What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-07 compared with 2023-11-08 · 201 added, 305 removed, 293 unchanged (63% 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 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.

The discussion should be read in conjunction with EVgo’s unaudited condensed consolidated financial statements and the related notes thereto as of March 31, 2024 and December 31, 2023 and for the three months ended March 31, 2024 and 2023 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, 2023 and 2022 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 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.

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 is a leader in EV 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.

EVgo is one of the nation’s largest public fast charging networks, featuring over 1,000 fast charging locations across more than 35 states, including stations built through EVgo eXtend, its white label service offering.

EVgo is accelerating transportation electrification through partnerships with automakers, fleet and rideshare operators, retail hosts such as grocery stores, shopping centers, and gas stations, policy leaders, and other organizations.

The foundation of the Company’s business is building, owning and operating EV fast charging sites that deliver charging to EVs driven by individuals, commercial drivers, and fleet operators.

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.

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 provide marketing, data and software-driven services.

EVgo also earns revenue from the sale of regulatory credits generated through sales of electricity and its operation and ownership of its DCFC network.

EVgo believes this combination of revenue streams can drive long-term margin expansion and customer retention.

Specifically, revenue is earned through the following streams:

Specifically, charging network revenue is earned through the following streams:

● Charging Revenue, Retail:

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 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.

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.

Commercial Site Hosts include retail and grocery stores, hotels, offices, medical complexes, airports and convenience stores.

EVgo believes its offerings are well aligned with the goals of Site Hosts, as many commercial businesses increasingly view EV charging capabilities as essential to attract tenants, employees, customers and visitors, and achieve sustainability goals.

Site Hosts are generally able to obtain these benefits at no cost when partnering with EVgo through EVgo’s owner and/or operator model, as EVgo is responsible for the installation and operation of chargers located on Site Hosts’ properties.

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

Various pricing plans exist for customers and drivers have the choice to charge through a subscription offering or a variety of pay-as-you-go plans.

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

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

Commercial Site Hosts include retail and grocery stores, offices, medical complexes, airports and convenience stores.

EVgo offerings are well aligned with the goals of Site Hosts, as many commercial businesses increasingly view charging capabilities as essential to attracting tenants, employees, customers and visitors, and achieve sustainability goals.

Site Hosts are generally able to obtain these benefits at no cost when partnering with EVgo through the Company’s owner and/or operator model, in which EVgo is responsible for the development, construction, and operation of chargers located on Site Hosts’ properties.

In many cases, Site Hosts will earn revenue from license payments in the form of parking space rental fees that EVgo pays in exchange for use of the site.

● 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.

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

Pricing for charging services is most often negotiated directly with 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.

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.

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.

ChaaS and dedicated charging allow for tailored fleet charging solutions without requiring fleets to directly incur capital expenditures or operating and management costs related to charging EVs.

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

Through its fleet product, EVgo develops, builds, and services charging assets for fleets either at their own depot locations or at off-site charging hubs that EVgo has secured without requiring a fleet to directly incur capital expenditures.

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

Together, EVgo’s dedicated charging solutions and public fleet charging services provide fleets with charging infrastructure options that are robust and flexible as the transition to electrified transportation accelerates.

● 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.

EVgo is a pioneer 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.

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.

EVgo’s OEM relationships are a core customer-acquisition channel.

● 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.

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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.

EVgo generates non-charging network revenue from the following streams:

● 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.

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 customers purchase and retain ownership of the charging assets.

Existing customers with EVgo accounts are able to access eXtend chargers through the EVgo app, among other options.

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

● Ancillary Revenue :

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.

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

These offerings currently include customization of digital applications, charging data integration, loyalty programs, access to chargers behind parking lot or garage pay gates, microtargeted advertising and charging reservations as well as all services provided under PlugShare such as data, research and advertising services and equipment procurement and operational services for customers operating dedicated networks.

EVgo continues to evaluate and engage in opportunities to use its foundational expertise in charging infrastructure to provide value-added services to the rapidly growing EV ecosystem.

Recent Developments

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

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, 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.

For example, the conflict between Russia and Ukraine and an escalation of tensions and conflict in Israel and

the broader Middle East region have led to disruptions, instability and volatility in global markets and industries and will likely continue to lead to, geopolitical instability, market uncertainty and supply disruptions.

