Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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 June 30, 2024 and December 31, 2023 and for the three and six months ended June 30, 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 Company’s Annual Report on Form 10-K. 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.
Overview
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 expected to accelerate 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 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, 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 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 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.
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In addition to offering access to its public network, EVgo offers dedicated charging solutions to fleets. 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 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’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 program in California. These credits are generated through charging station operations based on the volume of kWh sold. EVgo earns additional revenue through the sale of these credits to buyers obligated to purchase the credits to comply with the program mandates.
● Network Revenue, OEM: This revenue stream represents revenue related to contracts that have significant charger infrastructure build programs, which represent set-up costs under Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). Proceeds from these contracts are allocated to performance obligations including marketing activities, memberships, reservations and the expiration of unused charging credits. Marketing activities are recognized at a point in time as the services are performed and measurement is based on amounts spent. For memberships and reservations, revenue is recognized over time and measured based on the charging activity of subscriber members at each measurement period. 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 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 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
Geopolitical and Macroeconomic Environment
During the last several years, the global economy has experienced disruption and sustained volatility due to a number of factors. For example, the conflict between Russia and Ukraine and an escalation of tensions and conflict in Israel and
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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. Notwithstanding the current easing of inflation and general improvement in the macroeconomic environment, EVgo remains vigilant of factors that may 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. In addition, continued long lead times of grid equipment such as transformers may impact EVgo’s development cycle.
Government EV Initiatives
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 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, 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. 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.
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Key Components of Results of Operations
Revenue
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, 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. EVgo also offers network services to OEM customers, including memberships and marketing. Finally, as a result of owning and operating the EV charging stations, EVgo earns regulatory credits such as LCFS credits, which are sold to generate additional revenue.
Cost of Sales
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. 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. Depreciation, net of capital-build amortization, consists of depreciation related to EVgo’s property and equipment associated with charging equipment and installation and is partially offset by the amortization of EVgo’s capital-build liabilities associated with third-party funding received for charging stations and other programs.
Gross Profit (Loss) and Gross Margin
Gross profit (loss) consists of EVgo’s revenue less its cost of sales. Gross margin is gross profit (loss) as a percentage of revenue.
Operating Expenses
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. EVgo also expects to continue to incur additional expenses related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, general insurance and directors’ and officers’ insurance, investor relations and other professional services.
Depreciation, Amortization and Accretion. Depreciation, amortization and accretion consists of depreciation related to EVgo’s property, equipment and software not associated with charging equipment and, therefore, not included in the depreciation, net of capital-build amortization expenses recorded in cost of sales. This also includes amortization of EVgo’s intangible assets and accretion related to EVgo’s asset retirement obligations.
Operating Profit (Loss) and Operating Margin
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, cash equivalents and debt securities.
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Other Income (Expense), Net
Other income (expense), net, consists primarily of unrealized gains and losses on marketable securities.
Change in Fair Values of Warrant and Earnout Liabilities
The change in the fair values of the warrant and earnout liabilities reflects the mark-to-market adjustments associated with warrants to purchase shares of the Company’s common stock and earnout liabilities for each reporting period.
Income Taxes
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 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
EVgo management uses several performance metrics to manage the business and evaluate financial and operating performance:
Network Throughput on 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: business line, customer and customer class. EVgo believes monitoring of component trends and contributions is the appropriate way to monitor and measure business-related health.
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. There are certain configurations of EVgo sites where one DC charger is capable of charging only one vehicle at a time; all chargers at such a site are counted as one stall per one charger. There are certain configurations of EVgo sites where one DC charger is capable of charging two vehicles simultaneously; all chargers at such a site are counted as two stalls per one charger.
The following table presents network throughput and the number of DC Stalls on the EVgo Network:
June 30,
2024
2023
Network throughput (GWh) on the EVgo Network for the three months ended
66
25
Network throughput (GWh) on the EVgo Network for the six months ended
119
43
Number of DC Stalls on the EVgo Network (in thousands) as of
3.2
2.5
Factors Affecting EVgo’s Operating Results
EVgo believes its performance and future success depend on a number of factors, including those discussed below and in “ Part II, Item 1A., Risk Factors. ”
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EV Sales
EVgo’s revenue growth is directly tied to the adoption and continued acceptance and usage of passenger and commercial EVs, which it believes drives the demand for electricity, charging infrastructure and charging services. The market for EVs is still rapidly evolving and, although demand for EVs has grown in recent years, there is no guarantee of such future demand. Additionally, as demand increases, the supply must keep pace for adoption to continue to accelerate at a rapid pace. Factors impacting the adoption of EVs include perceptions about EV features, quality, safety, performance and cost; perceptions about the limited range over which EVs may be driven on a single battery charge; availability of services for EVs; consumers’ perception about the convenience, speed, reliability and cost of EV charging; volatility in the price of gasoline and diesel; EV supply chain shortages and disruptions including, but not limited to, availability of certain components (e.g., semiconductors and critical raw materials necessary for the production of EVs and EV batteries), the ability of EV OEMs to ramp-up EV production and/or allocate sufficient quantities of EV models to the U.S. market; domestic content requirements or other policy constraints; availability of batteries and battery materials; availability, cost and desirability of other alternative fuel vehicles, including plug-in hybrid EVs and high fuel-economy gasoline and diesel-powered vehicles; increases in fuel efficiency; regulations applicable to vehicle emissions and fuel economy; and availability of federal and state credits for EV purchases. In addition, macroeconomic factors could impact demand for EVs, particularly since the sales price of EVs can be more expensive than traditional gasoline-powered vehicles. If the market for EVs does not develop as expected or if there is any slowdown or delay in overall adoption of EVs, EVgo’s operating results may be adversely affected.
