What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-11-08 compared with 2023-08-02 · 164 added, 162 removed, 434 unchanged (43% of the section changed)

1 unchanged sentence

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 June 30, 2023 and December 31, 2022 and for the three and six months ended June 30, 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.

The discussion should be read in conjunction with EVgo’s unaudited condensed consolidated financial statements and the related notes thereto as of September 30, 2023 and December 31, 2022 and for the three and nine months ended September 30, 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.

4 unchanged sentences

The foundation of the Company’s business is the development and operation of EV charging sites through which it dispenses electricity to EVs driven by individuals, commercial drivers, and fleet operators.

EVgo’s principal revenue stream is from the provision of charging services for EVs of all types on EVgo’s network.

EVgo’s core revenue stream is from the provision of charging services for EVs of all types on EVgo’s network.

In addition, a variety of business-to-business commercial relationships provide EVgo with revenue or cash payments based on commitments to build new infrastructure, provide guaranteed access to charging, and offer marketing, data and software-driven services.

5 unchanged sentences

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.

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.

EVgo generally installs its chargers in parking spaces owned or leased by commercial or public-entity Site Hosts that desire to provide EV charging services at their respective locations.

3 unchanged sentences

In many cases, Site Hosts will earn additional revenue from license payments made by the Company in exchange for use of the site.

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 :

3 unchanged sentences

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 :

EVgo is a key leader in OEM charging programs with revenue models to meet a wide variety of OEM objectives related to the availability of charging infrastructure and the provision of charging services for EV drivers.

EVgo contracts directly with OEMs to provide charging services to drivers who have purchased or leased such OEMs’ EVs and who access EVgo’s public charger network, to expand EVgo’s network of owned DCFCs and to provide other related services.

Other related services currently provided to OEMs by EVgo include co-marketing, data services and digital application services.

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

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

4 unchanged sentences

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

● Charging Revenue, OEM :

Other related services currently provided to OEMs by EVgo include co-marketing, data services and digital application services.

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

● Regulatory Credit Sales :

19 unchanged sentences

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

For example, 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, resulting in overall reduced economic activity.

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

EVgo also experienced delays in its Site Host negotiations as Site Hosts devoted more time to day-to-day operations and employee health and safety.

Finally, for some contractual commitments, EVgo is required to adhere to a construction schedule over specified timeframes.

Those timelines were impacted due to delays associated with COVID-19 and broader supply chain disruptions.

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.

For example, 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, and an escalation of tensions and conflict in Israel and the broader Middle East region, 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;

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

and international financial systems has raised concerns regarding potential losses of 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 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.

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 conflicts in Ukraine, Israel and the broader Middle East region, rates of 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.

In addition, continued long lead times of grid equipment such as transformers may impact EVgo’s development cycle.

Government EV Initiatives

14 unchanged sentences

Additionally, in many states, utilities offer rebates or other incentive programs, typically called “make-ready” programs, to incent the development of EV charging infrastructure.

Leadership Succession Plan

On August 2, 2023, EVgo announced that the Board of Directors has appointed Badar Khan, a member of the Board of Directors, to succeed Catherine Zoi as the Company’s Chief Executive Officer, effective on or about November 9, 2023.

Key Components of Results of Operations

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.

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

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

31 unchanged sentences

EVgo management uses several performance metrics to manage the business and evaluate financial and operating performance:

Network Throughput

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

Network Throughput on the EVgo Network

Network throughput represents the total amount of GWh that is consumed by EVs using chargers and charging stations that EVgo has operational on its network (excluding eXtend chargers and charging stations) (the “EVgo Network”).

EVgo typically monitors GWh sales by three components:

1 unchanged sentence

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

Number of DC Stalls on EVgo’s Network

Number of DC stalls represents the total number of DC stalls that EVgo has operational on its network (energized, inspected and commissioned).

Number of DC Stalls on the EVgo Network

Number of DC stalls represents the total number of DC stalls (energized, inspected and commissioned) on the EVgo Network (“DC Stalls”).

One stall can charge one vehicle at a time.

3 unchanged sentences

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

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

The following table presents network throughput and the number of DC Stalls on the EVgo Network:

September 30,

Network throughput (GWh) for the three months ended

Network throughput (GWh) for the six 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;

Network throughput (GWh) for the nine months ended

Number of DC Stalls on EVgo Network (in thousands) as of

EVgo defines Receipts as total revenue plus the 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.

1 unchanged sentence

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 and six months ended June 30, 2023 and 2022:

The following table presents the calculation of Receipts for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(dollars in thousands)

3 unchanged sentences

Year-over-year percentage change in total Receipts

1 As reflected in the condensed consolidated statements of operations.

1 As reflected in the condensed consolidated statements of operations and comprehensive loss.

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

17 unchanged sentences

however, EVgo believes its unique set of offerings to fleets and its existing charging network position EVgo advantageously to win business from fleets.