Additionally, recent inflationary pressures have resulted in and may continue to result in increases to the costs of charging equipment and personnel, which could in turn cause capital expenditures and operating costs to rise.

Sustained levels of high inflation have likewise caused the U.S.

Federal Reserve and other central banks to increase interest rates, which could have the effects of raising the cost of capital and depressing economic growth.

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.

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In order to encourage the use of EVs, the U.S.

federal government and some state and local governments provide incentives to end users and purchasers of EVs and EV charging stations in the form of rebates, tax credits and other financial incentives that promote EV adoption and related EV charging infrastructure.

EVgo believes the increase in promotion of EVs and the installation of related EV charging infrastructure will continue in part due to the ongoing implementation of the Infrastructure Investment and Jobs Act (the “Bipartisan Infrastructure Law”) and the Inflation Reduction Act of 2022 (the “Inflation Reduction Act”), which included extensions, expansions and revisions of various tax credits relating to EVs and EV charging infrastructure and may provide more flexibility and options in monetizing such credits.

federal government and some state and local governments provide incentives to end users and owners of EVs and EV charging stations in the form of rebates, tax credits, low-cost funding and other financial incentives that promote EV adoption and related EV charging infrastructure.

EVgo believes the promotion of EVs and the installation of related EV charging infrastructure will continue in part due to the ongoing implementation of the Infrastructure Investment and Jobs Act (the “Bipartisan Infrastructure Law”) and the Inflation Reduction Act of 2022 (the “Inflation Reduction Act”), which included extensions, expansions and revisions of various tax credits relating to EVs and EV charging infrastructure and may provide more flexibility and options in monetizing such credits.

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 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.

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.

For example, the results of the 2024 Presidential and Congressional elections and resulting legislative or regulatory actions, if pursued, could impact the availability or value of these incentives or reduce access to such low-cost funding.

Further, 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, federal guidance on Buy America requirements applicable to the National Electric Vehicle Infrastructure (“NEVI”) Program, which was established by the Bipartisan Infrastructure Law, requires 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.

Similarly, regulations proposed by the U.S.

Department of the Treasury on March 31, 2023, to implement domestic content and assembly eligibility requirements to qualify for EV tax credits passed in the Inflation Reduction Act, once finalized, 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.

In addition to NEVI funding, which will be made available to every state department of transportation to administer grant programs to support the deployment of charging infrastructure, 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.

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.

These requirements could increase costs and lead to delays in the installation of EV chargers in the U.S.

as charging providers and their customers adjust their build-out plans in order to accommodate these added Buy America requirements, which could result in delays in receipt of revenue from customers.

Similarly, regulations proposed and guidance issued by the U.S.

Department of the Treasury to implement domestic content, assembly and “foreign entity of concern” eligibility requirements to qualify for EV tax credits passed in the Inflation Reduction Act 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.

In addition to NEVI funding, which has been made available to every state department of transportation to administer grant programs to support the deployment of charging infrastructure, a number of states also offer various rebates, grants and tax credits to incentivize both EV and EVSE purchases.

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

Key Components of Results of Operations

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Cost of Sales

Cost of Revenue.

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.

Charging Network.

Charging network cost of sales consists primarily of energy usage fees, site operating and maintenance expenses, network charges, warranty and repair services, and site lease and related expenses associated with charging stations.

Other cost of sales is primarily related to costs associated with the eXtend business and the sale of data services and other ancillary services.

Depreciation, Net of Capital-Build Amortization.

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Gross Profit (Loss) and Gross Margin

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

Gross profit (loss) consists of EVgo’s revenue less its cost of sales.

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

Operating Expenses

General and Administrative Expenses.

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.

General and Administrative.

General and administrative expenses primarily consist of payroll and related personnel expenses, IT and office services, customer service, 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.

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Operating Profit (Loss) and Operating Margin

Operating profit (loss) consists of EVgo’s gross profit or loss less general and administrative expenses and depreciation, amortization and accretion in operating expenses.

Operating profit (loss) consists of EVgo’s gross profit (loss) less total operating expenses.

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

Interest Income

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

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

Other Income (Expense), Net

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EVgo’s provision for income taxes consists primarily of income taxes related to federal and state jurisdictions where business is conducted related to the Company’s ownership in EVgo OpCo.