Electrification of Fleets
EVgo faces competition in the emerging fleet electrification segment, including from certain fleet customers who may opt to install and own charging equipment on their property; 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. 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. The ability of EVgo and its competitors to offer competitive charging services and value-added ancillary services may impact the pace at which fleets electrify and may impact EVgo’s ability to capture market share in fleets. Additionally, federal, state and local government support and regulations directed at fleets (or lack thereof) may accelerate or delay fleet electrification and increase or reduce EVgo’s business opportunity.
Competition
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 widely adopted standards; speed of charging relative to expected vehicle dwell times at a location; DCFC network reliability, scale and local density; software-enabled service offerings and overall customer experience; operator brand, track record and reputation; access to equipment vendors and service providers; policy incentives; and pricing. Existing competitors may expand their product offerings and sales strategies, new competitors may enter the market and certain fleet customers may choose to install and operate their own charging infrastructure. If EVgo’s market share decreases due to increased competition, its revenue and ability to generate profits in the future may be impacted.
Government Mandates, Incentives and Programs
The U.S. 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, 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 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. 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, EVgo has historically claimed
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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.
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 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 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.
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.
Sales of Regulatory Credits
EVgo derives revenue from selling regulatory credits earned for participating in LCFS programs, or other similar carbon or emissions trading schemes, in various jurisdictions in the U.S. EVgo currently sells these credits at market prices. These credits are exposed to various market and supply and demand dynamics which can drive price volatility and which are difficult to predict. Price fluctuations in credits may have a material effect on future results of operations. The availability of such credits depends on continued governmental support for these programs. If these programs are modified, reduced or eliminated, EVgo’s ability to generate this revenue in the future would be adversely impacted. 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.
Seasonality
EVgo believes that EV charging is subject to seasonality related to driving, travel and economic activity that impacts demand for charging. For example, Americans typically drive more miles in the summer months and fewer in the winter months, especially in January and February. EVgo’s rideshare drivers also typically experience lower activity levels in the first quarter. The exact impacts that these underlying trends have on charging demand has been difficult to discern given the growth in throughput and utilization that EVgo has experienced over the past several years. Lastly, many utilities tend to charge higher rates in the summer (typically defined as a four month period starting in June), than the rest of the year.
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Results of Operations for the Three Months Ended June 30, 2024 and 2023
The table below presents EVgo’s results of operations:
Three Months Ended June 30,
Change
(dollars in thousands)
2024
2023
$
%
Revenue
Charging, retail
$
22,336
$
9,085
$
13,251
146
%
Charging, commercial
7,094
2,418
4,676
193
%
Charging, OEM
3,638
986
2,652
269
%
Regulatory credit sales
1,749
1,613
136
8
%
Network, OEM
1,627
742
885
119
%
Total charging network
36,444
14,844
21,600
146
%
eXtend
27,667
33,281
(5,614)
(17)
%
Ancillary
2,508
2,427
81
3
%
Total revenue
66,619
50,552
16,067
32
%
Cost of sales
Charging network 1
23,979
12,009
11,970
100
%
Other 1
25,093
25,731
(638)
(2)
%
Depreciation, net of capital-build amortization
11,149
7,283
3,866
53
%
Total cost of sales
60,221
45,023
15,198
34
%
Gross profit
6,398
5,529
869
16
%
Operating expenses
General and administrative
33,827
34,333
(506)
(1)
%
Depreciation, amortization and accretion
4,958
4,783
175
4
%
Total operating expenses
38,785
39,116
(331)
(1)
%
Operating loss
(32,387)
(33,587)
1,200
4
%
Interest income
2,064
2,199
(135)
(6)
%
Other expense, net
(8)
(1)
(7)
(700)
%
Change in fair value of earnout liability
101
2,496
(2,395)
(96)
%
Change in fair value of warrant liabilities
677
7,391
(6,714)
(91)
%
Total other income, net
2,834
12,085
(9,251)
(77)
%
Loss before income tax expense
(29,553)
(21,502)
(8,051)
(37)
%
Income tax expense
(57)
(37)
(20)
(54)
%
Net loss
(29,610)
(21,539)
(8,071)
(37)
%
Less: net loss attributable to redeemable noncontrolling interest
(19,233)
(14,513)
(4,720)
(33)
%
Net loss attributable to Class A common stockholders
$
(10,377)
$
(7,026)
$
(3,351)
(48)
%
Gross margin
9.6
%
10.9
%
Operating margin
(48.6)
%
(66.4)
%
Network throughput (GWh)
66
25
Number of DC Stalls on the EVgo Network (in thousands) as of
3.2
2.5
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.
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Revenue
Total revenue for the three months ended June 30, 2024 increased $16.1 million, or 32%, to $66.6 million compared to $50.6 million for the three months ended June 30, 2023. As further discussed below, the increase in revenue was primarily due to a $13.3 million increase in retail charging revenue, a $4.7 million increase in commercial charging revenue, a $2.7 million increase in OEM charging revenue, and a $0.9 million increase in network revenue, partially offset by a $5.6 million decrease in eXtend revenue.
Charging Revenue, Retail. Charging revenue, retail, for the three months ended June 30, 2024 increased $13.3 million, or 146%, to $22.3 million compared to $9.1 million for the three months ended June 30, 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 three months ended June 30, 2024 increased $4.7 million, or 193%, to $7.1 million compared to $2.4 million for the three months ended June 30, 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 three months ended June 30, 2024 increased $2.7 million, or 269%, to $3.6 million compared to $1.0 million for the three months ended June 30, 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 three months ended June 30, 2024 increased $0.1 million, or 8%, to $1.7 million compared to $1.6 million for the three months ended June 30, 2023 due to the impact of increased throughput, partially offset by decreased market prices.
Network Revenue, OEM. Network revenue, OEM, for the three months ended June 30, 2024 increased $0.9 million, or 119%, to $1.6 million compared to $0.7 million for the three months ended June 30, 2023. The period-over-period increase was due to increased membership fees and marketing activities from OEM customers.
eXtend Revenue. eXtend revenue for the three months ended June 30, 2024 decreased $5.6 million, or 17%, to $27.7 million compared to $33.3 million for the three months ended June 30, 2023. The decrease was primarily due to a decrease in equipment sales, partially offset by increased construction projects in process or completed, compared to the same prior year period.
Ancillary Revenue. Ancillary revenue for the three months ended June 30, 2024 increased $0.1 million, or 3%, to $2.5 million compared to $2.4 million for the three months ended June 30, 2023. The increase was primarily due to increased revenue from engineering and construction and licensing, partially offset by decreased revenue from equipment sales and research and consulting.
Cost of Sales
Charging Network. Charging network cost of sales for the three months ended June 30, 2024 increased $12.0 million, or 100%, to $24.0 million compared to $12.0 million for the three months ended June 30, 2023. The increase in charging network cost was primarily due to a $8.3 million increase in usage-related energy costs resulting from increased throughput and a $3.7 million increase in fixed charging costs.
Other . Other cost of sales for the three months ended June 30, 2024 decreased $0.6 million, or 2%, to $25.1 million compared to $25.7 million for the three months ended June 30, 2023. The decrease in other cost of sales was primarily due to a decrease of $1.0 million in costs to support eXtend revenue, partially offset by an increase in costs related to ancillary and research-related revenue.
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Depreciation, Net of Capital-Build Amortization. Depreciation, net of capital-build amortization, for the three months ended June 30, 2024 increased $3.9 million, or 53%, to $11.1 million compared to $7.3 million for the three months ended June 30, 2023 due to the growth of EVgo’s charging network.
Gross Profit and Gross Margin
Gross profit for the three months ended June 30, 2024 increased to $6.4 million compared to $5.5 million for the three months ended June 30, 2023 primarily due to increased gross profit from charging revenues, partially offset by decreased eXtend revenue and increased depreciation, net of capital-build amortization. Gross margin for the three months ended June 30, 2024 was 9.6% compared to 10.9% for the three months ended June 30, 2023 primarily due to lower margins from eXtend revenues resulting in a mix shift from higher equipment sales in the three months ended June 30, 2023 to higher construction revenue in the three months ended June 30, 2024, partially offset by higher margins on charging revenue resulting from improved leveraging of charging station costs.
Operating Expenses
General and Administrative Expenses. General and administrative expenses for the three months ended June 30, 2024 decreased $0.5 million, or 1%, to $33.8 million compared to $34.3 million for the three months ended June 30, 2023. The decrease was primarily driven by a $1.5 million decrease in payroll expenses, partially offset by a $0.9 million increase in loss on disposals.
Depreciation, Amortization and Accretion. Depreciation, amortization and accretion expenses for the three months ended June 30, 2024 increased $0.2 million, or 4%, to $5.0 million compared to $4.8 million for the three months ended June 30, 2023. The increase was primarily due to increased amortization related to software, partially offset by decreased amortization of intangible assets.
Operating Loss and Operating Margin
During the three months ended June 30, 2024, EVgo had an operating loss of $32.4 million, a decrease of $1.2 million, or 4%, compared to $33.6 million for the three months ended June 30, 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 June 30, 2024 was negative 48.6% compared to negative 66.4% for the three months ended June 30, 2023 primarily due to improved leveraging of operating expenses and improved gross margin.
Interest Income
Interest income for the three months ended June 30, 2024 decreased $0.1 million, or 6%, to $2.1 million compared to $2.2 million for the three months ended June 30, 2023. The decrease was due to less cash and cash equivalents held in a high interest rate account by the Company during the three months ended June 30, 2024 compared to the same prior year period.
Other Expense, Net
Other expense, net, for the three months ended June 30, 2024 and 2023 was de minimis.
Changes in Fair Values of Warrant and Earnout Liabilities
For the three months ended June 30, 2024, there was a $0.8 million gain resulting from the change in fair values of warrant and earnout liabilities compared to a $9.9 million gain for the three months ended June 30, 2023. The change between periods was primarily due to a lower decrease in the fair value of the warrant and earnout liabilities during the three months ended June 30, 2024 compared to the same prior year period. See “ Part I, Item 1. Financial Statements – Note 10 – Fair Value Measurements ” for more information.
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Income Taxes
For the three months ended June 30, 2024 and 2023, EVgo’s income taxes and effective tax rates were de minimis. As of June 30, 2024 and 2023, EVgo maintained a full valuation allowance on EVgo’s net deferred tax assets.
Net Loss
Net loss for the three months ended June 30, 2024 was $29.6 million, compared to a net loss of $21.5 million for the three months ended June 30, 2023. The change was primarily driven by a $9.1 million impact from changes in the fair values of the warrant and earnout liabilities, which was partially offset by increased gross profit of $0.9 million and a $0.5 million decrease in general and administrative expenses.
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Results of Operations for the Six Months Ended June 30, 2024 and 2023
The table below presents EVgo’s results of operations:
Six Months Ended June 30,
Change
(dollars in thousands)
2024
2023
$
%
Revenue
Charging, retail
$
40,662
$
15,700
$
24,962
159
%
Charging, commercial
12,933
4,133
8,800
213
%
Charging, OEM
6,370
1,538
4,832
314
%
Regulatory credit sales
3,783
2,828
955
34
%
Network, OEM
5,050
3,441
1,609
47
%
Total charging network
68,798
27,640
41,158
149
%
eXtend
46,818
43,573
3,245
7
%
Ancillary
6,161
4,639
1,522
33
%
Total revenue
121,777
75,852
45,925
61
%
Cost of sales
Charging network 1
43,489
21,988
21,501
98
%
Other 1
43,541
34,669
8,872
26
%
Depreciation, net of capital-build amortization
21,508
13,625
7,883
58
%
Total cost of sales
108,538
70,282
38,256
54
%
Gross profit
13,239
5,570
7,669
138
%
Operating expenses
General and administrative
68,053
72,222
(4,169)
(6)
%
Depreciation, amortization and accretion
9,943
9,567
376
4
%
Total operating expenses
77,996
81,789
(3,793)
(5)
%
Operating loss
(64,757)
(76,219)
11,462
15
%
Interest income
4,337
4,197
140
3
%
Other expense, net
(17)
—
(17)
*
Change in fair value of earnout liability
309
433
(124)
(29)
%
Change in fair value of warrant liabilities
2,395
1,011
1,384
137
%
Total other income, net
7,024
5,641
1,383
25
%
Loss before income tax expense
(57,733)
(70,578)
12,845
18
%
Income tax expense
(70)
(42)
(28)
(67)
%
Net loss
(57,803)
(70,620)
12,817
18
%
Less: net loss attributable to redeemable noncontrolling interest
(37,593)
(50,518)
12,925
26
%
Net loss attributable to Class A common stockholders
$
(20,210)
$
(20,102)
$
(108)
(1)
%
Gross margin
10.9
%
7.3
%
Operating margin
(53.2)
%
(100.5)
%
Network throughput (GWh) on the EVgo Network
119
43
Number of DC Stalls on the EVgo Network (in thousands) as of
3.2
2.5
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.
Revenue
Total revenue for the six months ended June 30, 2024 increased $45.9 million, or 61%, to $121.8 million compared to $75.9 million for the six months ended June 30, 2023. As further discussed below, the increase in revenue was primarily due to a $25.0 million increase in retail charging revenue, an $8.8 million increase in commercial charging revenue, a $4.8 million increase in OEM charging revenue, and a $3.2 million increase in eXtend revenue.
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Charging Revenue, Retail. Charging revenue, retail, for the six months ended June 30, 2024 increased $25.0 million, or 159%, to $40.7 million compared to $15.7 million for the six months ended June 30, 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 six months ended June 30, 2024 increased $8.8 million, or 213%, to $12.9 million compared to $4.1 million for the six months ended June 30, 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 six months ended June 30, 2024 increased $4.8 million, or 314%, to $6.4 million compared to $1.5 million for the six months ended June 30, 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 six months ended June 30, 2024 increased $1.0 million, or 34%, to $3.8 million compared to $2.8 million for the six months ended June 30, 2023 due to the impact of increased throughput, partially offset by decreased market prices.
Network Revenue, OEM. Network revenue, OEM, for the six months ended June 30, 2024 increased $1.6 million, or 47%, to $5.1 million compared to $3.4 million for the six months ended June 30, 2023. The period-over-period increase was primarily due to increased marketing activities and membership fees from OEM customers.
eXtend Revenue. eXtend revenue for the six months ended June 30, 2024 increased $3.2 million, or 7%, to $46.8 million compared to $43.6 million for the six months ended June 30, 2023. The increase was primarily due to an increase in construction projects in process or completed, partially offset by decreased equipment sales, compared to the same prior year period.
Ancillary Revenue. Ancillary revenue for the six months ended June 30, 2024 increased $1.5 million, or 33%, to $6.2 million compared to $4.6 million for the six months ended June 30, 2023. The increase was primarily due to increased revenue from engineering and construction, equipment sales, and licensing, partially offset by decreased revenue from advertising.
Cost of Sales
Charging Network. Charging network cost of sales for the six months ended June 30, 2024 increased $21.5 million, or 98%, to $43.5 million compared to $22.0 million for the six months ended June 30, 2023. The increase in charging network cost was primarily due to a $15.0 million increase in usage-related energy costs resulting from increased throughput and a $6.5 million increase in fixed charging costs.
Other . Other cost of sales for the six months ended June 30, 2024 increased $8.9 million, or 26%, to $43.5 million compared to $34.7 million for the six months ended June 30, 2023. The increase in other cost of sales was primarily due to an increase of $7.3 million in costs to support eXtend revenue and an increase of $1.2 million in costs to support ancillary revenue .
Depreciation, Net of Capital-Build Amortization. Depreciation, net of capital-build amortization, for the six months ended June 30, 2024 increased $7.9 million, or 58%, to $21.5 million compared to $13.6 million for the six months ended June 30, 2023 due to the growth of EVgo’s charging network.
Gross Profit and Gross Margin
Gross profit for the six months ended June 30, 2024 increased to $13.2 million compared to $5.6 million for the six months ended June 30, 2023 primarily due to increased gross profit from charging revenues, partially offset by increased depreciation, net of capital-build amortization. Gross margin for the six months ended June 30, 2024 was 10.9% compared to 7.3% for the six months ended June 30, 2023 primarily due to higher margins on charging revenue resulting from improved leveraging of charging station costs, partially offset by lower margins from eXtend revenues resulting in a mix
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shift from higher equipment sales in the six months ended June 30, 2023 to higher construction revenue in the six months ended June 30, 2024.
Operating Expenses
General and Administrative Expenses. General and administrative expenses for the six months ended June 30, 2024 decreased $4.2 million, or 6%, to $68.1 million compared to $72.2 million for the six months ended June 30, 2023. The decrease was primarily driven by a $2.3 million decrease in payroll expenses, a $1.8 million decrease in impairment expense, and a $0.8 million decrease in legal and professional services, partially offset by a $1.4 million increase in loss on disposals of property and equipment, net of insurance recoveries.
Depreciation, Amortization and Accretion. Depreciation, amortization and accretion expenses for the six months ended June 30, 2024 increased $0.4 million, or 4%, to $9.9 million compared to $9.6 million for the six months ended June 30, 2023. The increase was primarily due to increased amortization related to software, partially offset by decreased amortization of intangible assets and decreased accretion expense.
Operating Loss and Operating Margin
During the six months ended June 30, 2024, EVgo had an operating loss of $64.8 million, an improvement of $11.5 million, or 15%, compared to $76.2 million for the six months ended June 30, 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 six months ended June 30, 2024 was negative 53.2% compared to negative 100.5% for the six months ended June 30, 2023 primarily due to improved gross margin and improved leveraging of operating expenses.
Interest Income
Interest income for the six months ended June 30, 2024 increased $0.1 million, or 3%, to $4.3 million compared to $4.2 million for the six months ended June 30, 2023. The increase was primarily due to higher interest rates, partially offset by decreased cash held by the Company during the six months ended June 30, 2024 compared to the same prior-year period.
Other Expense, Net
Other expense, net, for the six months ended June 30, 2024 and 2023 was de minimis.
Changes in Fair Values of Warrant and Earnout Liabilities
For the six months ended June 30, 2024, there was a $2.7 million gain resulting from the change in fair values of warrant and earnout liabilities compared to a $1.4 million gain for the six months ended June 30, 2023. The change between periods was primarily due to a larger decrease in the fair value of the warrant liabilities during the six months ended June 30, 2024, compared to the same prior-year period. See “ Part I, Item 1. Financial Statements – Note 10 – Fair Value Measurements ” for more information.
Income Taxes
For the six months ended June 30, 2024 and 2023, EVgo’s income taxes and effective tax rates were de minimis. As of June 30, 2024 and 2023, EVgo maintained a full valuation allowance on EVgo’s net deferred tax assets.
Net Loss
Net loss for the six months ended June 30, 2024 was $57.8 million, compared to a net loss of $70.6 million for the six months ended June 30, 2023. The change was primarily driven by increased gross profit of $7.7 million, a $4.2 million decrease in general and administrative expenses, and a $1.3 million impact from changes in the fair values of the warrant and earnout liabilities.
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Non-GAAP Financial Measures
This Quarterly Report includes the following non-GAAP financial measures, in each case as defined below: “Charging Network Margin,” “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.
Charging Network Margin, 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. These metrics should not be considered as alternatives to net income (loss) or any other performance measures derived in accordance with GAAP.
EVgo defines Charging Network Margin as total charging network revenue less charging network cost of sales divided by total charging network revenue. EVgo defines Adjusted Cost of Sales as cost of sales before: (i) depreciation, net of capital-build amortization, and (ii) share-based compensation. EVgo defines Adjusted Cost of Sales as a Percentage of Revenue as Adjusted Cost of Sales as a percentage of revenue. EVgo defines Adjusted Gross Profit (Loss) as revenue less Adjusted Cost of Sales. EVgo defines Adjusted Gross Margin as Adjusted Gross Profit (Loss) as a percentage of revenue. EVgo defines Adjusted General and Administrative Expenses as general and administrative expenses before (i) share-based compensation, (ii) loss on disposal of property and equipment, 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 (benefit). 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 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. 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.
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The following unaudited table presents a reconciliation of Charging Network Margin, 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
Six Months Ended
June 30,
June 30,
(dollars in thousands)
2024
2023
2024
2023
GAAP total charging network revenue
$
36,444
$
14,844
$
68,798
$
27,640
GAAP charging network cost of sales
23,979
12,009
43,489
21,988
Charging Network Margin
34.2%
19.1%
36.8%
20.4%
GAAP revenue
$
66,619
$
50,552
$
121,777
$
75,852
GAAP cost of sales
60,221
45,023
108,538
70,282
GAAP gross profit
$
6,398
$
5,529
$
13,239
$
5,570
GAAP cost of sales as a percentage of revenue
90.4%
89.1%
89.1%
92.7%
GAAP gross margin
9.6%
10.9%
10.9%
7.3%
Adjustments:
Depreciation, net of capital-build amortization
$
11,149
$
7,283
$
21,508
$
13,625
Share-based compensation
111
41
198
63
Total adjustments
11,260
7,324
21,706
13,688
Adjusted Cost of Sales
$
48,961
$
37,699
$
86,832
$
56,594
Adjusted Cost of Sales as a Percentage of Revenue
73.5%
74.6%
71.3%
74.6%
Adjusted Gross Profit
$
17,658
$
12,853
$
34,945
$
19,258
Adjusted Gross Margin
26.5%
25.4%
28.7%
25.4%
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:
Three Months Ended
Six Months Ended
June 30,
June 30,
(dollars in thousands)
2024
2023
2024
2023
GAAP revenue
$
66,619
$
50,552
$
121,777
$
75,852
GAAP general and administrative expenses
$
33,827
$
34,333
$
68,053
$
72,222
GAAP general and administrative expenses as a percentage of revenue
50.8%
67.9%
55.9%
95.2%
Adjustments:
Share-based compensation
$
5,291
$
8,454
$
9,905
$
14,859
Loss on disposal of property and equipment, net of insurance recoveries, and impairment expense
2,757
2,389
5,497
5,849
Bad debt expense
81
56
311
153
Other 1
66
24
2,218
1,479
Total adjustments
8,195
10,923
17,931
22,340
Adjusted General and Administrative Expenses
$
25,632
$
23,410
$
50,122
$
49,882
Adjusted General and Administrative Expenses as a Percentage of Revenue
38.5%
46.3%
41.2%
65.8%
1
For the six months ended June 30, 2024, comprised primarily of costs related to the organizational realignment announced by the Company on January 17, 2024. For the six months ended June 30, 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").
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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
Six Months Ended
June 30,
June 30,
(dollars in thousands)
2024
2023
2024
2023
GAAP revenue
$
66,619
$
50,552
$
121,777
$
75,852
GAAP net loss
$
(29,610)
$
(21,539)
$
(57,803)
$
(70,620)
GAAP net loss margin
(44.4%)
(42.6%)
(47.5%)
(93.1%)
Adjustments:
Depreciation, net of capital-build amortization
11,288
7,407
21,764
13,875
Amortization
4,342
4,117
8,805
8,236
Accretion
477
542
882
1,081
Interest income
(2,064)
(2,199)
(4,337)
(4,197)
Income tax expense
57
37
70
42
EBITDA
$
(15,510)
$
(11,635)
$
(30,619)
$
(51,583)
EBITDA Margin
(23.3%)
(23.0%)
(25.1%)
(68.0%)
Adjustments:
Share-based compensation
5,402
8,495
10,103
14,922
Loss on disposal of property and equipment, net of insurance recoveries, and impairment expense
2,757
2,389
5,497
5,849
Loss on investments
—
5
5
4
Bad debt expense
81
56
311
153
Change in fair value of earnout liability
(101)
(2,496)
(309)
(433)
Change in fair value of warrant liabilities
(677)
(7,391)
(2,395)
(1,011)
Other 1
66
24
2,218
1,479
Total adjustments
7,528
1,082
15,430
20,963
Adjusted EBITDA
$
(7,982)
$
(10,553)
$
(15,189)
$
(30,620)
Adjusted EBITDA Margin
(12.0%)
(20.9%)
(12.5%)
(40.4%)
1
For the six months ended June 30, 2024, comprised primarily of costs related to the organizational realignment announced by the Company on January 17, 2024. For the six months ended June 30, 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
Six Months Ended
June 30,
June 30,
(dollars in thousands)
2024
2023
2024
2023
GAAP capital expenditures
$
24,196
$
34,811
$
45,267
$
100,057
Capital offsets:
OEM infrastructure payments
$
5,956
$
6,022
$
11,782
$
9,917
Proceeds from capital-build funding
4,459
2,040
6,139
4,256
Total capital offsets
10,415
8,062
17,921
14,173
Capital Expenditures, Net of Capital Offsets
$
13,781
$
26,749
$
27,346
$
85,884
Liquidity and Capital Resources
EVgo has a history of operating losses and negative operating cash flows. As of June 30, 2024, EVgo had $162.7 million of cash, cash equivalents and restricted cash and working capital of $135.4 million. As of December 31, 2023,
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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 six months ended June 30, 2024 was $46.4 million. EVgo believes its cash and cash equivalents on hand as of June 30, 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. EVgo’s primary cash requirements include operating expenses, satisfaction of commitments to various counterparties and suppliers and capital expenditures (including property and equipment). EVgo’s principal uses of cash in recent periods have been funding its operations and investing in capital expenditures, including the purchase of EV chargers for installation.
In July 2022, EVgo entered into the Delta Charger Supply Agreement and the Purchase Order with Delta, pursuant to which EVgo will purchase and Delta will sell EV chargers manufactured by Delta from time to time in specified quantities at certain delivery dates over a period of four years. 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 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; however, EVgo’s liability is capped at a maximum of the greater of $30.0 million or 50% of the value of any outstanding firm orders. EVgo entered into the Delta Charger Supply Agreement and Purchase Order in order to meet its obligations under the Pilot Infrastructure Agreement, other potential contractual commitments and its own needs and intends to fund the capital expenditure required under the Delta Charger Supply Agreement and Purchase Order with proceeds from the Pilot Infrastructure Agreement as well as cash and cash equivalents on hand.
The term of the Tax Receivable Agreement commenced upon the completion of the CRIS Business Combination and will continue until all tax benefits that are subject to the Tax Receivable Agreement have been utilized or expired and all required payments are made, unless the Tax Receivable Agreement is terminated early (including upon a change of control). The actual timing and amount of any payments that may be made under the Tax Receivable Agreement are unknown at this time and will vary based on a number of factors. However, the Company Group expects that the payments that it will be required to make to TRA Holders in connection with the Tax Receivable Agreement will be substantial. Any payments made by the Company Group to TRA Holders under the Tax Receivable Agreement will generally reduce the amount of cash that might have otherwise been available to EVgo or EVgo OpCo. To the extent EVgo OpCo has available cash and subject to the terms of any current or future debt or other agreements, the EVgo OpCo A&R LLC Agreement will require EVgo OpCo to make pro rata cash distributions to holders of EVgo OpCo Units, including Thunder Sub, in an amount sufficient to allow the Company Group to pay its taxes and to make payments under the Tax Receivable Agreement. EVgo generally expects EVgo OpCo to fund such distributions out of available cash. However, except in cases where the Company Group elects to terminate the Tax Receivable Agreement early, the Tax Receivable Agreement is terminated early due to certain mergers or other changes of control, or the Company Group has available cash but fails to make payments when due, generally the Company Group may elect to defer payments due under the Tax Receivable Agreement if it does not have available cash to satisfy its payment obligations under the Tax Receivable Agreement or if its contractual obligations limit its ability to make these payments. Any such deferred payments under the Tax Receivable Agreement generally will accrue interest at the rate provided for in the Tax Receivable Agreement and such interest may significantly exceed the Company Group’s other costs of capital. 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. 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.
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Cash Flows
The following table summarizes EVgo’s consolidated cash flows:
Six Months Ended June 30,
(in thousands)
2024
2023
Cash flows used in operating activities
$
(6,526)
$
(22,525)
Cash flows used in investing activities
(45,115)
(99,898)
Cash flows provided by financing activities
5,231
133,356
Net (decrease) increase in cash, cash equivalents and restricted cash
$
(46,410)
$
10,933
Operating Activities. Cash used in operating activities for the six months ended June 30, 2024 was $6.5 million compared to $22.5 million for the six months ended June 30, 2023. The year-over-year change primarily reflected a $14.7 million increase in cash flows from operations, an $11.5 million increase in cash inflows from accounts receivable, net, and a $9.0 million increase in cash flows from accounts payable, partially offset by an $8.7 million decrease in cash flows from accrued liabilities, a $7.0 million decrease in cash flows from deferred revenue, and a $2.5 million decrease in cash flows from prepaid expenses, other current assets and other assets.
Investing Activities. Cash used in investing activities for the six months ended June 30, 2024 was $45.1 million, compared to $99.9 million for the six months ended June 30, 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 six months ended June 30, 2024 was $5.2 million compared to $133.4 million for the six months ended June 30, 2023. The decrease was driven primarily by the proceeds from the issuance of Class A common stock in the Company’s underwritten equity offering during 2023.
Working Capital . EVgo’s working capital as of June 30, 2024 was $135.4 million, compared to $178.1 million as of December 31, 2023. The decrease was driven primarily by a $46.4 million decrease in the Company’s cash, cash equivalents and restricted cash and a $6.0 million increase in accounts payable, partially offset by a $3.9 million increase in accounts receivable, capital-build, and a $3.7 million decrease in deferred revenue, current.
Contractual Obligations and Commitments . EVgo has material cash requirements for known contractual obligations and commitments in the form of operating leases, purchase commitments and certain other liabilities that are disclosed in “ Part I, Item 1. Financial Statements – Note 9 – Commitments and Contingencies. ” EVgo generally expects to fund these obligations through its existing cash and cash equivalents and future financing or cash flows from operations.
Critical Accounting Policies and Estimates
The discussion and analysis of EVgo’s financial condition and results of operations is based upon EVgo’s condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of EVgo’s financial statements requires the Company to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses and related disclosures of contingent assets and liabilities. Management bases these estimates on its historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results experienced may vary materially and adversely from EVgo’s estimates. Revisions to estimates are recognized prospectively. See “ Part I, Item 1. Financial Statements – Note 2 – Summary of Significant Accounting Policies ” for additional detail regarding the significant accounting policies that have been followed in preparing EVgo’s condensed consolidated financial statements.
The accounting policies described below are those EVgo considers to be the most critical to an understanding of its financial condition and results of operations and that require the most complex and subjective management judgment. EVgo considers its critical accounting estimates to be those related to its revenue recognition, business combinations and warrant liabilities, which are described below.
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Revenue Recognition
EVgo recognizes revenue in accordance with ASC 606. 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. Changes to the elements in an arrangement or, in EVgo’s determination, to the relative SSP for these elements, could materially affect the amount of earned and unearned revenue reflected in its consolidated financial statements.
Understanding the complex terms of some of EVgo’s agreements and determining the appropriate time, amount and method under which the Company should recognize revenue for the related transactions requires significant judgment. The Company exercises judgment in determining which promises in a contract constitute performance obligations rather than set-up activities. The Company determines which activities under a contract transfer a good or service to a customer rather than activities that are required to fulfill a contract but do not transfer control of a good or service to the customer. Determining whether obligations in a contract are considered distinct performance obligations that should be accounted for separately or as a single performance obligation requires significant judgment. In reaching its conclusion, the Company assesses the nature of each individual service offering and how the services are provided in the context of the contract, including whether the services are significantly integrated which may require judgment based on the facts and circumstances of the contract. The Company does not disclose the transaction price allocated to remaining performance obligations for (i) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice and (ii) contracts with variable consideration allocated entirely to a single performance obligation. The Company’s remaining performance obligations under these contracts include providing charging services, branding services, and maintenance services, which will generally be recognized over the contract term. The Company’s customer contracts may include variable consideration such as that due to the unknown number of users that will receive charging credits or an unknown number of sites that will receive maintenance services. For such variable consideration, the Company has determined it is not necessary to estimate variable consideration as the uncertainty resolves itself monthly in accordance with the contracts’ revenue recognition pattern. The timing and amount of revenue recognition in a period could vary if different judgments were made. The Company may also estimate variable consideration under the expected value method or the most likely amount method.
Additionally, where there are multiple performance obligations, judgment is required to determine revenue for each distinct performance obligation. Determining the relative SSP for contracts that contain multiple performance obligations requires significant judgment to appropriately determine the suitable method for estimating the SSP. EVgo determines SSP using observable pricing when available, which takes into consideration market conditions and customer specific factors.
At contract inception, EVgo determines whether EVgo satisfies the performance obligation over time or at a point in time. Revenues from charging – OEM are primarily recognized ratably over time or as fee-bearing usage occurs. Revenues from charging – retail, charging – commercial and LCFS are usage-based services and recognized over time or at a point in time upon the delivery of the charging products or services. eXtend and ancillary revenues are recognized over time based on a time-based or cost-based approach or at a point in time as performance obligations are satisfied.
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.
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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
EVgo accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480 and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to EVgo’s common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of EVgo’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end-date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance and remeasured to fair value at each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized in “changes in fair value of warrant liabilities” in the consolidated statements of operations. The fair value of the Private Placement Warrants on the date of issuance and on each measurement date is estimated 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 .
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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 ” as of and for the three and six months ended June 30, 2024 and 2023.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act includes provisions that, among other things, relax certain reporting requirements for qualifying public companies. Following the CRIS Business Combination, EVgo has qualified as an “emerging growth company” (“EGC”) under the JOBS Act and, as a result, is permitted to comply with new or revised accounting pronouncements based on the effective date for private (i.e., not publicly traded) companies. EVgo elected to delay the adoption of new or revised accounting standards and as a result, EVgo may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, EVgo’s financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
As an EGC, EVgo is not required to, among other things, (a) provide an auditor’s attestation report on EVgo’s system of internal control over financial reporting, (b) provide all of the compensation disclosure that may be required of non-EGC public companies, (c) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (d) disclose comparisons of the chief executive officer’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of the Initial Public Offering or until EVgo otherwise no longer qualifies as an EGC.
Additionally, following the CRIS Business Combination, EVgo has qualified as a “smaller reporting company” as defined under the Exchange Act. EVgo may continue to be a smaller reporting company so long as either (i) the market value of shares of its common stock held by non-affiliates is less than $250 million or (ii) its annual revenue was less than $100 million during the most recently completed fiscal year and the market value of shares of its common stock held by non-affiliates is less than $700 million. If EVgo is a smaller reporting company at the time it ceases to be an EGC, EVgo may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company, EVgo may choose to present only the two most recent fiscal years of audited financial statements in its Annual Report on Form 10-K and has reduced disclosure obligations regarding executive compensation and, similar to EGCs, if EVgo is a smaller reporting company under the requirements of (ii) above, EVgo would not be required to obtain an attestation report on internal control over financial reporting issued by its independent registered public accounting firm.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
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 3.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.