Fleet owners are generally

more sensitive to the total cost of ownership of a vehicle than private-vehicle owners.

Fleet owners are generally more sensitive to the total cost of ownership of a vehicle than private-vehicle owners.

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.

1 unchanged sentence

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 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, accessibility and reliability;

charger connectivity to EVs and ability to charge all standards;

charger connectivity to EVs and ability to charge widely adopted standards;

speed of charging relative to expected vehicle dwell times at the location;

2 unchanged sentences

operator brand, track record and reputation;

and access to equipment vendors and service providers;

access to equipment vendors and service providers;

policy incentives;

17 unchanged sentences

federal government offers a tax credit, the maximum amount of which is $7,500, for qualified new plug-in EVs.

The Inflation Reduction Act

modified the tax credit for new plug-in EVs and added new tax credits for used and commercial EVs.

The Inflation Reduction Act modified the tax credit for new plug-in EVs and added new tax credits for used and commercial EVs.

The Inflation Reduction Act also removed the phase-out of tax credits for new plug-in EVs with respect to vehicle manufacturers that reached certain production levels beginning in 2023.

5 unchanged sentences

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.

For example, in recent months, a number of OEMs, including Ford, GM, Rivian, Volvo and Mercedes, have announced plans to adopt the NACS standard in their future EVs, whereas EVgo’s existing charging network is largely based around the CCS standard.

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

For example, during 2023 to-date, a majority of the largest OEMs, including Ford, GM, Rivian, Volvo, Mercedes, Hyundai, Kia, BMW and Toyota have announced plans to adopt the NACS standard in their future EVs, whereas EVgo’s existing charging network is largely based around the CCS standard.

EVgo has announced that it will be adding NACS connectors to its fast charging network in 2025;

however, integrating NACS connectors in future charger installations and on certain existing chargers will require significant investment and management attention.

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.

See “ Risk Factors – The current lack of industry standards may lead to uncertainty, additional competition and further unexpected costs .”

Sales of Regulatory Credits

7 unchanged sentences

In addition to current programs, EVgo is currently monitoring the implementation of Washington’s program and additional proposals for new state clean fuels programs in varying stages of discussions in states including (but not limited to) New York, Massachusetts, Michigan, and Illinois.

Results of Operations for the Three Months Ended June 30, 2023 and 2022

The table below presents EVgo’s results of operations for the three months ended June 30, 2023 and 2022:

Three Months Ended June 30,

Results of Operations for the Three Months Ended September 30, 2023 and 2022

The table below presents EVgo’s results of operations for the three months ended September 30, 2023 and 2022:

Three Months Ended September 30,

(dollars in thousands)

7 unchanged sentences

Interest income

Other expense, net

Other income (expense), net

Change in fair value of earnout liability

Change in fair value of warrant liabilities

(Loss) income before income tax expense

Loss before income tax expense

Income tax expense

Net (loss) income

net (loss) income attributable to redeemable noncontrolling interest

Net (loss) income attributable to Class A common stockholders

net loss attributable to redeemable noncontrolling interest

Net loss 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 June 30, 2023 and 2022:

Three Months Ended June 30,

Number of DC Stalls on EVgo Network (in thousands) as of

* Not meaningful

The table below presents a disaggregation of EVgo’s revenue for the three months ended September 30, 2023 and 2022:

Three Months Ended September 30,

(dollars in thousands)

7 unchanged sentences

Total revenue

*Percentage greater than 999%

Total revenue for the three months ended June 30, 2023 increased $41.5 million, or 457%, to $50.6 million compared to $9.1 million for the three months ended June 30, 2022.

As further discussed below, the increase in revenue was primarily due to a $33.2 million increase in eXtend revenue, a $4.7 million increase in retail charging revenue, a $1.8 million increase in commercial charging revenue, and a $1.7 million increase in ancillary revenue.

Total revenue for the three months ended September 30, 2023 increased $24.6 million, or 234%, to $35.1 million compared to $10.5 million for the three months ended September 30, 2022.

As further discussed below, the increase in revenue was primarily due to an $8.9 million increase in eXtend revenue, an $8.2 million increase in retail charging revenue, a $3.4 million increase in commercial charging revenue, a $1.6 million increase in ancillary revenue, and a $1.2 million increase in OEM charging revenue.

Charging Revenue, Retail.

Charging revenue, retail, for the three months ended June 30, 2023 increased $4.7 million, or 107%, to $9.1 million compared to $4.4 million for the three months ended June 30, 2022.

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

Charging revenue, retail, for the three months ended September 30, 2023 increased $8.2 million, or 158%, to $13.4 million compared to $5.2 million for the three months ended September 30, 2022.

Period-over-period growth was primarily due to an overall increase in throughput driven primarily by increased charging volume from a greater number of customers and more throughput per customer.

Charging Revenue, Commercial.

Charging revenue, commercial, for the three months ended June 30, 2023 increased $1.8 million, or 270%, to $2.4 million compared to $0.7 million for the three months ended June 30, 2022.

Charging revenue, commercial, for the three months ended September 30, 2023 increased $3.4 million, or 496%, to $4.0 million compared to $0.7 million for the three months ended September 30, 2022.

Period-over-period growth was primarily due to higher charging volumes by the Company’s public fleet customers.

Charging Revenue, OEM.

Charging revenue, OEM, for the three months ended June 30, 2023 increased $0.8 million, or 422%, to $1.0 million compared to $0.2 million for the three months ended June 30, 2022.

Period-over-period growth was primarily due to increased revenue from the Company’s existing OEM partners.

Charging revenue, OEM, for the three months ended September 30, 2023 increased $1.2 million, or 486%, to $1.5 million compared to $0.3 million for the three months ended September 30, 2022.

Period-over-period growth was primarily due to increased charging volumes from the Company’s OEM contracts.

Regulatory Credit Sales.

Regulatory credit sales for the three months ended June 30, 2023 decreased $0.5 million, or 24%, to $1.6 million compared to $2.1 million for the three months ended June 30, 2022.

The period-over-period decrease was primarily due to the impact of lower market prices, partially offset by increased throughput compared to the three months ended June 30, 2022.

Regulatory credit sales for the three months ended September 30, 2023 increased $0.6 million, or 53%, to $1.8 million compared to $1.2 million for the three months ended September 30, 2022.

The period-over-period increase was primarily due to increased throughput, partially offset by the impact of lower market prices.

Network Revenue, OEM.

Network revenue, OEM, for the three months ended June 30, 2023 decreased $0.1 million, or 16%, to $0.7 million compared to $0.9 million for the three months ended June 30, 2022.

The period-over-period decrease was due to a decrease in OEM membership revenue.

Network revenue, OEM, for the three months ended September 30, 2023 increased $0.7 million, or 149%, to $1.1 million compared to $0.4 million for the three months ended September 30, 2022.

The period-over-period increase was due to an increase in OEM branding and marketing revenue.

eXtend Revenue.

eXtend revenue for the three months ended June 30, 2023 increased $33.2 million to $33.3 million compared to $0.1 million for the three months ended June 30, 2022 primarily as a result of the new agreement that was executed in 2022 with the Pilot Company.

eXtend revenue for the three months ended September 30, 2023 increased $8.9 million, or 579%, to $10.5 million compared to $1.5 million for the three months ended September 30, 2022.

The increase was primarily due to increased projects in process or completed and an increase in equipment sales compared to the same prior-year period.

Ancillary Revenue.

Ancillary revenue for the three months ended June 30, 2023 increased $1.7 million, or 248%, to $2.4 million compared to $0.7 million for the three months ended June 30, 2022.

The increase was primarily due to higher research and consulting revenue and increased equipment sales.

Ancillary revenue for the three months ended September 30, 2023 increased $1.6 million, or 130%, to $2.8 million compared to $1.2 million for the three months ended September 30, 2022.

The increase was primarily due to increased engineering and construction revenue, revenue from Plugshare, and sublease income.

Cost of Sales

Cost of Revenue.

Cost of revenue for the three months ended June 30, 2023 increased $32.0 million, or 560%, to $37.7 million compared to $5.7 million for the three months ended June 30, 2022.

The increase in cost of revenue was primarily due to an increase of $25.1 million in costs to support eXtend revenue, a $4.6 million increase in energy and other variable costs resulting from increased throughput, and a $0.9 million increase in maintenance expenses.

Cost of revenue for the three months ended September 30, 2023 increased $17.4 million, or 203%, to $25.9 million compared to $8.5 million for the three months ended September 30, 2022.

The increase in cost of revenue was primarily due to an increase of $8.3 million in costs to support eXtend revenue, a $6.6 million increase in energy and other variable charging costs resulting from increased throughput and a $1.6 million increase in fixed charging costs.

Depreciation, Net of Capital-Build Amortization.

Depreciation, net of capital-build amortization, for the three months ended June 30, 2023 increased $3.2 million, or 78%, to $7.3 million compared to $4.1 million for the three months ended June 30, 2022 due to growth in EVgo’s fixed asset base.

Depreciation, net of capital-build amortization, for the three months ended September 30, 2023 increased $3.4 million, or 66%, to $8.6 million compared to $5.2 million for the three months ended September 30, 2022 due to growth in EVgo’s charging network.

Gross Profit (Loss) and Gross Margin

Gross profit for the three months ended June 30, 2023 improved $6.3 million, or 843%, to $5.5 million compared to a gross loss of $0.7 million for the three months ended June 30, 2022.

Gross margin for the three months ended June 30, 2023 improved to 10.9% compared to negative 8.2% for the three months ended June 30, 2022 primarily due to improved leveraging of charging station costs and increased eXtend revenue, which generally has a higher gross margin, partially offset by the impact of lower LCFS prices.

Gross profit for the three months ended September 30, 2023 was $0.6 million compared to a gross loss of $3.2 million for the three months ended September 30, 2022, primarily due to increases in charging revenue and eXtend revenue, partially offset by increased depreciation, net of capital-build amortization.

Gross margin for the three months ended September 30, 2023 improved to 1.7% compared to negative 30.5% for the three months ended September 30, 2022 primarily due to improved leveraging of charging station costs, resulting in higher gross margin on charging revenue and higher margins on eXtend revenue, partially offset by decreased margins on ancillary revenue.

Operating Expenses

General and Administrative Expenses.

General and administrative expenses for the three months ended June 30, 2023 increased $2.2 million, or 7%, to $34.3 million compared to $32.2 million for the three months ended June 30, 2022.

The increase was primarily driven by a $2.9 million increase in payroll expenses due to higher headcount and additional share-based compensation and a $0.9 million increase in impairment expense, which were partially offset by a $1.3 million decrease in legal service and professional service expenses.

General and administrative expenses for the three months ended September 30, 2023 decreased $0.3 million, or 1%, to $32.0 million, compared to $32.3 million for the three months ended September 30, 2022, primarily due to lower costs for professional services and insurance, partially offset by lower insurance recoveries.

Depreciation, Amortization and Accretion.

Depreciation, amortization and accretion expenses for the three months ended June 30, 2023 increased $0.7 million, or 16%, to $4.8 million compared to $4.1 million for the three months ended June 30, 2022.

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

Operating Loss

During the three months ended June 30, 2023, EVgo had an operating loss of $33.6 million, an improvement of $3.5 million, or 9%, compared to $37.1 million for the three months ended June 30, 2022.

The decrease in operating loss was driven primarily by increased gross profits.

Operating margin for the three months ended June 30, 2023 was negative 66.4% compared to negative 408.3% for the three months ended June 30, 2022.

Depreciation, amortization and accretion expenses for the three months ended September 30, 2023 increased $0.5 million, or 10%, to $5.0 million compared to $4.5 million for the three months ended September 30, 2022 primarily due to higher amortization related to software.

Operating Loss and Operating Margin

During the three months ended September 30, 2023, EVgo had an operating loss of $36.4 million, an improvement of $3.7 million, or 9%, compared to $40.0 million for the three months ended September 30, 2022.

The improvement in the operating loss was driven primarily by increased gross profit.

Operating margin for the three months ended September 30, 2023 was negative 103.6% compared to negative 381.1% for the three months ended September 30, 2022 primarily due to improved leveraging of operating expenses and improved gross margin.

Interest Income

Interest income for the three months ended June 30, 2023 and 2022 was $2.2 million and $0.6 million, respectively.

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 June 30, 2023 compared to the same prior year period.

Other Expense, Net

Other expense, net, for the three months ended June 30, 2023 was de minimis compared to $0.2 million for the three months ended June 30, 2022.

The change was primarily due to a $0.2 million decrease in unrealized losses on investments.

Interest income for the three months ended September 30, 2023 increased $1.3 million, or 77%, to $2.9 million, compared to $1.6 million for the three months ended September 30, 2022.

The increase was a result of more cash and cash equivalents held in a high interest rate account by the Company during the three months ended September 30, 2023 compared to the same prior-year period.

Other Income (Expense), Net

Other income, net, for the three months ended September 30, 2023 was de minimis compared to other expense, net, of $0.3 million for the three months ended September 30, 2022.

The change was primarily due to $0.3 million in losses on investments incurred during the three months ended September 30, 2022.

Changes in Fair Values of Warrant and Earnout Liabilities

For the three months ended June 30, 2023, there was a $9.9 million gain on change in fair values of warrant and earnout liabilities compared to a $53.6 million gain for the three months ended June 30, 2022.

The change between periods was primarily due to a lower decrease in the fair value of the warrant liabilities during the three months ended June 30, 2023 compared to the same prior year period.

For the three months ended September 30, 2023, there was a $5.2 million gain on change in fair values of warrant and earnout liabilities compared to a $12.2 million loss for the three months ended September 30, 2022.

The change between periods was primarily due to a decrease in the fair values of the warrant and earnout liabilities during the three months ended September 30, 2023 compared to an increase in the fair values of the warrant and earnout liabilities during the same prior-year period.

See “ Part I, Item 1.

Financial Statements – Note 10 – Fair Value Measurements ” for more information.

For the three months ended June 30, 2023 and 2022, EVgo’s provision for income taxes and effective tax rates were de minimis.

As of June 30, 2023 and 2022, EVgo maintained a full valuation allowance on EVgo’s net deferred tax assets.

For the three months ended September 30, 2023 and 2022, there were no income taxes due to the full valuation allowance on EVgo’s net deferred tax assets.

Net (Loss) Income

Net loss for the three months ended June 30, 2023 was $21.5 million, compared to net income of $17.0 million for the three months ended June 30, 2022.

The change was primarily driven by the decreased gain from the change in fair values of the warrant liabilities, partially offset by an increase in gross profit.

Results of Operations for the Six Months Ended June 30, 2023 and 2022

The table below presents EVgo’s results of operations for the six months ended June 30, 2023 and 2022:

Six Months Ended June 30,

Net loss for the three months ended September 30, 2023 was $28.3 million, compared to $50.9 million for the three months ended September 30, 2022.

The change was primarily driven by the $17.4 million impact resulting from changes in the fair values of the warrant and earnout liabilities, the $3.8 million improvement in gross profit, and a $1.3 million increase in interest income.

Results of Operations for the Nine Months Ended September 30, 2023 and 2022

The table below presents EVgo’s results of operations for the nine months ended September 30, 2023 and 2022:

Nine Months Ended September 30,

(dollars in thousands)

7 unchanged sentences

Interest income

Other expense, net

Other income (expense), net

Change in fair value of earnout liability

6 unchanged sentences

Network throughput (GWh)

Number of DC stalls

The table below presents a disaggregation of EVgo’s revenue for the six months ended June 30, 2023 and 2022:

Six Months Ended June 30,

Number of DC Stalls on EVgo Network (in thousands) as of

The table below presents a disaggregation of EVgo’s revenue for the nine months ended September 30, 2023 and 2022:

Nine Months Ended September 30,

(dollars in thousands)

8 unchanged sentences

* Percentage greater than 999%

Total revenue for the six months ended June 30, 2023 increased $59.1 million, or 352%, to $75.9 million compared to $16.8 million for the six months ended June 30, 2022.

Total revenue for the nine months ended September 30, 2023 increased $83.7 million, or 307%, to $111.0 million compared to $27.3 million for the nine months ended September 30, 2022.

As further discussed below, the increase in revenue was primarily due to a $52.3 million increase in eXtend revenue, a $16.0 million increase in retail charging revenue, a $6.1 million increase in commercial charging revenue, and a $4.2 million increase in ancillary revenue.

Charging Revenue, Retail.

Charging revenue, retail, for the six months ended June 30, 2023 increased $7.8 million, or 99%, to $15.7 million compared to $7.9 million for the six months ended June 30, 2022.

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

Charging revenue, retail, for the nine months ended September 30, 2023 increased $16.0 million, or 122%, to $29.1 million compared to $13.1 million for the nine months ended September 30, 2022.

Period-over-period growth was primarily due to an overall increase in throughput driven primarily by increased charging volume from a greater number of customers and more throughput per customer.

Charging Revenue, Commercial.

Charging revenue, commercial, for the six months ended June 30, 2023 increased $2.8 million, or 203%, to $4.1 million compared to $1.4 million for the six months ended June 30, 2022.

Charging revenue, commercial, for the nine months ended September 30, 2023 increased $6.1 million, or 301%, to $8.2 million compared to $2.0 million for the nine months ended September 30, 2022.

Period-over-period growth was primarily due to higher charging volumes by the Company’s public fleet customers.

Charging Revenue, OEM.

Charging revenue, OEM, for the six months ended June 30, 2023 increased $1.2 million, or 352%, to $1.5 million compared to $0.3 million for the six months ended June 30, 2022.

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

Charging revenue, OEM, for the nine months ended September 30, 2023 increased $2.4 million, or 409%, to $3.0 million compared to $0.6 million for the nine months ended September 30, 2022.

Period-over-period growth was primarily due to higher charging volumes and customer enrollments from the Company’s OEM partners.

Regulatory Credit Sales.

Regulatory credit sales for the six months ended June 30, 2023 decreased $0.7 million, or 19%, to $2.8 million compared to $3.5 million for the six months ended June 30, 2022.

The period-over-period decrease was primarily due to the impact of lower market prices, partially offset by increased throughput compared to the six months ended June 30, 2022.

Regulatory credit sales for the nine months ended September 30, 2023 remained relatively flat at $4.6 million compared to $4.7 million for the nine months ended September 30, 2022 due to the impact of lower market prices partially offset by increased throughput.

Network Revenue, OEM.

Network revenue, OEM, for the six months ended June 30, 2023 increased $2.1 million, or 150%, to $3.4 million compared to $1.4 million for the six months ended June 30, 2022.

The period-over-period increase was due to increased breakage associated with prepaid charging credits and increased marketing activities.

Network revenue, OEM, for the nine months ended September 30, 2023 increased $2.7 million, or 150%, to $4.6 million compared to $1.8 million for the nine months ended September 30, 2022.

The period-over-period increase was due to increased breakage associated with prepaid charging credits and increased branding and marketing activities.

eXtend Revenue.

eXtend revenue for the six months ended June 30, 2023 increased $43.4 million to $43.6 million compared to $0.2 million for the six months ended June 30, 2022 primarily as a result of the new agreement that was executed in 2022 with the Pilot Company.

eXtend revenue for the nine months ended September 30, 2023 increased $52.3 million to $54.0 million compared to $1.8 million for the nine months ended September 30, 2022.

The increase was primarily due to an increase in equipment sales and increased projects in process or completed compared to the same prior-year period.

Ancillary Revenue.

Ancillary revenue for the six months ended June 30, 2023 increased $2.6 million, or 122%, to $4.6 million compared to $2.1 million for the six months ended June 30, 2022.

The increase was primarily due to increased equipment sales, rental income, and higher revenue from research and consulting services.

Ancillary revenue for the nine months ended September 30, 2023 increased $4.2 million, or 125%, to $7.5 million compared to $3.3 million for the nine months ended September 30, 2022.

The increase was primarily due to increased revenue from PlugShare, engineering and construction revenue, and sublease income.

Cost of Sales

Cost of Revenue.

Cost of revenue for the six months ended June 30, 2023 increased $46.1 million, or 436%, to $56.7 million compared to $10.6 million for the six months ended June 30, 2022.

The increase in cost of revenue was primarily due to an increase of $33.4 million in costs to support eXtend revenue, a $7.5 million increase in energy and other variable costs resulting from increased throughput, a $2.3 million increase in fixed charging station costs, and a $2.1 million increase in maintenance expenses.

Cost of revenue for the nine months ended September 30, 2023 increased $63.4 million, or 332%, to $82.5 million compared to $19.1 million for the nine months ended September 30, 2022.

The increase in cost of revenue was primarily due to a $41.7 million increase in costs to support eXtend revenue, a $14.2 million increase in energy and other variable charging costs resulting from increased throughput, and a $6.2 million increase in fixed charging costs.

Depreciation, Net of Capital-Build Amortization.

Depreciation, net of capital-build amortization, for the six months ended June 30, 2023 increased $6.1 million, or 80%, to $13.6 million compared to $7.6 million for the six months ended June 30, 2022 due to growth in EVgo’s fixed asset base.

Depreciation, net of capital-build amortization, for the nine months ended September 30, 2023 increased $9.5 million, or 75%, to $22.2 million compared to $12.7 million for the nine months ended September 30, 2022 due to growth of EVgo’s charging network.

Gross Profit (Loss) and Gross Margin

Gross profit for the six months ended June 30, 2023 improved $6.9 million, or 514%, to $5.6 million compared to a gross loss of $1.3 million for the six months ended June 30, 2022.

Gross margin for the six months ended June 30, 2023 improved to 7.3% compared to negative 8.0% for the six months ended June 30, 2022 primarily due to improved leveraging of charging station costs and increased eXtend revenue, which generally has a higher gross margin, partially offset by the impact of lower LCFS prices.

Gross profit for the nine months ended September 30, 2023 was $6.2 million compared to a gross loss of $4.6 million for the nine months ended September 30, 2022 primarily due to increased gross profit from eXtend revenues and charging revenues, partially offset by increased depreciation, net of capital-build amortization.

Gross margin for the nine months ended September 30, 2023 was 5.6% compared to negative 16.7% for the nine months ended September 30, 2022 primarily due to improved leveraging of charging station costs and higher margins on eXtend and charging revenue, partially offset by lower revenue from higher margin regulatory credit sales as a percentage of total consolidated sales and lower margins on ancillary revenue.

Operating Expenses

General and Administrative Expenses.

General and administrative expenses for the six months ended June 30, 2023 increased $14.6 million, or 25%, to $72.2 million compared to $57.6 million for the six months ended June 30, 2022.

The increase was primarily driven by a $10.7 million increase in payroll expenses due to higher headcount and additional share-based compensation and a $3.8 million increase in impairment expense.

General and administrative expenses for the nine months ended September 30, 2023 increased $14.3 million, or 16%, to $104.2 million compared to $89.9 million for the nine months ended September 30, 2022.

The increase was primarily driven by a $10.4 million increase in payroll expenses due to higher overall headcount compared to the same prior-year period and a $4.4 million increase in impairment expense due to increased write-offs of abandoned projects.

Depreciation, Amortization and Accretion.

Depreciation, amortization and accretion expenses for the six months ended June 30, 2023 increased $1.5 million, or 19%, to $9.6 million compared to $8.0 million for the six months ended June 30, 2022.

Depreciation, amortization and accretion expenses for the nine months ended September 30, 2023 increased $2.0 million, or 16%, to $14.5 million compared to $12.5 million for the nine months ended September 30, 2022.

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

Operating Loss

During the six months ended June 30, 2023, EVgo had an operating loss of $76.2 million, an increase of $9.3 million, or 14%, compared to $67.0 million for the six months ended June 30, 2022.

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

Operating margin for the six months ended June 30, 2023 was negative 100.5% compared to negative 399.2% for the six months ended June 30, 2022.

Operating Loss and Operating Margin

During the nine months ended September 30, 2023, EVgo had an operating loss of $112.6 million, a deterioration of $5.6 million, or 5%, compared to $107.0 million for the nine months ended September 30, 2022.

The increase in operating loss was driven primarily by an increase in general and administrative expenses partially offset by an increase in gross profit.

Operating margin for the nine months ended September 30, 2023 was negative 101.5% compared to negative 392.2% for the nine months ended September 30, 2022 primarily due to improved leveraging of operating expenses and improved gross margin.

Interest Expense

There was no interest expense incurred for the nine months ended September 30, 2023 and interest expense was de minimis for the nine months ended September 30, 2022.

Interest Income

Interest income for the six months ended June 30, 2023 and 2022 was $4.2 million and $0.7 million, respectively.

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 six months ended June 30, 2023 compared to the same prior year period.

Other Expense, Net

Other expense, net, for the six months ended June 30, 2023 was de minimis compared to $0.4 million for the six months ended June 30, 2022.

The change was primarily due to a $0.4 million decrease in unrealized losses on investments.

Interest income for the nine months ended September 30, 2023 increased $4.8 million, or 205%, to $7.1 million compared to $2.3 million for the nine months ended September 30, 2022.

The increase was a result of more cash and cash equivalents held in a high interest rate account by the Company during the nine months ended September 30, 2023 compared to the same prior-year period.

Other Income (Expense), Net

Other income, net, for the nine months ended September 30, 2023 was de minimis compared to other expense, net, of $0.8 million for the nine months ended September 30, 2022.

The change was primarily due to losses on investments incurred during the nine months ended September 30, 2022.

Changes in Fair Values of Warrant and Earnout Liabilities

For the six months ended June 30, 2023, there was a $1.4 million gain on change in fair values of warrant and earnout liabilities compared to a gain of $28.5 million for the six months ended June 30, 2022.

The change between periods was primarily due to a lower decrease in the fair value of the warrant liabilities during the six months ended June 30, 2023 compared to the same prior year period.

For the nine months ended September 30, 2023, there was a $6.7 million gain on change in fair values of warrant and earnout liabilities compared to $16.3 million for the nine months ended September 30, 2022.

The change between periods was primarily due to a smaller decrease in the fair value of the warrant and earnout liabilities during the nine months ended September 30, 2023 compared to the same prior-year period.

See “ Part I, Item 1.

Financial Statements – Note 10 – Fair Value Measurements ” for more information.

For the six months ended June 30, 2023 and 2022, EVgo’s provision for income taxes and effective tax rates were de minimis.

For the nine months ended September 30, 2023 and 2022, EVgo’s income taxes and effective tax rates were de minimis.

Net (Loss) Income

Net loss for the six months ended June 30, 2023 was $70.6 million, compared to $38.3 million for the six months ended June 30, 2022.

The change was primarily driven by the decreased gain from the change in fair values of the warrant liabilities and increased general and administrative expenses incurred to support growth, partially offset by an increase in gross profit.

Net loss for the nine months ended September 30, 2023 was $98.9 million, compared to $89.2 million for the nine months ended September 30, 2022.

The change was primarily driven by the $14.3 million increase in general and administrative expenses and the $9.6 million impact from changes in the fair values of the warrant and earnout liabilities, partially offset by the $10.7 million increase in gross profit and the $4.8 million increase in interest income.

Non-GAAP Financial Measures

17 unchanged sentences

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 and six months ended June 30, 2023 and 2022:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(dollars in thousands)

10 unchanged sentences

Adjusted Gross Margin

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 and six months ended June 30, 2023 and 2022:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(dollars in thousands)

10 unchanged sentences

Previously reported amounts have been updated to conform to the current period presentation.

2 For the six months ended June 30, 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.

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 and six months ended June 30, 2023 and 2022:

2 For the nine months ended September 30, 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.

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(dollars in thousands)

GAAP net (loss) income

GAAP net (loss) income margin

GAAP net loss

GAAP net loss margin

Depreciation, net of capital-build amortization

9 unchanged sentences

Change in fair value of warrant liabilities

Total adjustments

Adjusted EBITDA

3 unchanged sentences

Previously reported amounts have been updated to conform to the current period presentation.

Liquidity and Capital Resources

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

As of June 30, 2023, EVgo had $257.4 million of cash, cash equivalents and restricted cash and working capital of $215.9 million.

As of September 30, 2023, EVgo had $228.7 million of cash, cash equivalents and restricted cash and working capital of $186.0 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 inflow for the six months ended June 30, 2023 was $10.9 million.

EVgo believes its cash and cash equivalents on hand as of June 30, 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.

The Company’s net cash outflow for the nine months ended September 30, 2023 was $17.8 million.

EVgo believes its cash and cash equivalents on hand as of September 30, 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 an underwritten equity offering, and loans and equity contributions from its previous owners.

3 unchanged sentences

EVgo is obligated to purchase at least 1,000 chargers (which will enable the construction of 2,000 stalls) pursuant to the Delta Charger Supply Agreement and the Purchase Order with the option, at EVgo’s election, to increase the number of chargers purchased to 1,100.

Under the terms of the Purchase Order, EVgo will receive delivery of 600 chargers in the 11 months following July 12, 2022 and is required to make full payment on such chargers within sixty (60) days of receipt.

Under the terms of the Purchase Order, EVgo will receive delivery of 600 chargers by April 30, 2023 and is required to make full payment on such chargers within sixty (60) days of receipt.

EVgo’s obligations under the Purchase Order are take-or-pay obligations;

12 unchanged sentences

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.

The following table summarizes EVgo’s consolidated cash flows for the six months ended June 30, 2023 and 2022:

Six Months Ended June 30,

The following table summarizes EVgo’s consolidated cash flows for the nine months ended September 30, 2023 and 2022:

Nine Months Ended September 30,

(in thousands)

2 unchanged sentences

Cash flows provided by financing activities

Net increase (decrease) in cash, cash equivalents and restricted cash

Net decrease in cash, cash equivalents and restricted cash

Operating Activities.

Cash used in operating activities for the six months ended June 30, 2023 was $22.5 million compared to $38.4 million for the six months ended June 30, 2022.

The year-over-year change primarily reflected a $19.5 million increase in cash flows from deferred revenue, a $9.1 million increase in cash inflows from operating income, and a $2.6 million increase in cash flows from accrued expenses, partially offset by a $9.1 million decrease in cash flows from accounts receivable, a $4.4 million decrease in cash flows from customer deposits, and a $2.8 million decrease in cash flows from accounts payable.

Cash used in operating activities for the nine months ended September 30, 2023 was $29.8 million compared to $57.3 million for the nine months ended September 30, 2022.

The year-over-year change primarily reflected a $22.6 million increase in cash flows from deferred revenue, an $18.0 million increase in cash inflows from operating income, and a $2.8 million increase in cash flows from accounts payable, partially offset by a $10.6 million decrease in cash flows from accounts receivable, net, a $5.2 million decrease in cash flows from customer deposits, and a $1.5 million decrease in cash flows from receivables from related parties.

Investing Activities.

Cash used in investing activities for the six months ended June 30, 2023 was $99.9 million, compared to $106.8 million for the six months ended June 30, 2022.

The decrease was primarily driven by a decrease in the purchases of debt securities, partially offset by an increase in purchases of property, equipment and software.

Cash used in investing activities for the nine months ended September 30, 2023 was $123.8 million, compared to $133.3 million for the nine months ended September 30, 2022.

The decrease was primarily driven by a decrease in purchases of property, equipment and software.

Financing Activities .

Cash provided by financing activities for the six months ended June 30, 2023 was $133.4 million compared to $5.0 million for the six months ended June 30, 2022.

The increase was driven primarily by the proceeds from the issuance of Class A common stock in the Company’s underwritten equity offering.

Cash provided by financing activities for the nine months ended September 30, 2023 was $135.8 million compared to $6.5 million for the nine months ended September 30, 2022.

The increase was driven primarily by the receipt of $128.0 million in proceeds from the issuance of Class A common stock in the Company’s underwritten equity offering and $5.8 million in proceeds from the issuance of Class A common stock under the Company’s ATM Program, partially offset by a $4.7 million increase in cash paid for deferred transaction costs during the nine months ended September 30, 2023.

Working Capital .

EVgo’s working capital as of June 30, 2023 was $215.9 million, compared to $188.1 million as of December 31, 2022.

The increase was driven primarily by an $11.4 million increase in the Company’s accounts receivable, net, a $10.9 million increase in cash, cash equivalents and restricted cash, and a $6.5 million decrease in customer deposits, partially offset by a $2.2 million decrease in prepaid expenses, a $1.7 million decrease in other current assets, and a $1.6 million increase in accrued liabilities.

EVgo’s working capital as of September 30, 2023 was $186.0 million, compared to $188.1 million as of December 31, 2022.

The decrease was driven primarily by a $17.5 million decrease in the Company’s cash, cash equivalents and restricted cash, an $8.5 million increase in accounts payable, and a $3.9 million increase in deferred revenue, current, partially offset by a $14.6 million increase in accounts receivable, net, a $7.0 million decrease in customer deposits, and a $5.2 million increase in accounts receivable, capital-build.

Contractual Obligations and Commitments .

46 unchanged sentences

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 ” as of and for the three and six months ended June 30, 2023 and 2022.

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

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

11 unchanged sentences

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.

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 3.

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