Net (Loss) Income Attributable to Redeemable Noncontrolling Interest

Net (loss) income attributable to redeemable noncontrolling interest represents the share of net income or loss that is attributable to EVgo’s Class B common stock held by EVgo Holdings.

Net Income (Loss) Attributable to Redeemable Noncontrolling Interest

Net income (loss) attributable to redeemable noncontrolling interest represents the share of net income or loss that is attributable to EVgo’s Class B common stock held by EVgo Holdings.

Key Performance Indicators

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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”).

Network throughput represents the total amount of GWh 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:

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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 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.

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 and nine months ended September 30, 2023 and 2022:

Three Months Ended

Nine Months Ended

September 30,

(dollars in thousands)

GAAP revenue 1

GAAP changes in deferred revenue 2

Total Receipts

Year-over-year percentage change in total Receipts

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

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

Network throughput (GWh) on the EVgo Network for the three months ended

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

Factors Affecting EVgo’s Operating Results

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

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

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

DCFC network reliability, scale and local density;

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Government Mandates, Incentives and Programs

federal government and some state and local governments provide incentives to end-users and purchasers of EVs and EV charging stations in the form of rebates, tax credits and other financial incentives, such as payments for regulatory credits.

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.

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 and to otherwise financially support these industries.

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 generated and carried forward, for future benefit, federal tax credits under Section 30C of the Code, which effectively subsidizes the cost of placing into 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, EVgo has historically claimed

federal tax credits under Section 30C of the Code.

The Inflation Reduction Act revised the eligibility criteria for these credits, and there can be no assurance that the EV charging stations placed into service by EVgo will meet the revised requirements, 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 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 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, tariffs and policy incentives have been, and in the future 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.

federal government as well as state and local governments in order to encourage the use of EVs may be limited or reduced.

In particular, the U.S.

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 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.

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 encourage the adoption of EVs, which could negatively affect the EV market and adversely impact EVgo’s business operations and expansion potential.

Technology Risks

EVgo relies on numerous internally developed and externally sourced hardware and software technologies to operate its network and generate earnings.

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

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

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 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;

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, a majority of the largest OEMs have announced plans to adopt the NACS standard in their future EVs.

SAE International, a standards-developing organization for automotive engineering professionals, is currently working on an initiative to adapt Tesla’s specifications for NACS into the SAE J3400 industry standard.

EVgo expects that it will begin adding NACS connectors to its fast-charging network in late 2024;

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

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

EVgo is currently engaged in a rulemaking process of the California Air Resources Board that could result in an amendment to, and perhaps strengthening of, the California LCFS program.

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 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)

Cost of revenue

Depreciation, net of capital-build amortization

Gross profit (loss)

General and administrative expenses

Depreciation, amortization and accretion

Operating loss

Interest expense

Interest income

Other income (expense), net

Change in fair value of earnout liability

Change in fair value of warrant liabilities

Loss before income tax expense

Income tax expense

net loss attributable to redeemable noncontrolling interest

Net loss attributable to Class A common stockholders

Operating margin

Network throughput (GWh)

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,

EVgo is currently monitoring proposed enhancements to California’s LCFS program, which is being evaluated at the California Air Resources Board.

In addition to California, EVgo is monitoring proposed new Clean Fuels programs in Illinois, Massachusetts, Michigan, Minnesota, New Jersey and New York.

Results of Operations for the Three Months Ended March 31, 2024 and 2023

The table below presents EVgo’s results of operations:

Three Months Ended March 31,

(dollars in thousands)

Charging revenue, retail

Charging revenue, commercial

Charging revenue, OEM

Charging, retail

Charging, commercial

Charging, OEM

Regulatory credit sales

Network revenue, OEM

eXtend revenue

Ancillary revenue

Total charging network

Total 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 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 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 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 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 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 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 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 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.

Charging network 1

Depreciation, net of capital-build amortization

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 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.

Total cost of sales

Operating expenses

General and Administrative 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 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 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 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 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 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)

Cost of revenue

Depreciation, net of capital-build amortization

Gross profit (loss)

General and administrative expenses

General and administrative

Depreciation, amortization and accretion

Total operating expenses

Operating loss

Interest expense

Interest income

Other income (expense), net

Other (expense) income, net

Change in fair value of earnout liability

Change in fair value of warrant liabilities

Total other income (expense), net

Loss before income tax expense

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Operating margin

Network throughput (GWh)

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)

Charging revenue, retail

Charging revenue, commercial

Charging revenue, OEM

Regulatory credit sales

Network revenue, OEM

eXtend revenue

Ancillary revenue

Total revenue

* Percentage greater than 999%

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.

Network throughput (GWh) on the EVgo Network

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

1 In the fourth quarter of 2023, the Company changed the presentation of cost of sales to disaggregate such costs between “charging network” and “other.” Previously reported amounts have been updated to conform to the current presentation.

* Percent not meaningful.

Total revenue for the three months ended March 31, 2024 increased $29.9 million, or 118%, to $55.2 million compared to $25.3 million for the three months ended March 31, 2023.

As further discussed below, the increase in revenue was primarily due to an $11.7 million increase in retail charging revenue, an $8.9 million increase in eXtend revenue, a $4.1 million increase in commercial charging revenue, and a $2.2 million increase in OEM charging revenue.

Charging Revenue, Retail.

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.

Charging revenue, retail, for the three months ended March 31, 2024 increased $11.7 million, or 177%, to $18.3 million compared to $6.6 million for the three months ended March 31, 2023.

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 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.

Charging revenue, commercial, for the three months ended March 31, 2024 increased $4.1 million, or 240%, to $5.8 million compared to $1.7 million for the three months ended March 31, 2023.

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 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.

Charging revenue, OEM, for the three months ended March 31, 2024 increased $2.2 million, or 395%, to $2.7 million compared to $0.6 million for the three months ended March 31, 2023.

Period-over-period growth was primarily due to an increase in active OEM customers and increased throughput per customer.

Regulatory Credit Sales.

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.

Regulatory credit sales for the three months ended March 31, 2024 increased $0.8 million, or 67%, to $2.0 million compared to $1.2 million for the three months ended March 31, 2023 due to the impact of increased throughput.

Network Revenue, OEM.

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.

Network revenue, OEM, for the three months ended March 31, 2024 increased $0.7 million, or 27%, to $3.4 million compared to $2.7 million for the three months ended March 31, 2023.

The period-over-period increase was due to increased marketing activities and membership fees from OEM customers.

eXtend Revenue.

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.

eXtend revenue for the three months ended March 31, 2024 increased $8.9 million, or 86%, to $19.2 million compared to $10.3 million for the three months ended March 31, 2023.

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 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.

Ancillary revenue for the three months ended March 31, 2024 increased $1.4 million, or 65%, to $3.7 million compared to $2.2 million for the three months ended March 31, 2023.

The increase was primarily due to increased revenue from equipment sales, and engineering and construction revenue.

Cost of Sales

Cost of Revenue.

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.

Charging Network.

Charging network cost of sales for the three months ended March 31, 2024 increased $9.5 million, or 96% to $19.5 million compared to $10.0 million for the three months ended March 31, 2023.

The increase in charging network cost was primarily due to a $6.7 million increase in usage-related energy costs resulting from increased throughput and a $2.8 million increase in fixed charging costs.

Other cost of sales for the three months ended March 31, 2024 increased $9.5 million, or 106%, to $18.4 million compared to $8.9 million for the three months ended March 31, 2023.

The increase in other cost of sales was primarily due to an increase of $8.2 million in costs to support eXtend revenue and an increase of $1.3 million in costs to support ancillary revenue .

Depreciation, Net of Capital-Build Amortization.

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 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.

Depreciation, net of capital-build amortization, for the three months ended March 31, 2024 increased $4.0 million, or 63%, to $10.4 million compared to $6.3 million for the three months ended March 31, 2023 due to the growth of EVgo’s charging network.

Gross Profit and Gross Margin

Gross profit for the three months ended March 31, 2024 was $6.8 million compared to approximately break even for the three months ended March 31, 2023 primarily due to increased gross profit from charging revenues, partially offset by increased depreciation, net of capital-build amortization.

Gross margin for the three months ended March 31, 2024 was 12.4% compared to 0.2% for the three months ended March 31, 2023 primarily due to higher margins on charging revenue resulting from improved leveraging of charging station costs, partially offset by lower margins from eXtend and ancillary revenues.

Operating Expenses

General and Administrative Expenses.

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.

General and administrative expenses for the three months ended March 31, 2024 decreased $3.7 million, or 10%, to $34.2 million compared to $37.9 million for the three months ended March 31, 2023.

The decrease was primarily driven by a $1.3 million decrease in fees for professional services, a $1.1 million decrease in impairment expenses, and a $0.8 million decrease in payroll expenses.

Depreciation, Amortization and Accretion.

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.

Depreciation, amortization and accretion expenses for the three months ended March 31, 2024 increased $0.2 million, or 4%, to $5.0 million compared to $4.8 million for the three months ended March 31, 2023.

The increase was primarily due to an increase in amortization related to software, partially offset by decreased amortization of intangible assets.

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.

During the three months ended March 31, 2024, EVgo had an operating loss of $32.4 million, an improvement of $10.3 million, or 24%, compared to $42.6 million for the three months ended March 31, 2023.

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

Operating margin for the three months ended March 31, 2024 was negative 58.7% compared to negative 168.5% for the three months ended March 31, 2023 primarily due to improved leveraging of operating expenses and improved gross margin.

Interest Income

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.

Interest income for the three months ended March 31, 2024 increased $0.3 million, or 14%, to $2.3 million compared to $2.0 million for the three months ended March 31, 2023.

The increase was due to more cash and cash equivalents held in a high interest rate account by the Company during the three months ended March 31, 2024 compared to the same prior-year period.

Other (Expense) Income, Net

Other (expense) income, net, for the three months ended March 31, 2024 and 2023 was de minimis.

Changes in Fair Values of Warrant and Earnout Liabilities

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.

For the three months ended March 31, 2024, there was a $1.9 million gain on change in fair values of warrant and earnout liabilities compared to an $8.4 million loss for the three months ended March 31, 2023.

The change between periods was primarily due to a decrease in the fair value of the warrant and earnout liabilities during the three months ended March 31, 2024 compared to an increase during the same prior-year period.

See “ Part I, Item 1.

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

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 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.

For the three months ended March 31, 2024 and 2023, EVgo’s income taxes and effective tax rates were de minimis.

Net loss for the three months ended March 31, 2024 was $28.2 million, compared to a net loss of $49.1 million for the three months ended March 31, 2023.

The change was primarily driven by a $10.4 million impact from changes in the fair values of the warrant and earnout liabilities, increased gross profit of $6.8 million, and a $3.7 million decrease in general and administrative expenses.

Non-GAAP Financial Measures

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.

“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,” “Adjusted EBITDA Margin,” and “Capital Expenditures, Net of Capital Offsets.” With respect to Capital Expenditures, Net of Capital Offsets, pursuant to the terms of certain OEM contracts, EVgo is paid well in advance of when revenue can be recognized, and usually, the payment is tied to the number of stalls that commence operations under the applicable contractual arrangement while the related revenue is deferred at the time of payment and is recognized as revenue over time as EVgo provides charging and other services to the OEM and the OEM’s customers.

EVgo management therefore uses these measures internally to establish forecasts, budgets, and operational goals to manage and monitor its business, including the cash used for, and the return on, its investment in its charging infrastructure.

EVgo believes that these measures are useful to investors in evaluating EVgo’s performance and help to depict a 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, Adjusted EBITDA Margin and Capital Expenditures, Net of Capital Offsets 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.

5 unchanged sentences

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, net of recoveries, 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 general and administrative expenses before (i) share-based compensation, (ii) loss on disposal of property and equipment, net of insurance recoveries, and impairment expense, (iii) bad debt expense (recoveries), 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, (v) interest expense, and (vi) 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, net of recoveries, 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 as EBITDA plus (i) share-based compensation, (ii) loss on disposal of property and equipment, net of insurance recoveries, and impairment expense, (iii) loss (gain) on investments, (iv) bad debt expense (recoveries), (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 and nine months ended September 30, 2023 and 2022:

EVgo defines Capital Expenditures, Net of Capital Offsets as capital expenditures adjusted for the following capital offsets:

(i) all payments under OEM infrastructure agreements excluding any amounts directly attributable to OEM customer charging credit programs and pass-through of non-capital expense reimbursements, and (ii) proceeds from capital-build funding.

The tables below present quantitative reconciliations of these measures to their most directly comparable GAAP measures as described in this paragraph.

The following unaudited table presents a reconciliation of Adjusted Cost of Sales, Adjusted Cost of Sales as a Percentage of Revenue, Adjusted Gross Profit and Adjusted Gross Margin to the most directly comparable GAAP measures:

Three Months Ended

Nine Months Ended

September 30,

(dollars in thousands)

GAAP cost of sales

GAAP gross profit (loss)

GAAP gross profit

GAAP cost of sales as a percentage of revenue

7 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 nine months ended September 30, 2023 and 2022:

Three Months Ended

Nine Months Ended

September 30,

(dollars in thousands)

2 unchanged sentences

Share-based compensation

Loss on disposal of property and equipment, net of recoveries, and impairment expense 1

Loss on disposal of property and equipment, net of insurance recoveries, and impairment expense 1

Bad debt expense

2 unchanged sentences

Adjusted General and Administrative Expenses as a Percentage of Revenue

1 In the second quarter of 2023, the Company reclassified insurance proceeds from property losses from "other"

to "loss on disposal of property and equipment, net of recoveries, and impairment expense".

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

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.

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 nine months ended September 30, 2023 and 2022:

1 In the second quarter of 2023, the Company reclassified insurance proceeds from property losses from "other" to "loss on disposal of property and equipment, net of insurance recoveries, and impairment expenses." Previously reported amounts have been updated to conform to the current period presentation.

2 For the three months ended March 31, 2024, comprised primarily of costs related to the organizational realignment announced by the Company on January 17, 2024.

For the three months ended March 31, 2023, comprised primarily of costs related to the previous reorganization of Company resources 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").

The following unaudited table presents a reconciliation of EBITDA, EBITDA Margin, Adjusted EBITDA, and Adjusted EBITDA Margin to the most directly comparable GAAP measure:

Three Months Ended

Nine Months Ended

September 30,

(dollars in thousands)

3 unchanged sentences

Interest income

Interest expense

Income tax expense

1 unchanged sentence

Share-based compensation

Loss on disposal of property and equipment, net of recoveries, and impairment expense 1

Loss on investments

Loss on disposal of property and equipment, net of insurance recoveries, and impairment expense 1

Loss (gain) on investments

Bad debt expense

4 unchanged sentences

Adjusted EBITDA Margin

1 In the second quarter of 2023, the Company reclassified insurance proceeds from property losses from "other"

to "loss on disposal of property and equipment, net of recoveries, and impairment expense".

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

2 For the three months ended March 31, 2024, comprised primarily of costs related to the organizational realignment announced by the Company on January 17, 2024.

For the three months ended March 31, 2023, comprised primarily of costs related to the previous reorganization of Company resources announced by the Company on February 23, 2023 and the 205 Petition.

The following unaudited table presents a reconciliation of Capital Expenditures, Net of Capital Offsets, to the most directly comparable GAAP measure:

Three Months Ended

(dollars in thousands)

Capital expenditures

Capital offsets:

OEM infrastructure payments

Proceeds from capital-build funding

Total capital offsets

Capital Expenditures, Net of Capital Offsets

Liquidity and Capital Resources

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

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 March 31, 2024, EVgo had $175.5 million of cash, cash equivalents and restricted cash and working capital of $157.4 million.

As of December 31, 2023, EVgo had $209.1 million of cash, cash equivalents and restricted cash and working capital of $178.1 million.

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.

The Company’s net cash outflow for the three months ended March 31, 2024 was $33.6 million.

EVgo believes its cash and cash equivalents on hand as of March 31, 2024 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.

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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 by April 30, 2023 and is required to make full payment on such chargers within sixty (60) days of receipt.

Under the terms of the Purchase Order, EVgo 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;

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In certain circumstances (including an early termination of the Tax Receivable Agreement due to a change of control or otherwise), payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits, if any, the Company Group realizes in respect of the tax attributes subject to the Tax Receivable Agreement.

In the case of such an acceleration in connection with a change of control, where applicable, EVgo generally expects the accelerated payments due under the Tax Receivable Agreement to be funded out of the proceeds of the change of control transaction giving rise to such acceleration, which could have a significant impact on EVgo’s ability to consummate a change of control or the proceeds received by EVgo’s stockholders in connection with a change of control.

in connection with a change of control.

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 nine months ended September 30, 2023 and 2022:

Nine Months Ended September 30,

The following table summarizes EVgo’s consolidated cash flows:

Three Months Ended March 31,

(in thousands)

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Operating Activities.

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.

Cash used in operating activities for the three months ended March 31, 2024 was $14.1 million compared to $19.3 million for the three months ended March 31, 2023.

The year-over-year change primarily reflected a $17.8 million increase in cash flows from accounts receivable, net, a $12.3 million increase in cash inflows from operations, and a $2.7 increase in cash flows from prepaid expenses, other current assets and other assets, partially offset by a $15.5 million decrease in cash flows from deferred revenue, a $6.6 million decrease in cash flows from accounts payable, and a $4.8 million decrease in cash flows from accrued liabilities.

Investing Activities.

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.

Cash used in investing activities for the three months ended March 31, 2024 was $21.0 million, compared to $65.2 million for the three months ended March 31, 2023.

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

Financing Activities .

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.

Cash provided by financing activities for the three months ended March 31, 2024 was $1.5 million compared to $1.9 million for the three months ended March 31, 2023.

The decrease was driven primarily by a decrease in proceeds from capital-build funding received for charging stations during the three months ended March 31, 2024.

Working Capital .

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.

EVgo’s working capital as of March 31, 2024 was $157.4 million, compared to $178.1 million as of December 31, 2023.

The decrease was driven primarily by a $33.6 million decrease in the Company’s cash, cash equivalents and restricted cash and a $0.5 million increase in operating lease liabilities, current, partially offset by a $5.6 million decrease in accrued liabilities, a $2.8 million increase in accounts receivable, capital-build, and a $2.5 million decrease in deferred revenue, current.

Contractual Obligations and Commitments .

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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”).

Recording revenue may require 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.

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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.

Impairment of Goodwill and Other Identified Intangible Assets

The Company has one reporting unit and performs its annual goodwill impairment testing on October 1 each year.

In assessing the possibility that a reporting unit’s fair value has been reduced below its carrying amount due to the occurrence of events or circumstances between annual impairment testing dates, the Company considers all available evidence, including (i) the results of impairment testing from the most recent testing date (in particular, the magnitude of the excess

of fair value over carrying value observed), (ii) downward revisions to internal forecasts, decreases in market multiples (and the magnitude thereof) or changes to interest rates, if any, and (iii) declines in market capitalization below book value (and the magnitude and duration of those declines), if any.

The Company determines fair value using the market approach, when available and appropriate, or the income approach, or a combination of both and assesses the valuation methodology based upon the relevance and availability of the data at the time the valuation is performed.

If multiple valuation methodologies are used, the results are weighted appropriately.

Valuations using the market approach are derived from metrics of publicly traded companies or historically completed transactions of comparable businesses.

The selection of comparable businesses is based on the markets in which the Company operates giving consideration to risk profiles, size, geography, and diversity of products and services.

A market approach is used if there are publicly traded companies that have characteristics similar to EVgo’s business.

Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate.

The Company uses its internal forecasts to estimate future cash flows and includes an estimate of long-term future growth rates based on the most recent views of the long-term outlook for the business.

Discount rates are derived using a capital asset pricing model and analyzing published rates for relevant industries to estimate the cost of equity financing.

The discount rates used are commensurate with the risks and uncertainty inherent in EVgo’s business and in its internally developed forecasts.

Estimating the fair value of the reporting unit requires the use of significant judgments that are based on a number of factors including actual operating results, internal forecasts, market observable pricing multiples of similar businesses and comparable transactions, possible control premiums, determining the appropriate discount rate and long-term growth rate assumptions, and, if multiple approaches are being used, determining the appropriate weighting applied to each approach.

It is reasonably possible that the judgments and estimates described above could change in future periods.

The Company reviews identified intangible assets with defined useful lives and subject to amortization for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable.

Determining whether an impairment loss has occurred requires the use of internal forecasts to estimate future cash flows and the useful life over which these cash flows will occur.

To determine fair value, the Company uses its internal cash flow estimates discounted at an appropriate discount rate.

Warrant Liabilities

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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.

The fair value of the Private Placement Warrants on the date of issuance and on each measurement date is estimated by reference to the trading price of the public warrants, which is considered a Level 2 fair value measurement, or using a Monte Carlo simulation methodology, which is considered a Level 3 fair value measurement and 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 Monte Carlo 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.

Financial Statements – Note 2 – Summary of Significant Accounting Policies ” as of and for the quarters ended March 31, 2024 and 2023.

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis