expenses as a percentage of total revenue to decrease as it scales and focuses on increasing operational efficiency and process automation.

ChargePoint intends to use third-party contract manufacturers and design partners for targeted new research and development initiatives with the goals of controlling development costs and decreasing operating expenses.

ChargePoint believes such partnerships will allow it to better manage research and development expenses, improve the speed and quality of new product development and increase its efficiencies by leveraging the design talent and supply chains of these partners.

Implementing third-party design partners for new research and development initiatives will require sophisticated oversight, quality programs and cost-control initiatives.

If ChargePoint is not successful in its use of third-party contract manufacturers and design partners for new product development its financial conditions, gross margins and results of operations could be materially and adversely affected.

Government Mandates, Incentives and Programs

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In addition, the Inflation Reduction Act of 2022 (the “IRA”) signed into law on August 16, 2022 includes incentives and tax credits aimed at reducing the effects of climate change, such as the extension of electric vehicle charging infrastructure tax credits under Section 30C and tax credits for electric vehicles under Section 30D of the Internal Revenue Code of 1986, as amended (the “Code”) through 2032.

There are numerous restrictions and requirements associated with qualifying for the electric vehicle tax credits available under the IRA and ChargePoint is still assessing how the IRA may impact its business and EV sales generally.

There are numerous restrictions and requirements associated with qualifying for the electric vehicle tax credits available under the IRA and ChargePoint is still assessing how the IRA may

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impact its business and EV sales generally.

Further, incentives such as the Jobs Act and the IRA take time to be disbursed and to affect actual expenditure decisions.

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Any reduction in rebates, tax credits or other financial incentives could reduce the demand for EVs and for charging infrastructure, including infrastructure ChargePoint offers.

ChargePoint also derives other revenue from fees received for regulatory incentives earned for participating in low carbon fuel programs in some U.S.

ChargePoint claims these incentives only if they are not claimed by purchasers of its EV charging stations.

If a material percentage of its customers were to claim these incentives, ChargePoint’s revenue from this source could decline significantly, which could have an adverse effect on its revenue and overall gross margin.

Prior to fiscal year 2021, ChargePoint derived a slight majority of its other revenue from these incentives.

However, revenue from this source as a percentage of total revenue has declined since fiscal 2021 and may continue to decline as a percentage of total revenue going forward.

Further, the availability of such incentives depends on continued governmental support for these programs.

If these programs are modified, reduced or eliminated, ChargePoint’s ability to generate this revenue in the future would be adversely impacted.

Supply Chain Disruptions and Other Factors

Global supply chain disruptions, initially caused by the COVID-19 pandemic, continue to affect ChargePoint’s business.

The disruption to ChargePoint’s supply chain has heightened its material, freight and logistic costs, and has similarly disrupted manufacturing, delivery and overall supply chain of vehicle manufacturers and suppliers, which has contributed to fluctuations in EV sales in markets around the world.

These ongoing supply chain challenges and heightened logistic costs decreased gross margins in the fiscal year ended January 31, 2023, and ChargePoint expects that gross margins will continue to be adversely affected by increased material costs and freight and logistic expenses in the fiscal year ending January 31, 2024.

Also, more permanent work-from-home policies, initially caused by the COVID-19 pandemic, are likely to continue affecting the rate of global infrastructure spending, and thus to continue to adversely impact ChargePoint’s commercial business and its overall gross margin as ChargePoint’s commercial business contributes higher margins than its residential and fleet businesses.

Further, the continued disruption to ChargePoint’s supply chains and heightened component and shipping pricing and logistics expenses may further adversely impact ChargePoint’s gross margins, adversely affect demand for ChargePoint’s products, lengthen its product development and sales cycles, and reduce expected spending from new customers, all of which could adversely affect ChargePoint’s business, results of operations and financial condition.

Additionally, global economic uncertainty due to other macroeconomic conditions, including inflation, interest rate pressures, negative events in the financial services industry, and labor market disruptions, and related growing concerns of a potential recession, have impacted customer behavior related to discretionary spending and sentiment and could continue to impact such behaviors in the future.

Macroeconomic Trends

ChargePoint has an international presence and as a result is subject to risks and uncertainties caused by significant events with macroeconomic impacts, including, but not limited to geopolitical events, including the ongoing Russia-Ukraine conflict, conflicts in the Middle East, rising inflation and interest rates, monetary policy changes, financial services sector instability, recessions, global pandemics and foreign currency fluctuations.

Additionally, these macroeconomic impacts have generally disrupted the operations of its customers and prospective customers.

In addition, shifts in ChargePoint’s product mix to DC chargers from AC chargers may negatively affect ChargePoint’s gross profits and gross margins since ChargePoint generally realizes higher gross margins from sales of its AC chargers.

Further, disruption to ChargePoint’s supply chains and heightened component and shipping pricing and logistics expenses, which ChargePoint experienced in 2021 and 2022, may further adversely impact ChargePoint’s gross margins, adversely affect demand for ChargePoint’s products, lengthen its product development and sales cycles, and reduce expected spending from new customers, all of which could adversely affect ChargePoint’s business, results of operations and financial condition.

Global economic uncertainty due to other macroeconomic conditions, including inflation, interest rate pressures, disruptions and credit constraints in the financial services industry, labor market disruptions, and related concerns of a potential recession, have impacted customer behavior related to discretionary spending and sentiment and could continue to impact such behaviors in the future.

Any resulting decline in the ability or willingness of customers, fleet owners and operators to purchase ChargePoint’s products or subscription services could have an adverse impact on ChargePoint’s results of operations and financial condition.

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Results of Operations & its Components

Networked Charging Systems

A significant portion of ChargePoint’s Networked Charging Systems revenue is presently derived from the sale of AC products.

Networked Charging Systems revenue includes the deliveries of EV charging system infrastructure, which include a range of AC products for use in residential, commercial and fleet applications, and DC, or fast-charge products for use in commercial and fleet applications, as well as fees received for transferring regulatory incentives earned for participating in low carbon fuel programs.

ChargePoint generally recognizes revenue from sales of Networked Charging Systems upon shipment to the customer, at which point ChargePoint’s performance obligation is satisfied.

Revenue from regulatory incentives is recognized when the regulatory incentives are transferred.

Subscriptions

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Subscriptions revenue is generally recognized over time on a straight-line basis as ChargePoint has an ongoing obligation to deliver such services to the customer.

Other revenue consists of charging related fees received from drivers using charging sites owned and operated by ChargePoint, net transaction fees earned for processing payments collected on driver charging sessions at charging sites owned by its customers, fees received for transferring regulatory incentives earned for participating in low carbon fuel programs in some states, and other professional services.

Revenue from driver charging sessions and charging transaction fees is recognized when the charging session or transaction is completed.

Revenue from regulatory incentives is recognized when the regulatory incentives are transferred.

Revenue from fees for owned and operated sites is recognized over time on a straight-line basis over the performance period of the service contract as ChargePoint has an ongoing obligation to deliver such services.

Revenue from professional services is recognized as the services are rendered.

ChargePoint expects revenue to grow in both Networked Charging Systems and subscriptions due to increased demand in EVs and the related charging infrastructure market.

ChargePoint has seen its revenue fluctuate based on market demand and other factors, and expects this variability of growth in Networked Charging Systems revenue to continue in the near term.

In the long term it expects revenue to grow in both Networked Charging Systems and subscriptions due to increased demand in EVs and the related charging infrastructure market.

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Percentage of total revenue 71.2 % 77.7 % 72.1 %

Networked Charging Systems revenue increased for fiscal year ended January 31, 2023 compared to fiscal year ended January 31, 2022 primarily due to a continued increase in demand from customers in ChargePoint’s three verticals, resulting in higher volume of Networked Charging Systems delivered across ChargePoint’s major product families.

Networked Charging Systems revenue marginally decreased for fiscal year ended January 31, 2024 compared to fiscal year ended January 31, 2023.

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Subscriptions revenue increased for the fiscal year ended January 31, 2024 compared to fiscal year ended January 31, 2023 primarily due to the growth in the number of Cloud subscriptions and Assure subscriptions for Networked Charging Systems connected to ChargePoint’s network.

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Networked Charging Systems

ChargePoint uses contract manufacturers to manufacture the substantial majority of its Networked Charging Systems.

ChargePoint’s in-house manufacturing is typically limited to initial development units and to early customer samples.

ChargePoint uses contract manufacturers to manufacture its Networked Charging Systems.

ChargePoint’s cost of revenue for the sale of Networked Charging Systems includes the contract manufacturer costs of finished goods and shipping and handling.

Cost of revenue for the sale of Networked Charging Systems also consists of salaries and related personnel expenses, including stock-based compensation, warranty provisions, depreciation of manufacturing related equipment and facilities, and allocated facilities and information technology expenses.

Cost of revenue for the sale of Networked Charging Systems also consists of salaries and related personnel expenses, including stock-based compensation, warranty provisions, inventory obsolescence and write-downs, depreciation of manufacturing related equipment, and allocated facilities and information technology expenses.

As revenue is recognized, ChargePoint accounts for estimated warranty cost as a charge to cost of revenue.

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Cost of other revenue includes depreciation and other costs for ChargePoint’s owned and operated charging sites, charging related processing charges, salaries and related personnel expenses, including stock-based compensation, as well as costs of professional services.

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Percentage of total revenue 76.2 % 68.1 % 61.1 %

Cost of Networked Charging Systems revenue increased during the fiscal year ended January 31, 2023 compared to fiscal year ended January 31, 2022 primarily due to an increase in the number of Networked Charging Systems delivered.

Cost of Networked Charging Systems revenue increased during the fiscal year ended January 31, 2024 compared to fiscal year ended January 31, 2023 primarily due to a year-over-year increase in the number of Networked Charging Systems delivered and inventory impairment charges totaling $70.0 million, related to product transitions and aligning inventory with customer demand.

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Percentage of total revenue 14.5 % 11.0 % 12.9 %

Cost of subscriptions revenue increased during fiscal year ended January 31, 2023 compared to fiscal year ended January 31, 2022 primarily due to increases in customer support headcount driven by ChargePoint expanding its Networked Charging Systems and resulting in an increase in salaries and personnel expenses, including stock-based compensation, as well as Assure maintenance costs.

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Cost of subscriptions revenue increased during fiscal year ended January 31, 2024 compared to fiscal year ended January 31, 2023 primarily due to increases in Assure maintenance costs, customer support personnel expenses which were driven by ChargePoint expanding its Networked Charging Systems, network wireless connectivity costs, and other operating costs.

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Percentage of total revenue 3.3 % 2.6 % 3.7 %

Cost of other revenue increased for the fiscal year ended January 31, 2023 compared to fiscal year ended January 31, 2022 primarily related to increased other operating costs.

Cost of other revenue increased for the fiscal year ended January 31, 2024 compared to fiscal year ended January 31, 2023 primarily related to increased driver-generated cost.

Gross Profit and Gross Margin

Gross profit is revenue less cost of revenue and gross margin is gross profit as a percentage of revenue.

ChargePoint offers a range of Networked Charging Systems products which vary widely in selling price and associated gross margin, as, for example, ChargePoint’s commercial business contributes higher margins than its residential and fleet businesses.

ChargePoint offers a range of Networked Charging Systems products which vary widely in selling price and associated gross margin, as, for example, ChargePoint’s AC charger based commercial business contributes higher margins than its residential and DC charger based fleet businesses.

Accordingly, ChargePoint’s gross profit and gross margin have varied and are expected to continue to vary from period to period due to revenue levels;

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new product transition costs;

and its efforts to optimize its operations and supply chain and purchase price variances it may need to pay due to component shortages or supply chain disruptions.

and its efforts to optimize its operations and supply chain and purchase price variances.

In the long term, improvements in ChargePoint’s gross profit and gross margin will depend on its ability to continue to optimize its operations and supply chain as it increases its revenue.

However, at least in the short term, as the product mix continues to vary and as ChargePoint continues to optimize for customer acquisition and prioritize assurance of supply of its products as part of its “land and expand” model, launches new Networked Charging Systems products, grows its presence in Europe where it has not yet achieved economies of scale, and expands its solutions for its fleet customers, gross margin will vary from period to period.

In addition, ChargePoint expects gross margins will continue to be adversely affected by increased material costs, particularly due to the shortage of certain semiconductors, as a result of the ongoing worldwide supply chain disruptions.

However, at least in the short term, as the product mix continues to vary and as ChargePoint continues to align inventory supply with demand and optimize for customer acquisition as part of its “land and expand” model, launches new Networked Charging Systems products, grows its presence in Europe where it has not yet achieved economies of scale, and expands its solutions for its fleet customers, gross margin will vary from period to period.

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Gross Margin 5.9 % 18.4 % 22.2 %

Gross profit increased for the fiscal year ended January 31, 2023 compared to fiscal year ended January 31, 2022 primarily due to an increase in Networked Charging Systems sales that resulted from an increase in the number of Networked Charging Systems delivered and an increase in subscriptions revenue.

Gross profit decreased for the fiscal year ended January 31, 2024 compared to fiscal year ended January 31, 2023 primarily due to an increase in cost of revenue resulting from inventory impairment charges totaling $70.0 million, related to product transitions and aligning inventory with customer demand, partially offset by growing gross profits from subscriptions driven by ChargePoint expanding its networked Charging Systems.

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Gross margin decreased for the fiscal year ended January 31, 2024 compared to fiscal year ended January 31, 2023 primarily

due (i) to product mix changes towards lower gross margin products, (ii) higher purchase price costs and increased logistic costs incurred as the result of component shortages and supply chain challenges, (iii) new product transition costs, and (iv) increases in customer support headcount and resulting personnel compensation.

due to an increase of cost of revenue resulting from the increase of inventory impairment charges, as described above, and customer support personnel expenses, as well as other operating expenses.

Research and Development Expenses

Research and development expenses consist primarily of salaries and related personnel expenses, including stock-based compensation, for personnel related to the development of improvements and expanded features for ChargePoint’s services, as well as quality assurance, testing, product management, and allocated facilities and information technology expenses.

Research and development costs are expensed as incurred.

ChargePoint expects its research and development expenses to increase on an absolute basis for the foreseeable future as ChargePoint continues to invest in research and development activities to achieve its technology and product roadmap.

Research and development expenses consist primarily of salaries and related personnel expenses, including stock-based compensation, for personnel related to the development of improvements and expanded features for ChargePoint’s products and services, including in quality assurance, testing, product management, and allocated facilities and information technology expenses.

Research and development costs also include prototype and testing cost, professional services and consulting, and are expensed as incurred.

For the fiscal year ending January 31, 2025, ChargePoint expects its research and development expenses to decrease as a percentage of revenue as it continues to optimize its research and development activities for its technology and product roadmap.

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Percentage of total revenue 43.6 % 41.6 % 60.2 %

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Research and development expenses increased during the fiscal year ended January 31, 2023 compared to fiscal year ended January 31, 2022 and was primarily attributable to a $24.9 million increase in compensation related expenses due to headcount growth, a $12.5 million increase in stock-based compensation expense from restricted stock unit (“RSU”) grants, a $4.0 million increase in engineering materials and services costs, as well as a $5.5 million increase in depreciation and other expenses.

Research and development expenses increased during the fiscal year ended January 31, 2024 compared to fiscal year ended January 31, 2023 and was primarily attributable to a $17.3 million increase in compensation related expenses due to headcount growth and employee-related exit costs related to the reorganizations implemented by the Company (see Note 14, Restructuring , in the notes to the consolidated financial statements included in this Annual Report for more details), a $14.4 million increase in stock-based compensation expense due to the impact of grants to new hires and to promote long-term retention of employees, and an increase of $2.4 million in depreciation and other operating expense.

This is offset by a $6.9 million decrease in engineering materials and services costs and a decrease of $1.3 million in consulting fees.

Sales and Marketing Expenses

Sales and marketing expenses consist primarily of salaries and related personnel expenses, including stock-based compensation, sales commissions, professional services fees, travel, marketing and promotional expenses, bad debt expenses, and allocated facilities and information technology expenses.

ChargePoint expects its sales and marketing expenses to increase on an absolute basis for the foreseeable future while it continues to add sales and marketing personnel, expand its sales channels and expand in Europe.

For the fiscal year ending January 31, 2025, ChargePoint expects its sales and marketing expenses to decrease as a percentage of revenue as it continues to optimize its sales and marketing activities while expanding sales.

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Percentage of total revenue 29.6 % 30.4 % 38.4 %

Sales and marketing expenses increased during the fiscal year ended January 31, 2023 compared to fiscal year ended January 31, 2022 primarily attributable to a $20.4 million increase in compensation related expenses due to headcount growth, a $8.2 million increase in stock-based compensation expense resulting mainly from RSU grants, a $5.5 million increase in amortization expense mainly due to acquired customer relationship intangible assets from business combinations, a $3.5 million increase in travel expenses, and a $3.5 million increase in consulting and marketing expense.

Sales and marketing expenses increased during the fiscal year ended January 31, 2024 compared to fiscal year ended January 31, 2023 primarily attributable to a $2.4 million increase in compensation related expenses due to headcount growth and employee-related exit costs related to the reorganizations implemented by the Company (see Note 14, Restructuring , in the notes to the consolidated financial statements included in this Annual Report for more details), and a $5.5 million increase in stock-based compensation expense due to the impact of grants to new hires and to promote long-term retention of employees.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related personnel expenses, including stock-based compensation, related to finance, legal and human resource functions, contractor and professional services fees, audit and compliance expenses, insurance costs, and general corporate expenses, including allocated facilities and information technology expenses.

ChargePoint expects its general and administrative expenses to increase in absolute dollars as it continues to grow its business and to operate as a public company, including expenses related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, as well as higher expenses for investor relations and legal, accounting and other professional services.

For the fiscal year ending January 31, 2025, ChargePoint expects its general and administrative expenses to decrease as a percentage of revenue as it continues to optimize its operations.

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Percentage of total revenue 21.5 % 19.3 % 33.8 %

General and administrative expenses increased during the fiscal year ended January 31, 2023 compared to fiscal year ended January 31, 2022 primarily attributable to a $9.9 million increase in salary and benefit expenses due to headcount growth, a $4.7 million increase in stock-based compensation expense resulting mainly from RSU grants, a $3.2 million increase in consulting expenses, partially offset by a $6.8 million decrease in professional services fees related to acquisitions and expenses associated with an underwritten secondary offering of shares held by certain selling stockholders and other expense decreases.

General and administrative expenses increased during the fiscal year ended January 31, 2024 compared to fiscal year ended January 31, 2023 primarily due to an increase of $10.9 million in restructuring expense for facility and other contract terminations related to the reorganizations implemented by the Company (see Note 14, Restructuring , in the notes to the consolidated financial statements included in this Annual Report for more details), a $2.9 million increase in compensation related expenses due to headcount growth and employee-related exit costs related to the aforementioned reorganization, a $3.7 million increase in stock-based compensation expense due to new hires and to promote long-term retention of employees, and a $1.2 million increase in other operating expenses.

Interest Income

Interest income consists primarily of interest earned on ChargePoint’s cash, cash equivalents and short-term investments.

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For the Year Ended January 31, Change

2023 2022 2021 2023 vs 2022 2022 vs 2021

2024 2023 2022 2024 vs 2023

(dollar amounts in thousands, except percentages) Change

Interest income $ 5,534 $ 98 $ 315 $ 5,436 5546.9 % $ (217) (68.9) %

Interest income $ 9,603 $ 5,534 $ 98 $ 4,069 73.5 % $ 5,436 n.m.

Percentage of total revenue 1.9 % 1.2 % — %

Interest income increased during fiscal year ended January 31, 2023 compared to fiscal year ended January 31, 2022 due to interest income from short-term investments purchased in fiscal year 2023.

Interest income increased during fiscal year ended January 31, 2024 compared to fiscal year ended January 31, 2023 due to higher interest rates and higher balances of interest-earning investments.

Interest Expense

Interest expense consists primarily of the interest on ChargePoint’s 2027 Convertible Notes that were issued in April 2022 which are described more completely below in Liquidity and Capital Resources .

Interest expense consists primarily of the interest on ChargePoint’s 2028 Convertible Notes that were issued in April 2022, and amended in October 2023, which are described more completely below in Liquidity and Capital Resources .

For the Year Ended January 31, Change

2023 2022 2021 2023 vs 2022 2022 vs 2021

2024 2023 2022 2024 vs 2023

(dollar amounts in thousands, except percentages) Change

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Percentage of total revenue (3.2) % (2.0) % (0.6) %

Interest expense increased during the fiscal year ended January 31, 2023 compared to fiscal year ended January 31, 2022 primarily due to interest expense on the 2027 Convertible Notes.

Changes in Fair Value of Warrant Liabilities, Earnout Liabilities and Transaction Costs Expensed

The redeemable convertible preferred stock warrant liability was subject to remeasurement to fair value at each balance sheet date.

Changes in fair value of redeemable convertible preferred stock warrant liability are recognized in the consolidated statements of operations.

ChargePoint adjusts the liability for changes in fair value until the earlier of the exercise or expiration of the warrants and conversion of redeemable convertible preferred stock into Common Stock.

Common stock warrant liabilities consisted of Public Warrants and private placement warrants issued to NGP Switchback, LLC (“Private Placement Warrants”) which ChargePoint assumed in connection with the Merger and which were subject to remeasurement to fair value at each balance sheet date.

As of April 30, 2022, all Public Warrants and Private Placement Warrants had been exercised or redeemed.

The Company recorded a $9.2 million change in fair value of redeemable convertible preferred stock warrant liability and $47.8 million change in fair value in assumed common stock warrant liabilities during the fiscal year ended January 31, 2022.

As of January 31, 2023, ChargePoint had no outstanding warrant liabilities.

Contingent earnout liability was accounted for as a liability as of the date of the Merger (as described in Note 12, Stock Warrants and Earnout, to ChargePoint’s notes to the consolidated financial statements) and remeasured to fair value until the Earnout Triggering Events (as described in Note 12, Stock Warrants and Earnout, to ChargePoint’s notes to the consolidated financial statements) were met for the first two tranches in March 2021 and the corresponding Earnout Shares (as described in Note 12, Stock Warrants and Earnout, to ChargePoint’s notes to the consolidated financial statements) were issued.

In March 2021, the remaining earnout liability for the third tranche converted to be accounted for as equity.

The Company recorded a $84.4 million change in fair value of contingent earnout liability during the fiscal year ended January 31, 2022 due to the decrease in the fair value of ChargePoint’s Common Stock after consummation of the Merger.

The Earnout Triggering Event was met for the third and final tranche in June 2021, and in July 2021, the remaining Earnout Shares were issued.

The final Earnout Shares were issued in July 2021, and as such, there was no remaining contingent earnout liability during the fiscal year ended January 31, 2023.

Transaction costs consist of legal, accounting, banking fees and other costs that were directly related to the consummation of the Merger.

Transaction costs related to the issuance of shares were recognized in stockholders’ equity (deficit) while costs of $7.0 million associated with the warrant liabilities and non-capitalized amounts were expensed during the fiscal year ended January 31, 2022 upon the completion of the Merger on February 26, 2021.

Interest expense increased during the fiscal year ended January 31, 2024 compared to fiscal year ended January 31, 2023 primarily due to interest expense on the 2028 Convertible Notes that were originally issued in April 2022, and amended in October 2023.

For more information, see Note 6, Debt , in the notes to consolidated financial statements included in this Annual Report.

Other Income (Expense), Net

Other income (expense), net consists primarily of foreign currency transaction gains and losses.

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Year Ended January 31, Year-over-Year Change

2023 2022 2021 2023 to 2022 2022 to 2021

For the Year Ended January 31,

2024 2023 2022 2024 to 2023

(dollar amounts in thousands, except percentages) Change

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Other income (expense), net changed from $(1.6) million during the fiscal year ended January 31, 2023 to $(1.0) million during the fiscal year ended January 31, 2024 due to favorable changes in foreign exchange rates.

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Provision for Income Taxes

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federal and state deferred tax assets as it has concluded it is more likely than not that these deferred tax assets will not be realized.

Year Ended January 31, Year-over-Year Change

2023 2022 2021 2023 to 2022 2022 to 2021

For the Year Ended January 31,

2024 2023 2022 2024 to 2023

(dollar amounts in thousands, except percentages) Change

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Percentage of loss before provision (benefit) for income taxes — % 0.6 % 2.2 %

The benefit for income taxes decreased during the fiscal year ended January 31, 2023 as compared to fiscal year ended January 31, 2022 primarily due to changes to deferred tax liability.

The benefit for income taxes decreased during the fiscal year ended January 31, 2024 as compared to fiscal year ended January 31, 2023 primarily due to changes to deferred tax liability following a tax rate reduction in certain foreign jurisdictions recorded in the prior year.

Liquidity and Capital Resources

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ChargePoint has incurred net losses and negative cash flows from operations since its inception, which it anticipates will continue for the foreseeable future.

To date, ChargePoint has funded its business and the acquisitions of ViriCiti and HTB primarily with proceeds from the issuance of redeemable convertible preferred stock, proceeds from the Merger, proceeds from warrant and option exercises for cash, convertible debt and from customer payments.

As of January 31, 2023 and 2022, ChargePoint had cash, cash equivalents and restricted cash and short-term investments of $399.5 million and $315.6 million, respectively.

ChargePoint believes that its cash and short-term investments, and cash generated from sales to customers will satisfy its working capital and capital requirements for at least the next twelve months.

From inception to January 31, 2023, ChargePoint has raised aggregate net cash proceeds of $615.7 million from the sale of shares of redeemable convertible preferred stock and $479.2 million from the Merger and the concurrent purchase by certain investors of shares of Common Stock pursuant to separate subscription agreements (the “PIPE financing”).

To date, ChargePoint has funded its business and past acquisitions primarily with proceeds from the issuance of common stock, redeemable convertible preferred stock, proceeds from the Merger, proceeds from warrant and option exercises for cash, convertible debt and from customer payments.

As of January 31, 2024 and 2023, ChargePoint had cash and cash equivalents and restricted cash and short-term investments of $357.8 million and $399.5 million, respectively.

ChargePoint believes that its cash on hand and cash generated from sales to customers will satisfy its working capital and capital requirements for at least the next twelve months.

2028 Convertible Notes

In April 2022, ChargePoint completed a private placement of $300.0 million aggregate principal amount of 2027 Convertible Notes, which will mature on April 1, 2027 (the “2027 Convertible Notes”).

The net proceeds from the sale of the 2027 Convertible Notes were approximately $294.0 million after deducting initial purchaser discounts and commissions and the Company’s offering expenses.

ChargePoint expects to use the net proceeds for general corporate purposes.

The 2027 Convertible Notes bear interest at 3.50% per annum, to the extent paid in cash (“Cash Interest”), which is payable semi-annually in arrears on April 1st and October 1st of each year or 5.00% per annum through the issuance of additional 2027 Convertible Notes (“PIK Interest”).

In April 2022, ChargePoint completed a private placement of $300.0 million aggregate principal amount of convertible notes, with an original maturity date of April 1, 2027 (the “Original Convertible Notes”).

In October 2023, ChargePoint completed an amendment to the indenture for the Original Convertible Notes (the “2027 Notes Amendment”) pursuant to which the Cash Interest and PIK Interest (as described below) were increased and the maturity date for the Original Convertible Note was extended to April 1, 2028 (the “2028 Convertible Notes”).

The net proceeds from the original sale of the 2028 Convertible Notes were approximately $294.0 million after deducting initial purchaser discounts and commissions and the Company’s offering expenses.

Prior to the 2027 Notes Amendment, the Original Convertible Notes bore interest at 3.50% per annum, to the extent paid in cash (“Cash Interest”), which was payable semi-annually in arrears on April 1st and October 1st of each year or 5.00% per annum through the issuance of additional Original Convertible Notes.

The 2028 Convertible Notes bear Cash Interest at 7.00% per annum or 8.50% per annum through the issuance of additional 2028 Convertible Notes (“PIK Interest”).

The 2028 Convertible Notes are convertible, based on the applicable conversion rate, into cash, shares of ChargePoint Common Stock or a combination thereof, at ChargePoint’s election.

The initial conversion rate was 41.6119 shares per $1,000 principal amount of the 2027 Convertible Notes, subject to customary anti-dilution adjustment in certain circumstances, which represented an initial conversion price of approximately $24.03 per share.

The initial conversion rate was 83.3333 shares per $1,000 principal amount of the 2028 Convertible Notes, subject to customary anti-dilution adjustment in certain circumstances, which represents an initial conversion price of approximately $12.00 per share.

For additional details on the 2027 Notes Amendment and the 2028 Convertible Notes refer to Note 6, Debt, to ChargePoint’s notes to the consolidated financial statements in this Annual Report.

2027 Revolving Credit Facility

On July 27, 2023, the Company entered into a revolving credit agreement by and among the Company as the parent guarantor, ChargePoint, Inc.

(the “Borrower”), certain subsidiaries of the Borrower as guarantors, JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders party thereto (the “Credit Agreement”).

The Credit Agreement provides for senior secured revolving credit facility in an initial aggregate principal amount of up to $150.0 million, with a maturity date of January 1, 2027 (the “2027 Revolving Credit Facility”).

Pursuant to the Credit Agreement, the Borrower may from time to time arrange for one or more increases in the commitments under the 2027 Revolving Credit Facility in an aggregate principal amount not to exceed $150.0 million, subject to obtaining the consent of the lenders participating in any such increase.

In October 2023, the Company entered into an amendment to the Credit Agreement to, among other things, permit the Company to complete the 2027 Notes Amendment.

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For additional details refer to Note 9, Debt, to ChargePoint’s notes to the consolidated financial statements in this Annual Report.

As of January 31, 2024, the Borrower had no borrowings outstanding or letters of credit under the 2027 Revolving Credit Facility and, as a result, had a borrowing capacity of up to $150.0 million.

For additional details on the 2027 Revolving Credit Facility refer to Note 6, Debt , in ChargePoint’s notes to the consolidated financial statements in this Annual Report.

Shelf Registration and ATM Facility

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As part of the Shelf Registration Statement, ChargePoint filed a prospectus supplement registering for sale from time to time up to $500.0 million shares of Common Stock pursuant to a sales agreement (the “ATM Facility”).

During the fiscal year ended January 31, 2023, ChargePoint had generated proceeds of $49.5 million, net of $0.5 million of issuance costs in connection with the sale of common stock under the ATM Facility.

During the fiscal year ended January 31, 2024, the Company sold a total of 59,299,481 shares of its Common Stock pursuant to the ATM Facility for total proceeds of $287.2 million, net of $1.2 million of issuance costs, which includes 41,371,158 shares sold to an institutional investor.

As of January 31, 2024, $161.6 million of shares of Common Stock remained available for sale pursuant to the ATM Facility.

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Until ChargePoint can generate sufficient revenue to cover its cost of sales, operating expenses, working capital and capital expenditures, it expects to primarily fund cash needs through a combination of equity and debt financing.

ChargePoint may borrow funds on terms that may include restrictive covenants, including covenants that restrict the operation of its business, liens on assets, high effective interest rates and repayment provisions that reduce cash resources and limit future access to capital markets.

ChargePoint expects to opportunistically seek access to additional funds through public or private equity offerings or debt financings, including through potential sales of Common Stock under its ATM Facility.

ChargePoint may borrow funds on terms that may include restrictive covenants, such as the restrictive covenants included in the 2027 Revolving Credit Facility, including covenants that restrict the operation of its business, liens on assets, high effective interest rates and repayment provisions that reduce cash resources and limit future access to capital markets.

ChargePoint may continue to opportunistically seek access to additional funds through public or private equity offerings or debt financings, including through potential sales of Common Stock under its ATM Facility and drawing down amounts under the 2027 Revolving Credit Facility.

If ChargePoint raises funds by issuing equity securities or debt securities convertible into equity securities, dilution to stockholders may result.

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If ChargePoint raises funds by issuing debt securities, these debt securities would have rights, preferences and privileges senior to those of holders of Common Stock.

The terms of debt securities or borrowings could impose significant restrictions on ChargePoint’s operations and expose ChargePoint to enhanced risks associated with rising interest rates and elevated inflation experienced globally during fiscal year 2023.

The capital markets have in the past, and may in the future, experience periods of higher volatility that could impact the availability and cost of equity and debt financing.

ChargePoint’s principal use of cash in recent periods has been funding its operations, the acquisitions of ViriCiti and HTB, and investing in capital expenditures.

ChargePoint’s principal use of cash in recent periods has been funding its operations, past acquisitions, and investing in capital expenditures.

ChargePoint’s future capital requirements will depend on many factors, including its revenue growth rate, the timing and the amount of cash received from customers, the expansion of sales and marketing activities, the timing and extent of spending to support development efforts, expenses associated with its international expansion, the introduction of network enhancements and the continuing market adoption of its Networked Charging Systems.

In the future, ChargePoint may enter into arrangements to acquire or invest in complementary businesses, products and technologies.

ChargePoint may be required to seek additional equity or debt financing beyond the amounts available to it pursuant to the ATM Facility.

ChargePoint may be required to seek additional equity or debt financing beyond the amounts available to it pursuant to the ATM Facility and the 2027 Revolving Credit Facility.

If ChargePoint requires additional financing, it may not be able to raise such financing on acceptable terms or at all, particularly if certain unfavorable economic and market conditions persist or worsen and intensify risks of a potential recession or other economic downturn.

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If adequate funds are not available, ChargePoint may need to reconsider its expansion plans or limit its research and development activities, which could have a material adverse impact on its business prospects and results of operations.

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For the Fiscal Years Ended January 31, 2024, 2023 and 2022

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Net increase (decrease) in cash, cash equivalents and restricted cash $ 63,248 $ (21,073) $ 169,744

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Net Cash Used in Operating Activities

During the year ended January 31, 2023, net cash used in operating activities was $267.0 million, consisting primarily of a net loss of $345.1 million and change in operating assets and liabilities of $64.3 million, offset by an add back of non-cash charges of $142.4 million.

The non-cash charges consisted primarily of $93.4 million of stock-based compensation expense, $25.1 million of depreciation, and amortization expense and amortization of deferred contract acquisition costs, $4.7 million of non-cash operating lease costs and $16.8 million of other costs.

The change in operating assets and liabilities was mainly driven by increases in accounts receivable of $94.6 million, inventory of $39.4 million, prepaid expenses and other assets of $38.0 million and operating lease liabilities of $5.0 million, offset by increases in deferred revenue of $51.8 million, accounts payable of $31.5 million and accrued and other liabilities of $29.4 million.

During the year ended January 31, 2024, net cash used in operating activities was $328.9 million, consisting primarily of a net loss of $457.6 million, partially offset by a decrease in net operating assets of $102.8 million and non-cash charges of $231.5 million.

The non-cash charges consisted primarily of a $84.4 million change in the fair value of contingent earnout liability and a $57.1 million change in the fair value of warrant liabilities, offset by a $67.3 million stock-based compensation expense, a $16.5 million depreciation and amortization, and $7.0 million transaction costs related to the consummation of the Merger.

The change in operating assets and liabilities was mainly driven by increases in deferred revenue of $55.3 million, accrued and other liabilities of $21.6 million and accounts payable of $7.9 million, partially offset by an increase in accounts receivable of $38.4 million and prepaid expenses and other assets of $23.9 million and a decrease in operating lease liabilities of $3.5 million.

The non-cash charges consisted primarily of $117.3 million of stock-based compensation expense, $70.0 million of inventory impairment and non-cash charges, $31.3 million of depreciation, and amortization expense and amortization of deferred contract acquisition costs, $8.4 million of reserves and other costs, and $4.3 million of non-cash operating lease costs.

The change in operating assets and liabilities was mainly driven by an increase in inventory of $173.7 million and decrease in accounts payable, operating lease liabilities and accrued and other liabilities of $5.5 million, partially offset by a decrease in accounts receivable, net, of $36.5 million, an increase in deferred revenue of $32.8 million and a decrease in prepaid expenses and other assets of $7.0 million.

The non-cash charges consisted primarily of $93.4 million of stock-based compensation expense, $25.1 million of depreciation, and amortization expense,$4.7 million of non-cash operating lease costs and $16.8 million of other costs.

The change in operating assets and liabilities was mainly driven by increases in accounts receivable of $94.6 million, inventory of $39.4 million, and prepaid expenses and other assets of $38.0 million, offset by increases in deferred revenue of $51.8 million, accounts payable, operating lease liability, and accrued and other liabilities of $55.8 million.

Net Cash Provided By (Used In) Investing Activities

During the year ended January 31, 2024, net cash provided by investing activities was $85.6 million consisting of cash received from maturities of short-term investments of $105.0 million, offset by purchases of property and equipment of $19.4 million.

During the year ended January 31, 2023, net cash used in investing activities was $126.2 million consisting of cash paid for purchases of short-term investments of $284.8 million, purchases of property and equipment of $18.6 million, and additional cash paid for acquisitions (net of cash acquired) related to the acquisition of HTB in the prior year of $2.8 million, partially offset by cash received from maturities of short-term investments of $180.0 million.

During the year ended January 31, 2022, net cash provided by investing activities was $221.7 million, consisting of cash paid for acquisitions, net of cash acquired, of $205.3 million, partially offset by purchases of property and equipment of $16.4 million.

Net Cash Provided by Financing Activities

During the year ended January 31, 2024, net cash provided by financing activities was $306.5 million, consisting of proceeds from the sale of common stock under the ATM Facility, net of commission and fees, of $287.2 million, change in driver funds and amounts due to customers of $13.7 million, proceeds from the issuance of common stock under employee equity plans, net of tax withholdings, of $12.1 million, partially offset by $2.9 million in issuance costs related to the 2027 Revolving Credit Facility and $3.5 million of the total $7.1 million contingent earnout consideration payments related to the acquisition of ViriCiti, of which the remaining $3.6 million is classified as cash outflow under operating activities.

During the year ended January 31, 2023, net cash provided by financing activities was $372.9 million, consisting of net proceeds from the issuance of convertible debt of $294.0 million, proceeds from the sale of common stock under the ATM Facility, net of commissions and fees, of $49.5 million, proceeds from the issuance of common stock under employee equity plans, net of tax withholdings, of $11.4 million, proceeds from the exercise of stock options and warrants of $6.9 million, and change in driver funds and amounts due to customers of $11.1 million.

During the year ended January 31, 2022, net cash provided by financing activities was $549.7 million, consisting of net proceeds from the Merger and PIPE financing of $511.6 million, proceeds from the exercise of warrants of $118.9 million and proceeds from exercises of vested and unvested stock options of $4.9 million and change in driver funds and amounts due to customers of $3.7 million, partially offset by repayment of borrowings of $36.1 million, payment of transaction costs related to the Merger of $32.5 million and payment of tax withholding obligations on settlement of Earnout Shares of $20.9 million.

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Contractual Obligations and Commitments

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However, due to contractual terms and variability in production levels, and opportunities to renegotiate pricing, ChargePoint generally does not have long-term binding and enforceable purchase orders under such contracts, and the timing and magnitude of purchase orders beyond such period is difficult to accurately project.

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Critical Accounting Policies and Estimates

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The transaction price is allocated to the separate performance obligations on a relative standalone selling price (“SSP”) basis.

ChargePoint determines SSP based on observable standalone selling price when it is available, as well as other factors, including the price charged to its customers, its discounting practices and its overall pricing objectives, while maximizing observable inputs.

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while maximizing observable inputs.

In situations where pricing is highly variable, or a product is never sold on a stand-alone basis, ChargePoint estimates the SSP using the residual approach.

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After establishing the SSP, ChargePoint then allocates the transaction price using the relative selling price method.

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Inventory is stated at the lower of cost or net realizable value.

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Stock-based Compensation

Determining the grant date fair value of employee stock purchase plan (“ESPP”) rights using the Black-Scholes option-pricing model requires management to make certain assumptions and judgments.

ChargePoint recognizes compensation costs for all stock-based awards, including stock options, restricted stock units (“RSUs”), performance restricted stock units (“PRSUs”) and stock purchased under the Company’s 2021 Employee Share Purchase Plan (“ESPP”), based on grant date fair value of the award.

These estimates involve inherent uncertainties, and, if different assumptions had been used, stock-based compensation expense could have been materially different from the amounts recorded.

Stock-based compensation is measured at the grant date, based on the fair value of the award and is recognized as an expense, net of estimated forfeitures, on a straight-line basis over the requisite service period.

ChargePoint estimates the forfeiture rate based on the historical experience at the date of grant and revises it, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

For performance-based stock options issued, the value of the award is measured at the grant date as the fair value of the award and is expensed over the requisite service period, using the accelerated attribution method, once the performance condition becomes probable of being achieved.

These inputs are subjective and generally required significant analysis and judgment to develop.

The determination of the grant date fair value of ESPP rights issued is affected by a number of variables, including the expected Common Stock price volatility over the term of the award, the expected term of the award, risk-free interest rates, and the expected dividend yield of ChargePoint Common Stock.

• Expected volatility:

The expected volatility for the ESPP rights was determined by using a blended volatility approach of peer volatility and implied volatility.

Peer volatility was calculated as the average of historical volatilities of selected industry peers deemed to be comparable to ChargePoint’s business corresponding to the expected term of the awards.

• Risk-free interest rate:

The risk-free interest rate is based on the U.S.

Treasury yield curve in effect at the time of grant for zero-coupon U.S.

Treasury notes with maturities corresponding to the expected term of the awards.

• Expected dividend yield:

The expected dividend rate is zero as ChargePoint currently has no history or expectation of declaring dividends on its Common Stock.

• Expected term:

The expected term represented the period the ESPP rights were expected to remain outstanding and is based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules, and expectations of future employee behavior.

For RSUs, stock-based compensation is measured at the grant date, based on the fair value of the award and is recognized as an expense, net of estimated forfeitures, on a straight-line basis over the requisite service period.

For PRSUs with a market condition, the Company uses a Monte Carlo simulation pricing model to incorporate the market condition effects at the grant date to measure the fair value of the award and is expensed over the service period.

The Monte Carlo pricing model requires inputs which are subjective and generally requires judgment.

For ESPP, stock-based compensation on the grant date is estimated using the Black-Scholes option-pricing model, which requires the use of certain subjective assumptions, including the expected Common Stock price volatility over the term of the award, the expected term of the award, risk-free interest rates, and the expected dividend yield of ChargePoint Common Stock.

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ChargePoint utilizes the asset and liability method in accounting for income taxes.

Deferred tax assets and liabilities reflect the estimated future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those

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temporary differences are expected to be recovered or settled.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Deferred tax expense or benefit is the result of changes in the deferred tax asset and liability.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis