What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-09 compared with 2022-11-04 · 281 added, 329 removed, 208 unchanged (75% of the section changed)

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The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of EVgo’s consolidated results of operations and financial condition.

The discussion should be read in conjunction with EVgo’s unaudited condensed consolidated financial statements and related notes thereto as of September 30, 2022 and December 31, 2021 and for the three and nine months ended September 30, 2022 and 2021, included elsewhere in this Quarterly Report, and the consolidated financial statements and related notes thereto as of and for the year ended December 31, 2021, contained in the Annual Report.

The discussion should be read in conjunction with EVgo’s unaudited condensed consolidated financial statements and related notes thereto as of March 31, 2023 and December 31, 2022 and for the three months ended March 31, 2023 and 2022 included elsewhere in this Quarterly Report, and the audited consolidated financial statements and related notes thereto as of and for the years ended December 31, 2022 and 2021 contained in the Annual Report.

In addition to historical information, this discussion contains forward-looking statements that involve numerous risks, uncertainties, and assumptions that could cause EVgo’s actual results to differ materially from management’s expectations due to a number of factors, including those discussed in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in this Quarterly Report.

Factors which could cause such differences are discussed therein.

EVgo is a key leader in charging solutions, building and operating the infrastructure and tools to expedite the mass adoption of electric vehicles for individual drivers, rideshare and commercial fleets, and businesses.

Since its founding in 2010, EVgo has led the way to a cleaner transportation future, and its network has been powered by 100% renewable energy since 2019 through renewable energy certificates.

EVgo is a key leader in charging solutions, building and operating the infrastructure and tools to expedite the mass adoption of EVs for individual drivers, rideshare and commercial fleets, and businesses.

Since 2019 EVgo has purchased renewable energy certificates to match the electricity that powers its network.

EVgo has a flexible business model that derives value through multiple revenue streams.

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EVgo sells electricity directly to drivers who access EVgo’s publicly available networked chargers.

Various pricing plans exist for customers, and drivers have the choice to charge as members (with monthly fees and reduced per-minute or Kilowatt-hour (“kWh”) pricing) through a subscription service, or as non-members.

Various pricing plans exist for customers and drivers have the choice to charge as members (with monthly fees and reduced per-minute or kWh pricing) through a subscription service, or as non-members.

Drivers can locate the chargers through EVgo’s mobile application, their vehicle’s in-dash navigation system or third-party databases that license charger-location information from EVgo.

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EVgo also incorporates flexible ownership models through EVgo eXtend, through which certain Site Hosts can invest in and build EV charging stations that the Site Host owns and EVgo operates.

● Charging Revenue, Commercial :

High volume fleet customers, such as transportation network companies or delivery services, can access EVgo’s charging infrastructure through EVgo’s public network.

Pricing for charging services is most often negotiated directly between EVgo and the fleet owner based on the business needs and usage patterns of the fleet.

In these arrangements EVgo contracts with and bills, either the fleet owner directly or an individual fleet driver utilizing EVgo’s chargers.

Access to EVgo’s public network allows fleet and rideshare operators to support mass adoption of transportation electrification and achieve sustainability goals without needing to directly invest capital in charging infrastructure or incur operating costs associated with charging equipment.

● Charging Revenue, OEM :

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EVgo views its OEM relationships as a core customer acquisition channel.

● Charging Revenue, Commercial :

High volume fleet customers, such as transportation network companies (“TNCs”) or delivery services, can access EVgo’s charging infrastructure through EVgo’s public network.

Pricing for charging services is most often negotiated directly between EVgo and the fleet owner based on the business needs and usage patterns of the fleet.

In these arrangements EVgo contracts with, and bills, either the fleet owner directly or an individual fleet driver utilizing EVgo’s chargers.

In addition to offering access to its public network, EVgo offers dedicated charging solutions to fleets.

As part of this offering, EVgo typically builds, owns and operates charging infrastructure for the exclusive use of a dedicated customer and is currently offering flexible ownership models, such as its charging as a service (“ChaaS”) offering.

EVgo’s dedicated and ChaaS offerings provide a value proposition for fleets who might otherwise feel compelled to procure, install and manage their own electric vehicle supply equipment (“EVSE”).

EVgo’s dedicated and ChaaS offerings provide a value proposition for fleets who might otherwise feel compelled to procure, install and manage their own electric vehicle supply equipment.

EVgo offers a variety of pricing models for its dedicated charging solutions, including a mix of volumetric commitments and variable and fixed payments to EVgo for provision of its services.

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Together, EVgo’s dedicated charging solutions and public fleet charging services provide fleets with a more robust and flexible charging solution.

● Regulatory Credit Sales :

As a charging station owner and operator, EVgo earns regulatory credits, such as Low Carbon Fuel Standard (“LCFS”) credits and other regulatory credits, in states where such programs are enacted currently, including the Fast Charging Infrastructure (“FCI”) program in California.

These credits are generated through charging station operations based on the volume of kWh sold.

EVgo earns additional revenue through the sale of these credits to buyers obligated to purchase the credits to comply with the program mandates.

● Network Revenue, OEM:

This revenue stream represents revenue related to contracts that have significant charger infrastructure build programs, which represent set-up costs under ASC 606.

This revenue stream represents revenue related to contracts that have significant charger infrastructure build programs, which represent set-up costs under Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”).

Proceeds from these contracts are allocated to performance obligations including marketing activities, memberships, reservations and the expiration of unused charging credits.

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Any unused charging credits are recognized as breakage using the proportional method or, for programs where there is not enough information to determine the pattern of rights exercised by the customer, the remote method.

● eXtend Revenue :

Through EVgo eXtend, EVgo provides hardware, design, and construction services for charging sites, as well as ongoing operations, maintenance and networking and software integration solutions, while EVgo’s customers purchase and retain ownership of the charging assets.

For some eXtend customers, EVgo also provides grant application support and related services.

In 2022, EVgo announced an eXtend deal with the Pilot Company to deploy up to 2,000 fast charging stalls that the Pilot Company will own and EVgo will build, network, operate and maintain.

● Ancillary Revenue :

In addition to charging services on its owned network, EVgo offers a variety of software-driven digital, development and operations services to its customers, including through its PlugShare subsidiary and its eXtend offering.

EVgo has a number of offerings that currently include customization of digital applications and charging data integration.

EVgo currently pilots micro-targeted advertising services, smart charging reservations, loyalty programs and access to chargers behind parking lot pay gates.

EVgo also offers maintenance services and development and project management services, including EVSE installation, networking and operations.

In 2022, EVgo announced a major eXtend deal with the Pilot Company to deploy up to 2,000 fast charging stalls that the Pilot Company will own and EVgo will build, network, operate, and maintain.

EVgo offers a variety of software-driven digital, development and operations services to its customers.

EVgo has offerings that currently include customization of digital applications, charging data integration, micro-targeted advertising services, smart charging reservations, loyalty programs, access to chargers behind parking lot pay gates, and equipment procurement and operations services for customers operating dedicated networks.

EVgo also continues to evaluate and engage on potential market opportunities beyond these business models.

● Regulatory Credit Sales :

These credits are generated through charging station operations based on the volume of kWh sold.

EVgo earns additional revenue through the sale of these credits to buyers obligated to purchase the credits to comply with the program mandates.

Recent Developments

Geopolitical and Macroeconomic Environment

During the last several years, the global economy has experienced disruption and sustained volatility from a number of factors.

In particular, the global outbreak of COVID-19 resulted in significant volatility in the global and domestic economies, changes in consumer and business behavior, market downturns and restrictions on business and individual activities, which led to overall reduced economic activity.

During the last several years, the global economy has experienced disruption and sustained volatility due to a number of factors.

The COVID-19 pandemic impacted EVgo’s operations through reduced network throughput, construction delays and supply chain and shipping constraints.

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Those timelines were impacted due to delays associated with COVID-19 and broader supply chain disruptions and it is possible that the pandemic and its ongoing effects could continue to impact these timelines in the future.

More recently, Russia’s military invasion of Ukraine and the subsequent sanctions imposed on Russia, Belarus, the so-called Donetsk People’s Republic and the so-called Luhansk People’s Republic have led to, and will likely continue to lead to, geopolitical instability, market uncertainty and supply disruptions.

Finally, rising inflation has increased operating costs for many businesses and, together with slowing economic growth and fear of a recession, has led governments to change monetary policy in response.

The current economic environment remains uncertain, and the extent to which EVgo’s operating and financial results for future periods will be impacted by the COVID-19 pandemic, the ongoing conflict in Ukraine, increasing inflation, supply-chain disruptions, government efforts to reduce inflation and any recession will largely depend on future developments, which are highly uncertain and cannot be reasonably estimated at this time.

Russia’s military invasion of Ukraine and the subsequent sanctions imposed on Russia, Belarus, the so-called Donetsk People’s Republic and the so-called Luhansk People’s Republic have led to and will likely continue to lead to, geopolitical instability, market uncertainty and supply disruptions.

Additionally, rising inflation has increased operating costs for many businesses and, together with slowing economic growth and fear of a recession, has led governments to change monetary policy in response.

Finally, recent concerns regarding the stability of the U.S.

and international financial systems has raised concerns regarding the ability of companies to access deposits;

potential losses of uninsured deposits and other financial assets;

the potential loss of access to working capital sources and access to favorable commercial financing terms (including terms related to interest rates and restrictive financial or operating covenants);

and systemic limitations on access to credit and liquidity sources.

The current economic environment remains uncertain and the extent to which EVgo’s operating and financial results for future periods will be impacted by the ongoing impacts of the COVID-19 pandemic, the ongoing conflict in Ukraine, increasing inflation, instability in the financial services sector, supply-chain disruptions, government efforts to reduce inflation and any recession will largely depend on future developments, which are highly uncertain and cannot be reasonably estimated at this time.

Government EV Initiatives

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In particular, the Inflation Reduction Act (i) expanded and extended tax credits for EV charging infrastructure and new EVs while also imposing new limitations and requirements for such credits, (ii) introduced tax credits for used EVs and commercial EVs and (iii) introduced the concept of transferability for certain tax credits, providing an additional option to monetize such credits.

However, the impact of the Inflation Reduction Act cannot be known with any certainty and EVgo may not achieve any or all of the expected benefits of the Inflation Reduction Act.

However, the impact of the Inflation Reduction Act and other government EV initiatives, including regulatory requirements and restrictions that may impact the ability of EVgo and its competitors to take advantage of such initiatives, cannot be known with any certainty at this time, and EVgo may not reap any or all of the expected benefits of the Inflation Reduction Act or the Bipartisan Infrastructure Law.

For example, f ederal guidance on Buy America requirements (effective as of March 23, 2023) applicable to the National Electric Vehicle Infrastructure (“NEVI”) Program, which was established by the Bipartisan Infrastructure Law, requires immediate domestic assembly and U.S.

steel requirements for chargers to qualify for funding under the NEVI program, with higher domestic content percentages required in 2024.

EVgo’s suppliers may experience delays in bringing their U.S.

facilities online, and EVgo may be unable to source Buy

America-compliant chargers in time to take advantage of early NEVI funding opportunities or only at increased costs.

EVgo may be at a disadvantage to competitors that have already implemented domestic assembly and content standards into their supply chain.

EVgo’s customers may request delays or adjustments to their build-out plans in order to accommodate these added Buy America requirements, which could result in delays in receipt of revenue from customers.

States including (but not limited to) California, Colorado, Delaware, Massachusetts, New Jersey and New York also offer various rebates, grants and tax credits to incentivize both EV and EVSE purchases.

EVgo believes these regulations, combined with a shift toward car-sharing and mobility as a service offering as well as broader fleet sustainability trends, will rapidly accelerate EV adoption in the coming years.

Pilot Infrastructure Agreement

On July 5, 2022, EVgo entered into a charging infrastructure agreement (the “Pilot Infrastructure Agreement”) and an operations and maintenance agreement (the “Pilot O&M”) with Pilot Travel Centers LLC (“Pilot Company”) and General Motors LLC (“GM”) to build, operate, and maintain up to 2,000 stalls served by DC chargers that Pilot Company will own.

The stalls will be located at approximately 500 Pilot Company sites across more than 40 states.

Under the Pilot O&M, EVgo is required to perform operations, maintenance and networking services on stalls built and commissioned under the Pilot Infrastructure Agreement in exchange for payment of a monthly fee by Pilot to EVgo.

Delta Charger Supply Agreement and Purchase Order

On July 12, 2022, EVgo entered into a General Terms and Conditions for Sale of EV Charger Products (the “Delta Charger Supply Agreement”) with Delta Electronics, Inc.

(“Delta”), including an initial purchase order (the “Purchase Order”), pursuant to which EVgo will purchase and Delta will sell EV chargers manufactured by Delta in specified quantities at certain delivery dates.

EVgo expects to use a portion of the chargers purchased under the Purchase Order to meet the requirements of the Pilot Infrastructure Agreement.

EVgo is required to purchase a minimum of 1,000 chargers (which will enable the construction of 2,000 stalls) from Delta under the Purchase Order and may at EVgo’s election, increase the number of chargers it purchases from Delta to 1,100.

Granting of EVgo’s 205 Petition

On February 3, 2023, EVgo filed a petition in the Court of Chancery under Section 205 of the Delaware General Corporation Law seeking (i) the validation of the stockholder vote approving CRIS’s certificate of incorporation in connection with the CRIS Business Combination and (ii) the validation and declaration of effectiveness of (a) EVgo’s Charter (including its filing and effectiveness, in each case as of July 1, 2021) and (b) the securities issued or to be issued in reliance on such approval and/or the validity of EVgo’s Charter, as of the respective dates of their issuance (including the 5,750,000 shares of Class A common stock into which the shares of Class B common stock converted upon the consummation of the CRIS Business Combination).

EVgo filed the petition due in part to a recent ruling of the Court of Chancery that created uncertainty as to the validity and effectiveness of these corporate acts and, consequently, as to its capital structure.

Such purported uncertainty was eliminated on February 21, 2023, when, following a hearing on EVgo’s petition, the Court of Chancery issued an order validating each of the corporate acts described above, effective as of the time each such act was originally taken, notwithstanding any failures of authorization or potential failures of authorization described in, or resulting from the matters described in, the petition.

Key Components of Results of Operations

EVgo’s revenues are generated across various business lines.

The majority of EVgo’s revenue is generated from the sale of charging services, which are comprised of retail, OEM and commercial (fleet) business lines.

In addition, EVgo generates ancillary revenues through the sale of data services, consumer retail services and the development and project management of third party-owned charging sites.

EVgo’s revenue is generated across various business lines.

The majority of EVgo’s revenue is generated from the sale of charging services, which are comprised of retail, OEM and commercial business lines, and its eXtend offering.

In addition, EVgo generates ancillary revenue through the sale of data services and consumer retail services.

EVgo also offers network services to OEM customers, including memberships and marketing.

Finally, as a result of owning and operating the EV charging stations, EVgo earns regulatory credits such as California LCFS credits which are sold to generate additional revenue.

Revenue From Related Party

EVgo is a party to various agreements with an affiliate of LS Power for the purchase and sale of California LCFS credits at prevailing market prices.

Finally, as a result of owning and operating the EV charging stations, EVgo earns regulatory credits such as LCFS credits, which are sold to generate additional revenue.

Cost of Sales

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Cost of revenue consists primarily of energy usage fees, site operating and maintenance expenses, warranty and repair services, and site lease and rent expense associated with charging equipment.

Depreciation and Amortization

Depreciation and amortization consists of depreciation related to EVgo’s property and equipment associated with charging equipment and installation and includes the amortization of EVgo’s capital-build liabilities.

Depreciation, Net of Capital-Build Amortization.

Depreciation, net of capital-build amortization, consists of depreciation related to EVgo’s property and equipment associated with charging equipment and installation and is partially offset by the amortization of EVgo’s capital-build liabilities associated with third-party funding received for charging stations and other programs.

Gross Profit (Loss) and Gross Margin

Gross profit (loss) consists of EVgo’s revenue less its cost of revenues and depreciation and amortization.

Gross profit (loss) consists of EVgo’s revenue less its cost of revenue and depreciation, net of capital-build amortization.

Gross margin is gross profit (loss) as a percentage of revenue.

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General and administrative expenses primarily consist of payroll and related personnel expenses, IT and office services, customer service and network charges, office rent expense and professional services.

EVgo expects its general and administrative expenses to increase in absolute dollars as it continues to grow its business but to decrease over time as a percentage of revenue.

EVgo also expects to incur additional expenses as a result of operating as a public company, including expenses necessary to comply with the rules and regulations applicable to companies listed on a national securities exchange and related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, as well as higher expenses for general and directors’ and officers’ insurance, investor relations and other professional services.

EVgo expects its general and administrative expenses to increase in absolute dollars as it continues to grow its business.

EVgo also expects to continue to incur additional expenses related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, general insurance and directors’ and officers’ insurance, investor relations and other professional services.

Depreciation, Amortization and Accretion.

Depreciation, amortization and accretion consists of depreciation related to EVgo’s property, equipment and software not associated with charging equipment, and, therefore, not included in the depreciation and amortization expenses recorded in cost of sales.

Depreciation, amortization and accretion consists of depreciation related to EVgo’s property, equipment and software not associated with charging equipment and, therefore, not included in the depreciation, net of capital-build amortization expenses recorded in cost of sales.

This also includes amortization of EVgo’s intangible assets and accretion related to EVgo’s asset retirement obligations.

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Operating margin is operating profit (loss) as a percentage of revenue.

Interest Expense, Related Party

Interest expense, related party consists primarily of interest due under the Secured Demand Grid Promissory Note, dated January 16, 2020, by and between EVgo Services and EVgo Holdings (the “LS Power Note”).

Pursuant to the terms of the Business Combination Agreement, the LS Power Note was cancelled immediately prior to the CRIS Close Date and converted into equity of EVgo Services, immediately followed by a contribution of such equity interest by EVgo Holdings to EVgo Holdco.

Interest Income

Interest income consists primarily of interest earned on cash, cash equivalents and debt securities.

Other (Expense) Income, Net

Other (expense) income, net, consists primarily of unrealized gains and losses on marketable securities.

Interest income consists primarily of interest earned on cash and cash equivalents.

Other Income (Expense), Net

Other income (expense), net, consists primarily of unrealized gains and losses on marketable securities.

Change in Fair Values of Warrant and Earnout Liabilities

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Network Throughput

Network throughput represents the total amount of Gigawatt hours (“GWh”) that was consumed by EVs using chargers and charging stations on EVgo’s network.

EVgo typically monitors GWh sales by business line, customer, and customer class.

Network throughput represents the total amount of GWh that was consumed by EVs using chargers and charging stations on EVgo’s network.

EVgo typically monitors GWh sales by three components:

business line, customer and customer class.

EVgo believes monitoring of component trends and contributions is the appropriate way to monitor and measure business-related health.

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all chargers at such a site are counted as two stalls per one charger.

The following table represented network throughput and the number of DC stalls on EVgo’s network:

September 30,

The following table represents network throughput and the number of DC stalls on EVgo’s network:

Network throughput (GWh) for the three months ended

Network throughput (GWh) for the nine months ended

Number of DC stalls on EVgo network as of

EVgo defines Receipts as total revenue plus change in deferred revenue over the same period.

Pursuant to the term of certain OEM contracts, EVgo is paid well in advance of when revenue can be recognized according to ASC Topic 606;

usually, the payment is tied to the number of stalls that commence operations under the applicable contract arrangement.

EVgo believes that its Receipts metric provides investors valuable insight into cash that has been generated from EVgo’s customers and EVgo’s periodic performance.

EVgo uses Receipts to monitor and measure EVgo’s commercial performance, liquidity and growth as EVgo’s OEM customers pay EVgo in advance for placing stalls in operation and then EVgo recognizes a portion of the related revenue over time.

The following table presents the calculation of Receipts for the three months ended March 31, 2023 and 2022:

Three Months Ended

(in thousands)

GAAP revenue 1

GAAP changes in deferred revenue 2

Total Receipts

Year-over-year percentage change in total Receipts

1 As presented in the condensed consolidated statements of operations.

2 As presented in the condensed consolidated statements of cash flows.

Factors Affecting EVgo’s Operating Results

EVgo believes its performance and future success depend on several factors, including those discussed below and in “Part II, Item 1A., Risk Factors.”

EVgo’s revenue growth is directly tied to the adoption and continued acceptance and usage of passenger and commercial EVs sold, which it believes drives the demand for electricity, charging infrastructure and charging services.

EVgo believes its performance and future success depend on a number of factors, including those discussed below and in “Part II, Item 1A., Risk Factors.”

EVgo’s revenue growth is directly tied to the adoption and continued acceptance and usage of passenger and commercial EVs, which it believes drives the demand for electricity, charging infrastructure and charging services.

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.

Additionally, as demand increases, the supply must keep pace for adoption to continue to accelerate at a rapid pace.

Factors impacting the adoption of EVs include perceptions about EV features, quality, safety, performance and cost; perceptions about the limited range over which EVs may be driven on a single battery charge; availability of services for EVs; consumers’ perception about the convenience, speed and cost of EV charging; volatility in the price of gasoline and diesel;

EV supply chain disruptions including but not limited to availability of certain components (e.g., semiconductors), ability of EV OEMs to ramp-up EV production and/or allocate sufficient quantities of EV models to the U.S.

Factors impacting the adoption of EVs include perceptions about EV features, quality, safety, performance and cost; perceptions about the limited range over which EVs may be driven on a single battery charge; availability of services for EVs; consumers’ perception about the convenience, speed, reliability and cost of EV charging; volatility in the price of gasoline and diesel;

EV supply chain shortages and disruptions including, but not limited to, availability of certain components (e.g., semiconductors and critical raw materials necessary for the production of EVs and EV batteries), the ability of EV OEMs to ramp-up EV production and/or allocate sufficient quantities of EV models to the U.S.

domestic content requirements or other policy constraints;

availability of batteries and battery materials;

availability, cost and desirability of other alternative fuel vehicles, plug-in hybrid EVs and high fuel-economy gasoline and diesel-powered vehicles;

availability, cost and desirability of other alternative fuel vehicles, including plug-in hybrid EVs and high fuel-economy gasoline and diesel-powered vehicles;

and increases in fuel efficiency.

In addition, macroeconomic factors could impact demand for EVs, particularly since EVs can be more expensive than traditional gasoline-powered vehicles.

In addition, macroeconomic factors could impact demand for EVs, particularly since the sales price of EVs can be more expensive than traditional gasoline-powered vehicles.

If the market for EVs does not develop as expected or if there is any slowdown or delay in overall adoption of EVs, EVgo’s operating results may be adversely affected.

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As such, electrification of vehicle fleets may occur more slowly or more rapidly than management forecasts based on the cost to purchase, operate and maintain EVs and the general availability of such vehicles relative to those of internal combustion engine vehicles.

EVgo’s, and other competitors’, ability to offer competitive charging services and value-added ancillary services may impact the cadence at which fleets electrify and may impact EVgo’s ability to capture market share in fleets.

The ability of EVgo and its competitors’ to offer competitive charging services and value-added ancillary services may impact the pace at which fleets electrify and may impact EVgo’s ability to capture market share in fleets.

Additionally, federal, state and local government support and regulations directed at fleets (or lack thereof) may accelerate or delay fleet electrification and increase or reduce EVgo’s business opportunity.

EVgo’s management is currently monitoring several key rules that may encourage fleet electrification, including California’s Advanced Clean Truck (ACT) rule and similar programs recently adopted by Massachusetts, New Jersey, New York, Oregon, and Washington, and the implementation of California’s Clean Miles Standard, as well as similar proposals in other zero emission vehicle states and potential action at the federal level.

EVgo’s management is currently monitoring several key rules that may encourage fleet electrification, including California’s Advanced Clean Truck rule and similar programs recently adopted by Massachusetts, New Jersey, New York, Oregon and Washington and the implementation of California’s Clean Miles Standard, as well as similar proposals in other zero emission vehicle states and potential action at the federal level.

The EV charging industry is increasingly competitive.

The principal competitive factors in the industry include charger count, locations and accessibility;

The principal competitive factors in the industry include charger count, locations, accessibility and reliability;

charger connectivity to EVs and ability to charge all standards;

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DCFC network reliability, scale and local density;

software-enabled services offering and overall customer experience;

software-enabled service offerings and overall customer experience;

operator brand, track record and reputation;

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The EV market relies on these governmental rebates, tax credits and other financial incentives to significantly lower the effective price of EVs and EV charging stations.

However, these incentives may expire on a particular date, end when the allocated funding is exhausted, or be reduced or terminated as a matter of regulatory or legislative policy.

In particular, EVgo has historically benefitted from the availability of federal tax credits under Section 30C of the Code, which effectively subsidized the cost of placing in service EVgo’s charging stations.

The Inflation Reduction Act revised the credits under Section 30C of the Code to (i) retroactively extend the expiration of the credit as of December 31, 2021 (with such credit continuing to be capped at $30,000 per location for EV charging stations placed in service before January 1, 2023) until January 1, 2033, (ii) revised the credit structure, availability, and requirements for EV charging stations placed in service after December 31, 2022, and (iii) introduced the concept of transferability of such tax credits, providing an additional option to monetize such credits.

As part of the revised credit structure and requirements for EV charging stations placed in service after December 31, 2022, the available Section 30C credit was expanded such that it is capped at $100,000 per item;

however, in order to be eligible for such tax credit, EV charging stations must be installed in certain census tracts.

Additionally, in order to receive the full tax credit, labor for EV charging station construction and maintenance must meet prevailing wage and apprenticeship requirements unless an exception applies, with additional clarification possible pending Department of Treasury advice and comment proceedings.

There can be no assurance that the EV charging stations placed in service by EVgo will meet the revised requirements for the Section 30C credits and complying with such requirements could increase EVgo’s labor and other costs.

Any reduction in rebates, tax credits or other financial incentives available to EVs or EV charging stations, could negatively affect the EV market and adversely impact EVgo’s business operations and expansion potential.

In addition, there is no assurance EVgo will have the necessary tax attributes to utilize any such credits that are available and may not be able to monetize such credits on favorable terms.

Further, certain of EVgo OpCo’s ownership may limit the available tax credit that can be monetized or utilized.

However, these incentives may expire on a particular date, end when the allocated funding is exhausted, or may be reduced or terminated as a matter of regulatory or legislative policy.

In particular, EVgo has historically benefitted from the availability of federal tax credits under Section 30C of the Code, which effectively subsidizes the cost of placing in service EVgo’s charging stations.

The Inflation Reduction Act revised the credit under Section 30C to extend the credit until December 31, 2032, introduce the concept of transferability of such tax credits, expand the credit such that it is capped at $100,000 per item and increase eligibility requirements to require installation of EV charging stations in certain census tracts along with meeting prevailing wage and apprenticeship requirements, among other changes.

There can be no assurance that the EV charging stations placed in service by EVgo will meet the revised requirements for the Section 30C credits, and compliance with such requirements could increase EVgo’s labor and other costs.

Any reduction in rebates, tax credits or other financial incentives available to buyers or owners of EVs or EV charging stations could negatively affect the EV market and adversely impact EVgo’s business operations and expansion potential.

In addition, there can be no assurance that EVgo will have the necessary tax attributes to utilize any such credits that are available and may not be able to monetize such credits on favorable terms.

Further, certain features of EVgo OpCo’s ownership may limit the available tax credit that can be monetized or utilized.

New tariffs and policies that could incentivize overbuilding of infrastructure may also have a negative impact on the economics of EVgo’s stations.

Furthermore, new tariffs and policy incentives could be put in place by the Biden Administration that favor equipment manufactured by or assembled at American factories, which may put EVgo’s fast charging equipment vendors at a competitive disadvantage, including by increasing the cost or delaying the availability of charging equipment, by challenging or eliminating EVgo’s ability to apply or qualify for grants and other government incentives, or by disqualifying the Company from the ability to compete for certain charging infrastructure buildout solicitations and programs, including those initiated by federal government agencies.

Furthermore, new tariffs and policy incentives could be put in place that favor equipment manufactured by or assembled at American factories, which may put EVgo’s fast charging equipment vendors at a competitive disadvantage, including by increasing the cost or delaying the availability of charging equipment, by challenging or eliminating EVgo’s ability to apply or qualify for grants and other government incentives, or by disqualifying the Company from the ability to compete for certain charging infrastructure build-out solicitations and programs, including those initiated by federal government agencies.

Moreover, a variety of incentives and rebates offered by the U.S.

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However, the tax credit is subject to additional requirements and limitations, such as certain adjusted gross income limits for consumers claiming the credit, domestic content requirements for critical minerals and batteries and a requirement for final assembly to occur in North America.

Such additional requirements and limitations for such tax credits may reduce incentives available to consumers to encourage the adoption of EVs, which could negatively affect the EV market and adversely impact EVgo’s business operations and expansion potential.

Such additional requirements and limitations for such tax credits may reduce incentives available to encourage the adoption of EVs, which could negatively affect the EV market and adversely impact EVgo’s business operations and expansion potential.

Technology Risks

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EVgo engages a variety of third-party vendors for non-proprietary hardware and software components.

The ability of EVgo to continue to integrate its technology stack with technological advances in the wider EV ecosystem including EV model characteristics, charging standards, charging hardware, software and battery chemistries will determine EVgo’s sustained competitiveness in offering charging services.

There is a risk that some or all of the components of the EV technology ecosystem become obsolete and that EVgo will be required to make significant investment to continue to effectively operate its business.

The ability of EVgo to continue to integrate its technology stack with technological advances in the wider EV ecosystem including EV model characteristics, charging standards, charging hardware, software and battery chemistries and value-added customer services will determine EVgo’s sustained competitiveness in offering charging services.

There is a risk that some or all of the components of the EV technology ecosystem become obsolete and that EVgo will be required to make significant investments to continue to effectively operate its business.

EVgo’s management believes EVgo’s business model is well-positioned to enable EVgo to remain technology-, vendor- and OEM-agnostic over time and allow the business to remain competitive regardless of long-term technological shifts in EVs, batteries or modes of charging.

Sale of Regulatory Credits

EVgo derives revenue from selling regulatory credits earned for participating in low carbon fuel standard programs, or other similar carbon or emissions trading schemes, in various states and jurisdictions in the U.S.

Sales of Regulatory Credits

EVgo derives revenue from selling regulatory credits earned for participating in LCFS programs, or other similar carbon or emissions trading schemes, in various jurisdictions in the U.S.

EVgo currently sells these credits at market prices.

These credits are exposed to various market and supply and demand dynamics which can drive price volatility and are difficult to predict.

Price fluctuations in credits may have a material effect on future earnings.

These credits are exposed to various market and supply and demand dynamics which can drive price volatility and which are difficult to predict.

Price fluctuations in credits may have a material effect on future results of operations.

The availability of such credits depends on continued governmental support for these programs.

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

In addition to current programs, EVgo’s management is currently monitoring the implementation of Washington’s program and additional proposals in varying states of discussions including in New York, along with potential changes to the Renewable Fuels Standard.

In addition to current programs, EVgo’s management is currently monitoring the implementation of Washington’s program and additional proposals in varying stages of discussions including in New York, along with potential changes to the Renewable Fuels Standard.

Results of Operations

Three Months Ended September 30, 2022 and 2021

The table below presents EVgo’s results of operations for the three months ended September 30, 2022 and 2021.

The period-to-period comparison of results is not necessarily indicative of results for future periods.

Three Months Ended September 30,

(dollars in thousands)

Total revenue

Cost of revenue

Depreciation and amortization

General and administrative

Depreciation, amortization and accretion

Operating loss

Interest expense

Interest expense, related party

Interest income

Other expense, net

Change in fair value of earnout liability

Change in fair value of warrant liability

Net (loss) income

net (loss) income attributable to redeemable noncontrolling interest

Net (loss) income attributable to Class A common stockholders

Operating margin

Network throughput (GWh)

Number of DC stalls

The table below presents a disaggregation of EVgo’s revenue for the three months ended September 30, 2022 and 2021:

Three Months Ended September 30,

(dollars in thousands)

Charging revenue, retail

Charging revenue, OEM

Charging revenue, commercial

Network revenue, OEM

Ancillary revenue

Regulatory credit sales

Total revenue

Total revenue for the three months ended September 30, 2022 increased $4.3 million, or 70%, to $10.5 million compared to $6.2 million for the three months ended September 30, 2021.

As further discussed below, the increase in revenue during the three months ended September 30, 2022 was primarily due to a 62% increase in retail charging revenue as a result of increased throughput, as well as 152% increase in ancillary revenue and a 72% increase in regulatory credit sales.

Charging Revenue, Retail

Charging revenue, retail, for the three months ended September 30, 2022 increased $2.0 million, or 62%, to $5.2 million compared to $3.2 million for the three months ended September 30, 2021.

Period-over-period growth was due to an overall increase in usage and subscription fees driven primarily by increased charging volume and a growing number of customers.

Charging Revenue, OEM

Charging revenue, OEM, for the three months ended September 30, 2022 increased $0.1 million, or 67%, to $0.3 million compared to $0.2 million for the three months ended September 30, 2021.

Period-over-period growth was primarily due to the addition of a new OEM partner.

Charging Revenue, Commercial

Charging revenue, commercial, for the three months ended September 30, 2022 stayed flat at $0.7 million compared to the three months ended September 30, 2021 as an increase in revenue due to increased charging volumes by the Company’s public fleet customers was offset by the revenue impacts of the expiration of certain take-or-pay contracts in 2022.

Network Revenue, OEM

Network revenue, OEM, for the three months ended September 30, 2022 stayed flat at $0.4 million compared to the three months ended September 30, 2021 as there were no material changes to membership activity or joint marketing activity under the OEM agreements.

Ancillary Revenue

Ancillary revenue for the three months ended September 30, 2022 increased $1.7 million, or 152%, to $2.8 million compared to $1.1 million for the three months ended September 30, 2021.

The increase was primarily due to engineering and construction revenue recognized in relation to a new EVgo eXtend ™ client, as well as higher PlugShare revenue and operating and maintenance revenue.

Regulatory Credit Sales

Regulatory credit sales for the three months ended September 30, 2022 increased $0.5 million, or 72%, to $1.2 million compared to $0.7 million for the three months ended September 30, 2021.

The period-over-period increase was primarily due to increased network capacity and throughput, partially offset by a decrease in price per credit.

Cost of Sales

Cost of Revenue (Exclusive of Depreciation and Amortization Shown Separately Below)

Cost of revenue for the three months ended September 30, 2022 increased $3.7 million, or 77%, to $8.5 million compared to $4.8 million for the three months ended September 30, 2021.

The increase in cost of revenue was due to an increase of $1.1 million in non-energy costs driven by increased stall count and $1.5 million in increased energy and other variable costs due to increased throughput, as well as a $1.1 million increase in ancillary cost of revenue driven by engineering and construction costs recognized in relation to a new EVgo eXtend ™ client, as well as operating and maintenance expenses and web hosting costs.

Depreciation and Amortization

Depreciation and amortization for the three months ended September 30, 2022 increased $2.2 million, or 72%, to $5.2 million compared to $3.0 million for the three months ended September 30, 2021 due to growth in EVgo’s asset base.

Gross Loss and Gross Margin

Gross loss for the three months ended September 30, 2022 increased $1.6 million, or 94%, to $3.2 million compared to $1.7 million for the three months ended September 30, 2021.

Gross margin for the three months ended September 30, 2022 was negative 30.5% compared to negative 26.7% for the three months ended September 30, 2021 as growth in revenue was more than offset by higher cost of revenue and depreciation and amortization.

Operating Expenses

General and Administrative

General and administrative expenses for the three months ended September 30, 2022 increased $11.4 million, or 55%, to $32.3 million compared to $20.9 million for the three months ended September 30, 2021.

The difference was driven by an $7.5 million increase in payroll expenses due to higher headcount and higher share-based compensation, a $1.4 million increase in loss on fixed asset disposals, a $1.7 million increase in legal service and professional service expenses, as well as a $1.2 million increase in software expenses.

Depreciation, Amortization and Accretion

Depreciation, amortization and accretion expenses for the three months ended September 30, 2022 increased $1.1 million, or 33%, to $4.5 million compared to $3.4 million for the three months ended September 30, 2021.

The increase was primarily due to higher intangible asset amortization related to software amortization.

Operating Loss and Operating Margin

During the three months ended September 30, 2022, EVgo had an operating loss of $40.0 million, an increase of $14.1 million, or 54%, compared to $25.9 million for the three months ended September 30, 2021 driven primarily by an increase in general and administrative expenses.

Operating margin for the three months ended September 30, 2022 was negative 381.1% compared to negative 419.5% for the three months ended September 30, 2021.

Interest Expense

For the three months ended September 30, 2022, interest expense was de minimis.

There was no interest expense for the three months ended September 30, 2021.

Interest Expense, Related Party

There was no interest expense, related party for the three months ended September 30, 2022.

For the three months ended September 30, 2021, interest expense, related party was de minimis.

Interest Income

Interest income for the three months ended September 30, 2022 was $1.6 million.

Interest income for the three months ended September 30, 2021 was de minimis.

The increase was a result of the interest earned on cash and cash equivalents and debt securities held by the Company during the three months ended September 30, 2022.

Other Expense, Net

Other expense, net, for the three months ended September 30, 2022 increased by $0.2 million, or 143%, to $0.3 million compared to $0.1 million for the three months ended September 30, 2021.

The increase was primarily due to a $0.2 million increase in realized losses on investments.

Changes in Fair Values of Warrant and Earnout Liabilities

For the three months ended September 30, 2022, there was a $12.2 million loss on change in fair values of warrant and earnout liabilities compared to a $49.6 million gain for the three months ended September 30, 2021.

The change between periods was primarily due to an increase in the fair value of the warrant liability during the third quarter of 2022 and a decrease in the fair value of the warrant liability during the third quarter of 2021.

See “Part I, Item 1.

Financial Statements – Note 11 – Fair Value Measurements” for more information.

For the three months ended September 30, 2022 and 2021, EVgo’s provision for income taxes and effective tax rates were de minimis as the Company’s current income tax benefit was offset by a change in the valuation allowance on its deferred tax assets.

Net Income (Loss)

Net loss for the three months ended September 30, 2022 was $50.9 million, compared to net income of $23.6 million for the three months ended September 30, 2021.

The change was primarily driven by changes in fair values of the warrant and earnout liabilities and increased general and administrative expenses incurred to support growth.

Nine Months Ended September 30, 2022 and 2021

The table below presents EVgo’s results of operations for the nine months ended September 30, 2022 and 2021.

The period-to-period comparison of results is not necessarily indicative of results for future periods.

Nine Months Ended September 30,

The table below presents EVgo’s results of operations for the three months ended March 31, 2023 and 2022.

Three Months Ended March 31,

(dollars in thousands)

Revenue from related party

Total revenue

Cost of revenue

Depreciation and amortization

General and administrative

Depreciation, net of capital-build amortization

Gross profit (loss)

General and administrative expenses

Depreciation, amortization and accretion

Operating loss

Interest expense

Interest expense, related party

Interest income

Other (expense) income, net

Other income (expense), net

Change in fair value of earnout liability

Change in fair value of warrant liability

Change in fair value of warrant liabilities

Loss before income tax expense

1 unchanged sentence

net loss attributable to redeemable noncontrolling interest

Net (loss) income attributable to Class A common stockholders

Net loss attributable to Class A common stockholders

Operating margin

1 unchanged sentence

Number of DC stalls

The table below presents a disaggregation of EVgo’s revenue for the nine months ended September 30, 2022 and 2021:

Nine Months Ended September 30,

*Percentage greater than 999% or not meaningful

The table below presents a disaggregation of EVgo’s revenue for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

(dollars in thousands)

Charging revenue, retail

Charging revenue, OEM

Charging revenue, commercial

Charging revenue, OEM

Regulatory credit sales

Network revenue, OEM

eXtend revenue

Ancillary revenue

Regulatory credit sales

Total revenue

Total revenue for the nine months ended September 30, 2022 increased $12.2 million, or 81%, to $27.3 million compared to $15.1 million for the nine months ended September 30, 2021.

As further discussed below, the increase in revenue during the nine months ended September 30, 2022 was primarily due to a 74% increase in retail charging revenue, a 136% increase in ancillary revenue, as well as a 143% increase in regulatory credit sales.

*Percentage greater than 999% or not meaningful

Total revenue for the three months ended March 31, 2023 increased $17.6 million, or 229%, to $25.3 million compared to $7.7 million for the three months ended March 31, 2022.

As further discussed below, the increase in revenue was primarily due to a $10.2 million increase in eXtend revenue, a $3.1 million increase in retail charging revenue resulting from increased throughput and subscription fees, a $2.2 million increase in network revenue, and a $1.0 million increase in commercial charging revenue.

Charging Revenue, Retail.

Charging revenue, retail, for the nine months ended September 30, 2022 increased $5.6 million, or 74%, to $13.1 million compared to $7.5 million for the nine months ended September 30, 2021.

Year-over-year growth was due to an overall increase in usage and subscription fees driven primarily by increased charging volume and a growing number of customers, as well as the ongoing recovery from COVID-19.

Charging Revenue, OEM

Charging revenue, OEM, for the nine months ended September 30, 2022 stayed flat at $0.6 million compared to the nine months ended September 30, 2021 as the revenue lost from an OEM agreement that ended in 2021 was offset by revenue from an OEM agreement that became effective in 2021 and increased usage from existing agreements.

Charging revenue, retail, for the three months ended March 31, 2023 increased $3.1 million, or 89%, to $6.6 million compared to $3.5 million for the three months ended March 31, 2022.

Period-over-period growth was due to an overall increase in throughput and subscription fees driven primarily by increased charging volume and a growing number of customers.

Charging Revenue, Commercial.

Charging revenue, commercial, for the nine months ended September 30, 2022 increased $0.3 million, or 18%, to $2.0 million compared to $1.7 million for the nine months ended September 30, 2021.

The increase was attributable to new fleet contracts that became effective during 2021, increased charging volumes by the Company’s public fleet customers, as well as the ongoing recovery from COVID-19, partially offset by the expiration of certain take-or-pay contracts in 2022.

Charging revenue, commercial, for the three months ended March 31, 2023 increased $1.0 million, or 142%, to $1.7 million compared to $0.7 million for the three months ended March 31, 2022.

Period-over-period growth was due to higher charging volumes by the Company’s public fleet customers and reclassification of pass-through electricity expense as revenue.

Charging Revenue, OEM.

Charging revenue, OEM, for the three months ended March 31, 2023 increased $0.4 million, or 266%, to $0.6 million compared to $0.2 million for the three months ended March 31, 2022.

Period-over-period growth was primarily due to the addition of a new OEM partner and higher vehicle sales by the Company’s OEM partners.

Regulatory Credit Sales.

Regulatory credit sales for the three months ended March 31, 2023 decreased $0.2 million, or 12%, to $1.2 million compared to $1.4 million for the three months ended March 31, 2022.

The period-over-period decrease was primarily due to accelerated LCFS recognition in the first quarter of 2022.

Network Revenue, OEM.

Network revenue, OEM, for the nine months ended September 30, 2022 increased $0.7 million, or 58%, to $1.8 million compared to $1.2 million for the nine months ended September 30, 2021 primarily due to increased membership fees, and breakage of prepaid charging credits as a result of increased membership activity and increased joint marketing activity under the OEM agreements.

Network revenue, OEM, for the three months ended March 31, 2023 increased $2.2 million, or 451%, to $2.7 million compared to $0.5 million the three months ended March 31, 2022 The period-over-period increase was due to increased breakage associated with prepaid charging credits and marketing activities.

eXtend Revenue.

eXtend revenue for the three months ended March 31, 2023 increased $10.2 million to $10.3 million compared to $0.1 million for the three months ended March 31, 2022 primarily as a result of the new agreement that was executed in 2022 with the Pilot Company.

Ancillary Revenue.

Ancillary revenue for the nine months ended September 30, 2022 increased $2.9 million, or 136%, to $5.1 million compared to $2.1 million for the nine months ended September 30, 2021.

The increase was primarily due to the acquisition of PlugShare and subsequent inclusion of PlugShare’s revenues in ancillary revenue, as well as engineering and construction revenue recognized in relation to a new EVgo eXtend ™ client.

Regulatory Credit Sales

Regulatory credits for the nine months ended September 30, 2022 increased $2.8 million, or 143%, to $4.7 million compared to $1.9 million for the nine months ended September 30, 2021.

The year-over-year increase was primarily due to increased network capacity and throughput, partially offset by a decrease in price per credit.

Ancillary revenue for the three months ended March 31, 2023 increased $0.8 million, or 59%, to $2.2 million compared to $1.4 million for the three months ended March 31, 2022.

The increase was primarily due to increased equipment and project sales and higher advertising revenue.

Cost of Sales

Cost of Revenue (Exclusive of Depreciation and Amortization Shown Separately Below)

Cost of revenue for the nine months ended September 30, 2022 increased $7.2 million, or 60%, to $19.1 million compared to $11.9 million for the nine months ended September 30, 2021.

The increase in cost of revenue was due to an increase of $3.2 million in non-energy costs related to increased stall count, a $3.1 million increase in energy and other variable costs due to increased throughput, as well as a $1.2 million increase in ancillary cost of sales driven by engineering and construction costs recognized in relation to a new EVgo eXtend ™ client, higher operating and maintenance costs, and increased web hosting costs.

Depreciation and Amortization

Depreciation and amortization for the nine months ended September 30, 2022 increased $4.6 million, or 56%, to $12.7 million compared to $8.2 million for the nine months ended September 30, 2021 due to higher stall count.

Gross Loss and Gross Margin

Gross loss for the nine months ended September 30, 2022 decreased by $0.5 million, or 9%, to $4.6 million compared to $5.0 million for the nine months ended September 30, 2021.

Gross margin for the nine months ended September 30, 2022 was negative 16.7% compared to negative 33.2% for the nine months ended September 30, 2021.

The change in gross margin was primarily due to higher revenue, including increased retail charging revenue, partially offset by increased cost of revenue and depreciation and amortization.

Cost of Revenue.

Cost of revenue for the three months ended March 31, 2023 increased $14.1 million, or 290%, to $18.9 million compared to $4.8 million for the three months ended March 31, 2022.

The increase in cost of revenue was primarily due to an increase of $8.3 million in costs to support eXtend revenue, $2.9 million in increased energy and other variable costs resulting from increased throughput and $2.5 million in increased non-energy costs driven by increased stall count.

Depreciation, Net of Capital-Build Amortization .

Depreciation, net of capital-build amortization for the three months ended March 31, 2023 increased $2.9 million, or 84%, to $6.3 million compared to $3.5 million for the three months ended March 31, 2022 due to growth in EVgo’s fixed asset base.

Gross Profit (Loss) and Gross Margin

Gross profit (loss) for the three months ended March 31, 2023 improved $0.6 million, or 107%, to close to break even compared to a gross loss of $0.6 million for the three months ended March 31, 2022.

Gross margin for the three months ended March 31, 2023 improved to 0.2% compared to negative 7.8% for the three months ended March 31, 2022 primarily due to breakage revenue and, to a lesser extent, a significant increase in eXtend revenues which have higher gross margin than most of the Company’s other business lines.

Operating Expenses

General and Administrative

General and administrative expenses for the nine months ended September 30, 2022 increased $43.7 million, or 95%, to $89.9 million compared to $46.2 million for the nine months ended September 30, 2021.

The difference was driven by a $27.4 million increase in payroll expenses due to higher headcount and higher share-based compensation, a $4.7 million increase in legal service and professional service expenses, a $4.2 million increase in software expenses, a $4.0 million increase in loss on fixed asset disposals, and a $2.6 million increase in insurance expenses.

General and Administrative Expenses.

General and administrative expenses for the three months ended March 31, 2023 increased $12.5 million, or 49%, to $37.9 million compared to $25.4 million for the three months ended March 31, 2022.

The increase was primarily driven by a $7.8 million increase in payroll expenses due to higher headcount and higher share-based compensation, a $2.9 million increase in impairment expense, and a $1.0 million increase in legal service and professional service expenses.

Depreciation, Amortization and Accretion.

Depreciation, amortization and accretion expenses for the nine months ended September 30, 2022 increased $4.1 million, or 48%, to $12.5 million compared to $8.4 million for the nine months ended September 30, 2021.

The increase was primarily due to higher intangible asset amortization as a result of the PlugShare acquisition and software amortization.

Operating Loss and Operating Margin

During the nine months ended September 30, 2022, EVgo had an operating loss of $107.0 million, an increase of $47.3 million, or 79%, compared to $59.7 million for the nine months ended September 30, 2021.

Operating margin for the nine months ended September 30, 2022 was negative 392.2%, compared to negative 395.4% for the nine months ended September 30, 2021 The increase in operating loss period-over-period was primarily due to an increase in general and administrative expenses and depreciation and amortization, partially offset by the improvement in gross margin.

Interest Expense

For the nine months ended September 30, 2022, interest expense was de minimis.

There was no interest expense for the nine months ended September 30, 2021.

Interest Expense, Related Party

There was no interest expense, related party for the nine months ended September 30, 2022.

For the nine months ended September 30, 2021, interest expense, related party was $1.9 million.

The decrease was related to conversion of the borrowings under the LS Power Note to equity on the CRIS Close Date.

Depreciation, amortization and accretion expenses for the three months ended March 31, 2023 increased $0.9 million, or 23%, to $4.8 million compared to $3.9 million for the three months ended March 31, 2023.

The increase was primarily due to higher amortization related to software.

Operating Loss

During the three months ended March 31, 2023, EVgo had an operating loss of $42.6 million, an increase of $12.7 million, or 43%, compared to $29.9 million for the three months ended March 31, 2022.

The increase in operating loss was driven primarily by an increase in general and administrative expenses.

Operating margin for the three months ended March 31, 2023 was negative 168.5% compared to negative 388.5% for the three months ended March 31, 2022.

Interest Income

Interest income for the nine months ended September 30, 2022 was $2.3 million.

Interest income for the nine months ended September 30, 2021 was de minimis.

The increase was a result of the interest earned on cash and cash equivalents and debt securities held by the Company during the nine months ended September 30, 2022.

Other (Expense) Income, Net

Other (expense) income, net, for the nine months ended September 30, 2022 was $0.8 million of other expense, net, compared to $0.5 million of other income, net, for the nine months ended September 30, 2021.

The decrease was primarily due to unrealized and realized losses on marketable equity securities.

Interest income for the three months ended March 31, 2023 was $2.0 million.

Interest income for the three months ended March 31, 2022 was de minimis.

The increase was a result of higher interest earned on cash and cash equivalents held in a high interest rate account by the Company during the three months ended March 31, 2023 compared to the same prior year period.

Other Income (Expense), Net

Other income (expense), net, for the three months ended March 31, 2023 was a de minimis amount of other income, net, compared to other expense, net, of $0.3 million for the three months ended March 31, 2022.

The change was primarily due to a $0.3 million decrease in unrealized losses on investments.

Changes in Fair Values of Warrant and Earnout Liabilities

For the nine months ended September 30, 2022, there was a $16.3 million gain on change in fair values of warrant and earnout liabilities, compared to a $49.6 million gain for the nine months ended September 30, 2021.

The change between periods was primarily due to a larger reduction in the fair value of the warrant liability during the first nine months of 2021 than in the first nine months of 2022 .

For the three months ended March 31, 2023, there was an $8.4 million loss on change in fair values of warrant and earnout liabilities compared to a $25.1 million loss for the three months ended March 31, 2022.

The change between periods was primarily due to a lower increase in the fair value of the warrant liabilities during the first quarter of 2023 compared to the same prior year period.

See “ Part I, Item 1.

Financial Statements – Note 8 – Fair Value Measurements ” for more information.

For the nine months ended September 30, 2022 and 2021, EVgo’s provision for income taxes and effective tax rates were de minimis as the current income tax benefit was offset by a change in the valuation allowance on its deferred tax assets.

Net loss for the nine months ended September 30, 2022 was $89.2 million, compared to a net loss of $11.4 million for the nine months ended September 30, 2021.

The increased loss was primarily due to increased general and administrative expenses incurred to support growth and a smaller gain on the change in fair value of the warrant liability, partially offset by improved gross margin.

For the three months ended March 31, 2023 and 2022, EVgo’s provision for income taxes and effective tax rates were deemed to be de minimis.

As of March 31, 2023 and 2022, EVgo maintained a full valuation allowance on EVgo’s net deferred tax assets.

Net loss for the three months ended March 31, 2023 was $49.1 million, compared to $55.3 million for the three months ended March 31, 2022.

The change was primarily driven by decreases in the change in fair values of the warrant liabilities, which was partially offset by increased general and administrative expenses incurred to support growth.

Non-GAAP Financial Measures

This Quarterly Report includes the following non-GAAP financial measures:

“Adjusted Cost of Sales,” “Adjusted Gross Profit,” “Adjusted Gross Margin,” “EBITDA,” “Adjusted EBITDA” and “Receipts.” EVgo believes these measures are useful to investors in evaluating EVgo’s financial performance.

In addition, EVgo uses these measures internally to establish forecasts, budgets, and operational goals to manage and monitor its business.

Further, due to the nature of certain OEM contracts, there is a significant timing difference between cash receipt and revenue recognition, therefore, EVgo believes Receipts (defined below) provides valuable insight to the ongoing performance and liquidity of the business.

EVgo believes that these non-GAAP financial measures help to depict a more realistic representation of the performance of the underlying business, enabling EVgo to evaluate and plan more effectively for the future.

EVgo believes that investors should have access to the same set of tools that its management uses in analyzing operating results.

Adjusted Cost of Sales (defined below), Adjusted Gross Profit (Loss) (defined below), Adjusted Gross Margin (defined below), EBITDA, Adjusted EBITDA (defined below) and Receipts are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies.

This Quarterly Report includes the following non-GAAP financial measures, in each case as defined below:

“Adjusted Cost of Sales,” “Adjusted Cost of Sales as a Percentage of Revenue,” “Adjusted Gross Profit (Loss),” “Adjusted Gross Margin,” “Adjusted General and Administrative Expenses,” “Adjusted General and Administrative Expenses as a Percentage of Revenue,” “EBITDA,” “EBITDA Margin,” “Adjusted EBITDA” and “Adjusted EBITDA Margin.” EVgo believes these measures are useful to investors in evaluating EVgo’s performance.

In addition, EVgo management uses these measures internally to establish forecasts, budgets and operational goals to manage and monitor its business.

EVgo believes that these measures help to depict a more meaningful representation of the performance of the underlying business, enabling EVgo to evaluate and plan more effectively for the future.

Adjusted Cost of Sales, Adjusted Cost of Sales as a Percentage of Revenue, Adjusted Gross Profit (Loss), Adjusted Gross Margin, Adjusted General and Administrative Expenses, Adjusted General and Administrative Expenses as a Percentage of Revenue, EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies.

These measures should not be considered as measures of financial performance under GAAP and the items excluded from or included in these metrics are significant components in understanding and assessing EVgo’s financial performance.

These metrics should not be considered as alternatives to net income (loss) or any other performance measures derived in accordance with GAAP.

Adjusted Cost of Sales, Adjusted Gross Profit (Loss), Adjusted Gross Margin, EBITDA and Adjusted EBITDA.

EVgo defines Adjusted Cost of Sales as cost of sales before:

(i) depreciation and amortization, (ii) share-based compensation, and (iii) OEM reimbursement.

Adjusted Gross Profit is defined as revenues less Adjusted Cost of Sales.

Adjusted Gross Margin is defined as Adjusted Gross Profit (Loss) as a percentage of revenues.

EVgo defines EBITDA as net income (loss) before (i) interest expense, (ii) income taxes and (iii) depreciation and amortization.

EVgo defines Adjusted EBITDA as EBITDA plus (i) share-based compensation expense, (ii) loss on disposal of property and equipment, (iii) loss (gain) on investments, (iv) bad debt expense, (v) change in fair value of earnout liability, (vi) change in fair value of warrant liability, and (vii) certain other items that we believe are not indicative of our ongoing performance.

The following is a reconciliation of adjusted cost of sales, adjusted gross profit and adjusted gross margin for the three and nine months ended September 30, 2022 and 2021:

(i) depreciation, net of capital-build amortization, and (ii) share-based compensation.

EVgo defines Adjusted Cost of Sales as a Percentage of Revenue as Adjusted Cost of Sales as a percentage of revenue.

EVgo defines Adjusted Gross Profit (Loss) as revenue less Adjusted Cost of Sales.

EVgo defines Adjusted Gross Margin as Adjusted Gross Profit (Loss) as a percentage of revenue.

EVgo defines Adjusted General and Administrative Expenses as general and administrative expenses before (i) share-based compensation, (ii) loss on disposal of property and equipment and impairment expense, (iii) bad debt expense and (iv) certain other items that management believes are not indicative of EVgo’s ongoing performance.

EVgo defines Adjusted General and Administrative Expenses as a Percentage of Revenue as Adjusted General and Administrative Expenses as a percentage of revenue.

EVgo defines EBITDA as net income (loss) before (i) depreciation, net of capital-build amortization, (ii) amortization, (iii) accretion, (iv) interest income, and (v) income tax expense.

EVgo defines EBITDA Margin as EBITDA as a percentage of revenue.

EVgo defines Adjusted EBITDA as EBITDA plus (i) share-based compensation, (ii) loss on disposal of property and equipment and impairment expense, (iii) (gain) loss on investments, (iv) bad debt expense, (v) change in fair value of earnout liability, (vi) change in fair value of warrant liabilities, and (vii) certain other items that management believes are not indicative of EVgo’s ongoing performance.

EVgo defines Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of revenue.

The following unaudited table presents a reconciliation of Adjusted Cost of Sales, Adjusted Cost of Sales as a Percentage of Revenue, Adjusted Gross Profit (Loss) and Adjusted Gross Margin to the most directly comparable GAAP measures, in each case, for the three months ended March 31, 2023 and 2022:

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Total revenue

Cost of sales

Depreciation and amortization in cost of sales

Share-based compensation and other

(dollars in thousands)

GAAP cost of sales

GAAP gross profit (loss)

GAAP cost of sales as a percentage of revenue

GAAP gross margin

Depreciation, net of capital-build amortization

Share-based compensation

Total adjustments

Adjusted Cost of Sales

Adjusted Cost of Sales as a Percentage of Revenue

Adjusted Gross Profit

Adjusted Gross Margin

The following unaudited table presents a reconciliation of EBITDA and Adjusted EBITDA to net income (loss), the most directly comparable GAAP measure, for the three and nine months ended September 30, 2022 and 2021:

The following unaudited table presents a reconciliation of Adjusted General and Administrative Expenses and Adjusted General and Administrative Expenses as a Percentage of Revenue to the most directly comparable GAAP measures for the three months ended March 31, 2023 and 2022:

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Net (loss) income

(dollars in thousands)

GAAP general and administrative expenses

GAAP general and administrative expenses as a percentage of revenue

Share-based compensation

Loss on disposal of property and equipment and impairment expense

Bad debt expense

Total adjustments

Adjusted General and Administrative Expenses

Adjusted General and Administrative Expenses as a Percentage of Revenue

For the three months ended March 31, 2023, comprised primarily of costs related to the reorganization of Company resources previously announced by the Company on February 23, 2023 and the petition filed by EVgo in the Delaware Court of Chancery in February 2023 seeking validation of EVgo's charter and share structure (the “205 Petition”), which are not expected to recur.

For the three months ended March 31, 2022, comprised primarily of insurance proceeds for property losses.

The following unaudited table presents a reconciliation of EBITDA, EBITDA Margin, Adjusted EBITDA, and Adjusted EBITDA Margin to the most directly comparable GAAP measure, in each case, for the three months ended March 31, 2023 and 2022:

Three Months Ended

(dollars in thousands)

GAAP net loss

GAAP net loss margin

Depreciation, net of capital-build amortization

Interest income

Interest expense

State income tax

Income tax expense

EBITDA Margin

Share-based compensation

Loss on disposal of property and equipment

Loss (gain) on investments

Loss on disposal of property and equipment and impairment expense

(Gain) loss on investments

Bad debt expense

Change in fair value of earnout liability

Change in fair value of warrant liability

Change in fair value of warrant liabilities

Adjusted EBITDA

EVgo defines Receipts, a non-GAAP financial measure, as total revenue plus change in deferred revenue over the same period.

Pursuant to the term of certain OEM contracts, EVgo is paid well in advance of when revenue can be recognized according to ASC 606;

usually, the payment is tied to the number of stalls that commence operations under the applicable contract arrangement.

EVgo believes that Receipts provide investors insight into cash generated from EVgo’s customers and EVgo’s periodic performance and liquidity.

EVgo uses Receipts to monitor and measure EVgo’s commercial performance, liquidity and growth as EVgo’s OEM customers pay EVgo in advance for placing stalls in operation, and then EVgo recognizes a portion of the related revenue over time.

The calculation of Receipts is set forth in the table below for the following periods:

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Total revenues

Change in deferred revenue 1

Total Receipts

Year-over-year percentage change in total Receipts

1 Change in deferred revenue for the nine months ended September 30, 2021 includes the first payment received in March 2021 of $20.0 million under one of EVgo’s OEM agreements.

Adjusted EBITDA Margin

For the three months ended March 31, 2022, comprised primarily of insurance proceeds for property losses.

Liquidity and Capital Resources

EVgo has a history of operating losses and negative operating cash flows.

As of September 30, 2022, EVgo had a cash and restricted cash balance of $301.0 million and working capital of $248.5 million.

As of December 31, 2021, EVgo had a cash and restricted cash balance of $485.2 million and working capital of $459.5 million.

The Company’s net cash outflow for the nine months ended September 30, 2022 was $184.2 million.

EVgo believes its cash on hand as of September 30, 2022 is sufficient to meet EVgo’s current working capital and capital expenditure requirements for a period of at least twelve months from the filing date of this Quarterly Report.

To date, EVgo’s primary sources of liquidity have been cash flows from the CRIS Business Combination, revenues from its various revenue streams, including retail charging revenue and OEM charging and network revenue, government grants, and loans and equity contributions from its previous owners.

As of March 31, 2023, EVgo had $163.8 million of cash, cash equivalents and restricted cash and working capital of $114.6 million.

As of December 31, 2022, EVgo had $246.5 million of cash, cash equivalents and restricted cash and working capital of $188.1 million.

The Company’s net cash outflow for the three months ended March 31, 2023 was $82.7 million.

EVgo believes its cash and cash equivalents on hand as of March 31, 2023 are sufficient to meet EVgo’s current working capital and capital expenditure requirements for a period of at least twelve months from the filing date of this Quarterly Report.

To date, EVgo’s primary sources of liquidity have been cash flows from the CRIS Business Combination, revenues from its various revenue streams, government grants, proceeds from sales of EVgo’s Class A common stock, including under the ATM Program, and loans and equity contributions from its previous owners.

EVgo’s primary cash requirements include operating expenses, satisfaction of commitments to various counterparties and suppliers and capital expenditures (including property and equipment).

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however, EVgo’s liability is capped at a maximum of the greater of $30.0 million or 50% of the value of any outstanding firm orders.

EVgo entered into the Delta Charger Supply Agreement and Purchase Order in order to meet its obligations under the Pilot Infrastructure Agreement, other potential contractual commitments and its own needs and intends to fund the capital expenditure required under the Delta Charger Supply Agreement and Purchase Order with proceeds from the Pilot Infrastructure Agreement as well as cash on hand.

Following the consummation of the CRIS Business Combination, the Company Group is obligated to make payments under the Tax Receivable Agreement.

The term of the Tax Receivable Agreement commenced upon the completion of the CRIS Business Combination and will continue until all tax benefits that are subject to the Tax Receivable Agreement have been utilized or expired and all required payments are made, unless the Tax Receivable Agreement is terminated early (including upon a change of control).

The actual timing and amount of any payments that may be made under the Tax Receivable Agreement are unknown at this time and will vary based on a number of factors.

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However, the Company Group may be required to fund such payment from other sources and as a result, any early termination of the Tax Receivable Agreement could have a substantial negative impact on EVgo’s liquidity or financial condition.

Nine Months Ended September 30,

The following table summarizes EVgo’s consolidated cash flows for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

(in thousands)

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Cash flows provided by financing activities

Net (decrease) increase in cash and restricted cash

Net decrease in cash, cash equivalents and restricted cash

Operating Activities.

Cash used in operating activities for the nine months ended September 30, 2022 was $57.3 million compared to $17.8 million for the nine months ended September 30, 2021.

The year-over-year change primarily reflected a $21.5 million cash loss from operations, a $17.4 million decrease in deferred revenue, and a $6.4 million decrease in customer deposits, partially offset by a $6.0 million decrease in prepaid expenses and other current and noncurrent assets and a $1.6 million decrease in receivables from related parties.

Cash used in operating activities for the three months ended March 31, 2023 was $19.3 million compared to $19.8 million for the three months ended March 31, 2022.

The year-over-year change primarily reflected a $22.3 million increase in cash flows from deferred revenue and an $6.3 million increase in cash flows from accounts payable, which were partially offset by a $17.9 million decrease in cash flows from accounts receivable and an $8.0 million decrease in cash flows from prepaid expenses and other current and long-term assets.

Investing Activities.

Cash used in investing activities for the nine months ended September 30, 2022 was $133.3 million, primarily comprised of purchases of property, equipment and software, including costs incurred for construction in process and purchases of charging equipment.

During the nine months ended September 30, 2021, cash used in investing activities was $62.4 million, consisting of $39.7 million of purchases of property and equipment, largely comprised of purchases of charging equipment and costs incurred for construction in process, and $22.8 million paid, net of cash received, for the acquisition of Recargo, Inc.

Cash used in investing activities for the three months ended March 31, 2023 was $65.2 million, compared to $28.1 million for the three months ended March 31, 2022.

The increase was primarily driven by an increase in purchases of property, equipment and software.

Financing Activities .

Cash provided by financing activities for the nine months ended September 30, 2022 was $6.5 million, primarily comprised of proceeds from capital-build funding.

Cash provided by financing activities for the nine months ended September 30, 2021 was $593.5 million, consisting principally of $601.6 million in proceeds received in connection with the CRIS Business Combination, partially offset by $28.1 million in transaction costs paid in connection with the CRIS Business Combination.

Cash provided by financing activities for the three months ended March 31, 2023 was $1.9 million compared to $4.1 million for the three months ended March 31, 2022.

The decrease was driven primarily by a decrease in proceeds from capital-build funding received for charging stations.

Working Capital .

EVgo’s working capital as of September 30, 2022 was $248.5 million, compared to $459.5 million as of December 31, 2021.

During the nine months ended September 30, 2022, EVgo’s cash balance decreased by $184.2 million, receivables from related party decreased $1.5 million, prepaid expenses decreased by $1.6 million and accrued liabilities increased by $19.0 million.

EVgo’s working capital as of March 31, 2023 was $114.6 million, compared to $188.1 million as of December 31, 2022.

The decrease was driven primarily by an $82.7 million decrease in the Company’s cash, cash equivalents and restricted cash balance, a $9.5 million increase in accounts payable, and an $8.5 million increase in deferred revenue, current, which were partially offset by an $18.2 million increase in accounts receivable, net, a $5.2 million increase in other assets, and a $5.0 million decrease in customer deposits.

Contractual Obligations and Commitments .

EVgo has material cash requirements for known contractual obligations and commitments in the form of operating leases, purchase commitments and certain other liabilities that are disclosed in “ Part I, Item 1.

Financial Statements – Note 8 – Commitments and Contingencies.

” EVgo generally expects to fund these obligations through its existing cash and cash equivalents and future financing or cash flows from operations.

Critical Accounting Policies and Estimates

The discussion and analysis of EVgo’s financial condition and results of operations is based upon EVgo’s condensed consolidated financial statements, which have been prepared in accordance with GAAP.

The discussion and analysis of EVgo’s financial condition and results of operations is based upon EVgo’s consolidated financial statements, which have been prepared in accordance with GAAP.

The preparation of EVgo’s financial statements requires the Company to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses and related disclosures of contingent assets and liabilities.

Managements bases these estimates on its historical experience and various other assumptions that it believes to be reasonable under the circumstances.

Management bases these estimates on its historical experience and various other assumptions that it believes to be reasonable under the circumstances.

Actual results experienced may vary materially and adversely from EVgo’s estimates.

Revisions to estimates are recognized prospectively.

The Company’s significant accounting policies are discussed in Note 2 of the notes to the consolidated financial statements as of and for the fiscal years ended December 31, 2021 and 2020, included in the Company’s Annual Report.

There have been no significant changes to EVgo’s critical accounting policies other than the implementation of a comprehensive new lease standard during the nine months ended September 30, 2022.

See “Part I, Item 1.

Financial Statements – Note 5 – Lease Accounting” for further information on EVgo’s accounting policies related to the implementation of the comprehensive new lease standard.

for more information See “ Part I, Item 1.

Financial Statements – Note 2 – Summary of Significant Accounting Policies ” for additional description of the significant accounting policies that have been followed in preparing EVgo’s consolidated financial statements.

The accounting policies described below are those EVgo considers to be the most critical to an understanding of its financial condition and results of operations and that require the most complex and subjective management judgment.

EVgo considers its critical accounting estimates to be those related to its revenue recognition, business combinations and warrant liabilities, which are described below.

Revenue Recognition

EVgo recognizes revenue in accordance with ASC 606.

Recording revenue requires judgment, including determining whether an arrangement includes multiple performance obligations, whether any of those obligations are distinct and cannot be combined and allocation of the transaction price to each performance obligation based on the relative standalone selling prices (“SSP”).

Revenue for performance obligations can be recognized over time or at a point in time depending on the nature of the performance obligation.

Changes to the elements in an arrangement or, in EVgo’s determination, to the relative SSP for these elements, could materially affect the amount of earned and unearned revenue reflected in its consolidated financial statements.

Understanding the complex terms of some of EVgo’s agreements and determining the appropriate time, amount and method under which the Company should recognize revenue for the related transactions requires significant judgment.

The Company exercises judgment in determining which promises in a contract constitute performance obligations rather than set-up activities.

The Company determines which activities under a contract transfer a good or service to a customer rather than activities that are required to fulfill a contract but do not transfer control of a good or service to the customer.

Determining whether obligations in a contract are considered distinct performance obligations that should be accounted for separately or as a single performance obligation requires significant judgment.

In reaching its conclusion, the Company assesses the nature of each individual service offering and how the services are provided in the context of the contract, including whether the services are significantly integrated which may require judgment based on the facts and circumstances of the contract.

The Company does not disclose the transaction price allocated to remaining performance obligations for (i) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice and (ii) contracts with variable consideration allocated entirely to a single performance obligation.

The Company’s remaining performance obligations under these contracts include providing charging services, branding services, and maintenance services which will generally be recognized over the contract term.

The Company’s customer contracts may include variable consideration such as that due to the unknown number of users that will receive charging credits or an unknown number of sites that will receive maintenance services.

For such variable consideration, the Company has determined it is not necessary to estimate variable consideration as the uncertainty resolves itself monthly in accordance with the contracts’ revenue recognition pattern.

The timing and amount of revenue recognition in a period could vary if different judgments were made.

The Company may also estimate variable consideration under the expected value method or the most likely amount method.

Additionally, where there are multiple performance obligations, judgment is required to determine revenue for each distinct performance obligation.

Determining the relative SSP for contracts that contain multiple performance obligations requires significant judgment to appropriately determine the suitable method for estimating the SSP.

EVgo determines SSP using observable pricing when available, which takes into consideration market conditions and customer specific factors.

At contract inception, EVgo determines whether EVgo satisfies the performance obligation over time or at a point in time.

Revenues from charging – OEM are primarily recognized ratably over time or as fee-bearing usage occurs.

Revenues from charging – retail, charging – commercial and LCFS are usage-based services and recognized over time or at a point in time upon the delivery of the charging products or services.

eXtend and ancillary revenues are recognized over time based on a time-based or cost-based approach or at a point in time as performance obligations are satisfied.

Warrant Liabilities

EVgo accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC Topic 480, “ Distinguishing Liabilities from Equity ” (“ASC 480”) and ASC Topic 815, “ Derivatives and Hedging ” (“ASC 815”).

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480 and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to EVgo’s common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of EVgo’s control, among other conditions for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end-date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.

For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance and remeasured to fair value at each balance sheet date thereafter.

Changes in the estimated fair value of the warrants are recognized in “changes in fair value of warrant liabilities” in the consolidated statements of operations.

The fair value of the private placement warrants on the date of issuance and on each measurement date is estimated using a Monte Carlo simulation methodology, which includes inputs such as EVgo’s stock price, the risk-free interest rate, the expected term, the expected volatility, the dividend rate, the exercise price and the number of private placement warrants outstanding.

Assumptions used in the model are subjective and require significant judgment.

Recent Accounting Pronouncements

For a discussion of EVgo’s new or recently adopted accounting pronouncements, see “ Part I, Item 1.

Financial Statements – Note 2 – Summary of Significant Accounting Policies.”

Jumpstart Our Business Startups Act of 2012

Financial Statements– Note 2 – Summary of Significant Accounting Policies ” as of and for the quarters ended March 31, 2023 and 2022.

On April 5, 2012, the JOBS Act was signed into law.

The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies.

Following the CRIS Business Combination, EVgo is an “emerging growth company” under the JOBS Act and is allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies.

The JOBS Act includes provisions that, among other things, relax certain reporting requirements for qualifying public companies.

Following the CRIS Business Combination, EVgo has qualified as an “emerging growth company” (“EGC”) under the JOBS Act and, as a result, is permitted to comply with new or revised accounting pronouncements based on the effective date for private (i.e., not publicly traded) companies.

EVgo elected to delay the adoption of new or revised accounting standards and as a result, EVgo may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies.

As a result, EVgo’s financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

As an “emerging growth company,” EVgo is not required to, among other things, (a) provide an auditor’s attestation report on EVgo’s system of internal control over financial reporting, (b) provide all of the compensation disclosure that may be required of non-emerging growth public companies, (c) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (d) disclose comparisons of the chief executive officer’s compensation to median employee compensation.

These exemptions will apply for a period of five years following the completion of the Initial Public Offering or until EVgo otherwise no longer qualifies as an “emerging growth company.”

Following the CRIS Business Combination, EVgo was and currently is a “smaller reporting company” as defined under the Exchange Act.

As an EGC, EVgo is not required to, among other things, (a) provide an auditor’s attestation report on EVgo’s system of internal control over financial reporting, (b) provide all of the compensation disclosure that may be required of non-EGC public companies, (c) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (d) disclose comparisons of the chief executive officer’s compensation to median employee compensation.

These exemptions will apply for a period of five years following the completion of the Initial Public Offering or until EVgo otherwise no longer qualifies as an EGC.

Additionally, following the CRIS Business Combination, EVgo has qualified as a “smaller reporting company” as defined under the Exchange Act.

EVgo may continue to be a smaller reporting company so long as either (i) the market value of shares of its common stock held by non-affiliates is less than $250 million or (ii) its annual revenue was less than $100 million during the most recently completed fiscal year and the market value of shares of its common stock held by non-affiliates is less than $700 million.

If EVgo is a smaller reporting company at the time it ceases to be an emerging growth company, EVgo may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

Specifically, as a smaller reporting company, EVgo may choose to present only the two most recent fiscal years of audited financial statements in its Annual Report on Form 10-K and have reduced disclosure obligations regarding executive compensation, and, similar to emerging growth companies, if EVgo is a smaller reporting company under the requirements of (ii) above, EVgo would not be required to obtain an attestation report on internal control over financial reporting issued by its independent registered public accounting firm.

If EVgo is a smaller reporting company at the time it ceases to be an EGC, EVgo may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

Specifically, as a smaller reporting company, EVgo may choose to present only the two most recent fiscal years of audited financial statements in its Annual Report on Form 10-K and has reduced disclosure obligations regarding executive compensation and, similar to EGCs, if EVgo is a smaller reporting company under the requirements of (ii) above, EVgo would not be required to obtain an attestation report on internal control over financial reporting issued by its independent registered public accounting firm.

Quantitative and Qualitative Disclosures About Market Risk

EVgo is a smaller reporting company as defined in Rule 12b-2 under the Exchange Act.

Accordingly, pursuant to Item 305(e) of Regulation S-K, the Company is not required to provide the information required by this Item.

EVgo is a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K.

As a result, pursuant to Item 305(e) of Regulation S-K, the Company is not required to provide the information required by this Item 7A.

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-Q

Item 2. Management’s Discussion and Analysis