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Item 2. Management’s Discussion and Analysis

2024-11-12 compared with 2024-08-01 · 147 added, 144 removed, 450 unchanged (39% 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 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.

The discussion should be read in conjunction with EVgo’s unaudited condensed consolidated financial statements and the related notes thereto as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 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.

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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

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.

During the last several years, the global economy has experienced disruption and sustained volatility due to a number of factors, such as the conflict between Russia and Ukraine and the conflict between 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.

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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.

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.

In particular, the Inflation Reduction Act (i) expanded and extended tax credits for EV charging infrastructure and new EVs while also amending rules for vehicles to qualify 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, tax incentives may expire, grant programs will end when the allocated funding from the Bipartisan Infrastructure Law is exhausted, or may be impacted 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.

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 if material changes are made to these laws or the regulations issued thereunder, which could negatively affect the EV market and adversely impact EVgo’s business operations and expansion potential.

In addition, a number of states 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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Interest income consists primarily of interest earned on cash, cash equivalents and debt securities.

Other Income (Expense), Net

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

Change in Fair Values of Warrant and Earnout Liabilities

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

September 30,

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

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

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

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

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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.

In addition, macroeconomic factors could impact demand for

EVs, particularly since the sales price of EVs can be more expensive than traditional gasoline-powered vehicles.

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

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Further, EVgo has historically claimed

federal tax credits under Section 30C of the Code.

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.

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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.

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.

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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.

Results of Operations for the Three Months Ended June 30, 2024 and 2023

Results of Operations for the Three Months Ended September 30, 2024 and 2023

The table below presents EVgo’s results of operations:

Three Months Ended June 30,

Three Months Ended September 30,

(dollars in thousands)

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Interest income

Other expense, net

Other (expense) income, net

Change in fair value of earnout liability

Change in fair value of warrant liabilities

Total other income, net

Total other (expense) income, net

Loss before income tax expense

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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.

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.

* Percentage not meaningful.

Total revenue for the three months ended September 30, 2024 increased $32.4 million, or 92%, to $67.5 million compared to $35.1 million for the three months ended September 30, 2023.

As further discussed below, the increase in revenue was primarily due to a $13.3 million increase in retail charging revenue, an $11.4 million increase in eXtend revenue, a $4.6 million increase in commercial charging revenue, and a $2.8 million increase in OEM charging 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, retail, for the three months ended September 30, 2024 increased $13.3 million, or 100%, to $26.7 million compared to $13.4 million for the three months ended September 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 and, to a lesser extent, price increases.

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, commercial, for the three months ended September 30, 2024 increased $4.6 million, or 113%, to $8.6 million compared to $4.0 million for the three months ended September 30, 2023.

Period-over-period growth was primarily due to higher charging volumes by the Company’s public fleet customers and, to a lesser extent, price increases.

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.

Charging revenue, OEM, for the three months ended September 30, 2024 increased $2.8 million, or 191%, to $4.3 million compared to $1.5 million for the three months ended September 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.

Regulatory credit sales for the three months ended September 30, 2024 increased $0.4 million, or 21%, to $2.2 million compared to $1.8 million for the three months ended September 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.

Network revenue, OEM, for the three months ended September 30, 2024 increased $0.2 million, or 15%, to $1.3 million compared to $1.1 million for the three months ended September 30, 2023.

The period-over-period increase was due to increased marketing activities and membership fees from OEM customers, partially offset by decreased breakage.

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.

eXtend revenue for the three months ended September 30, 2024 increased $11.4 million, or 109%, to $21.9 million compared to $10.5 million for the three months ended September 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 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.

Ancillary revenue for the three months ended September 30, 2024 decreased $0.3 million, or 9%, to $2.6 million compared to $2.8 million for the three months ended September 30, 2023.

The decrease was primarily due to decreased engineering and construction services.

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 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.

Charging network cost of sales for the three months ended September 30, 2024 increased $13.3 million, or 86%, to $28.9 million compared to $15.6 million for the three months ended September 30, 2023.

The increase in charging network cost was primarily due to a $9.0 million increase in usage-related energy costs resulting from increased throughput and a $4.3 million increase in non-energy charging costs.

Other cost of sales for the three months ended September 30, 2024 increased $10.4 million, or 101%, to $20.8 million compared to $10.3 million for the three months ended September 30, 2023.

The increase in other cost of sales was primarily due to an increase in costs related to eXtend, partially offset by a decrease of $0.4 million in costs related to ancillary revenue.

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.

Depreciation, net of capital-build amortization, for the three months ended September 30, 2024 increased $2.9 million, or 34%, to $11.5 million compared to $8.6 million for the three months ended September 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.

Gross profit for the three months ended September 30, 2024 increased to $6.4 million compared to $0.6 million for the three months ended September 30, 2023 primarily due to increased gross profit from charging revenues and eXtend revenue, partially offset by increased depreciation, net of capital-build amortization.

Gross margin for the three months ended September 30, 2024 was 9.4% compared to 1.7% for the three months ended September 30, 2023 primarily due to

higher margins from charging revenue resulting from improved leveraging of charging station costs, partially offset by lower margins due to decreased contributions from higher margin ancillary revenues and regulatory credit sales in the three months ended September 30, 2024 compared to the same prior-year period.

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.

General and administrative expenses for the three months ended September 30, 2024 increased $1.1 million, or 3%, to $33.1 million compared to $32.0 million for the three months ended September 30, 2023.

The increase was primarily driven by a $1.0 million increase in payroll due to an increase in the overall headcount during the three months ended September 30, 2024 compared to the same prior-year period and a $0.7 million increase in legal and professional services, partially offset by a $1.2 million decrease in impairment expense.

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.

Depreciation, amortization and accretion expenses for the three months ended September 30, 2024 and 2023 was $5.0 million.

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.

During the three months ended September 30, 2024, EVgo had an operating loss of $31.8 million, a decrease of $4.6 million, or 13%, compared to $36.4 million for the three months ended September 30, 2023.

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

Operating margin for the three months ended September 30, 2024 was negative 47.1% compared to negative 103.6% for the three months ended September 30, 2023 primarily due to improved leveraging of operating expenses and 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.

Interest income for the three months ended September 30, 2024 decreased $1.1 million, or 38%, to $1.8 million compared to $2.9 million for the three months ended September 30, 2023.

The decrease was due primarily to less cash and cash equivalents held in a high interest rate account by the Company and, to a lesser extent, lower interest rates during the three months ended September 30, 2024 compared to the same prior year period.

Other (Expense) Income, Net

Other (expense) income, net, for the three months ended September 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.

For the three months ended September 30, 2024, there was a $3.3 million loss resulting from the change in fair values of warrant and earnout liabilities compared to a $5.2 million gain for the three months ended September 30, 2023.

The change between periods was primarily due to an increase in the fair value of the warrant and earnout liabilities during the three months ended September 30, 2024 compared to a decrease during the same prior-year period.

See “ Part I, Item 1.

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

For the three months ended June 30, 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 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.

Results of Operations for the Six Months Ended June 30, 2024 and 2023

For the three months ended September 30, 2024 and 2023, EVgo’s income taxes and effective tax rates were de minimis.

As of September 30, 2024 and 2023, EVgo maintained a full valuation allowance on EVgo’s net deferred tax assets.

Net loss for the three months ended September 30, 2024 was $33.3 million, compared to a net loss of $28.3 million for the three months ended September 30, 2023.

The change was primarily driven by an $8.5 million impact from changes in the fair values of the warrant and earnout liabilities and a $1.1 million increase in general and administrative expenses, partially offset by increased gross profit of $5.8 million.

Results of Operations for the Nine Months Ended September 30, 2024 and 2023

The table below presents EVgo’s results of operations:

Six Months Ended June 30,

Nine Months Ended September 30,

(dollars in thousands)

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Interest income

Other expense, net

Other (expense) income, net

Change in fair value of earnout liability

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* Percent not meaningful.

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.

* Percentage more than 999%.

Total revenue for the nine months ended September 30, 2024 increased $78.4 million, or 71%, to $189.3 million compared to $111.0 million for the nine months ended September 30, 2023.

As further discussed below, the increase in revenue was primarily due to a $38.3 million increase in retail charging revenue, a $14.7 million increase in eXtend revenue, a $13.4 million increase in commercial charging revenue, and a $7.7 million increase in OEM charging revenue.

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, retail, for the nine months ended September 30, 2024 increased $38.3 million, or 132%, to $67.3 million compared to $29.1 million for the nine months ended September 30, 2023.

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, commercial, for the nine months ended September 30, 2024 increased $13.4 million, or 164%, to $21.6 million compared to $8.2 million for the nine months ended September 30, 2023.

Period-over-period growth was primarily due to higher charging volumes by the Company’s public fleet customers and, to a lesser extent, price increases.

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.

Charging revenue, OEM, for the nine months ended September 30, 2024 increased $7.7 million, or 254%, to $10.7 million compared to $3.0 million for the nine months ended September 30, 2023.

Period-over-period growth was primarily due to an increased enrollment of OEM customers resulting in increased throughput.

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.

Regulatory credit sales for the nine months ended September 30, 2024 increased $1.3 million, or 29%, to $6.0 million compared to $4.6 million for the nine months ended September 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.

Network revenue, OEM, for the nine months ended September 30, 2024 increased $1.8 million, or 39%, to $6.3 million compared to $4.6 million for the nine months ended September 30, 2023.

The period-over-period increase was primarily due to increased marketing activities and membership fees from OEM customers, partially offset by decreased breakage.

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.

eXtend revenue for the nine months ended September 30, 2024 increased $14.7 million, or 27%, to $68.7 million compared to $54.0 million for the nine months ended September 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.

Ancillary revenue for the nine months ended September 30, 2024 increased $1.3 million, or 17%, to $8.7 million compared to $7.5 million for the nine months ended September 30, 2023.

The increase was primarily due to increased equipment sales, partially offset by decreased revenue from dedicated fleet contracts.

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 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.

Charging network cost of sales for the nine months ended September 30, 2024 increased $34.8 million, or 93%, to $72.4 million compared to $37.5 million for the nine months ended September 30, 2023.

The increase in charging network cost was primarily due to a $24.1 million increase in usage-related energy costs resulting from increased throughput and a $10.7 million increase in non-energy charging costs.

Other cost of sales for the nine months ended September 30, 2024 increased $19.3 million, or 43%, to $64.3 million compared to $45.0 million for the nine months ended September 30, 2023.

The increase in other cost of sales was primarily due to an increase of $17.8 million in costs to support eXtend revenue and an increase of $0.8 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.

Depreciation, net of capital-build amortization, for the nine months ended September 30, 2024 increased $10.8 million, or 49%, to $33.1 million compared to $22.2 million for the nine months ended September 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

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.

Gross profit for the nine months ended September 30, 2024 increased to $19.6 million compared to $6.2 million for the nine months ended September 30, 2023 primarily due to increased gross profit from charging revenues, partially offset by decreased gross profit from eXtend revenues and increased depreciation, net of capital-build amortization.

Gross margin for the nine months ended September 30, 2024 was 10.4% compared to 5.6% for the nine months ended September 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 from a shift of higher equipment sales in the nine months ended September 30, 2023 to higher construction revenue in the nine months ended September 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.

General and administrative expenses for the nine months ended September 30, 2024 decreased $3.1 million, or 3%, to $101.2 million compared to $104.2 million for the nine months ended September 30, 2023.

The decrease was primarily driven by a $3.0 million decrease in impairment expense, a $1.4 million decrease in payroll expenses primarily driven by lower share-based compensation, and a $0.7 million decrease in insurance expense, partially offset by a $0.8 million increase in storage and freight costs.

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.

Depreciation, amortization and accretion expenses for the nine months ended September 30, 2024 increased $0.5 million, or 3% to $15.0 million compared to $14.5 million for the nine months ended September 30, 2023.

The increase was primarily driven by an increase in software amortization, partially offset by a decrease in amortization of intangible assets.

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.

During the nine months ended September 30, 2024, EVgo had an operating loss of $96.5 million, an improvement of $16.0 million, or 14%, compared to $112.6 million for the nine months ended September 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.

Operating margin for the nine months ended September 30, 2024 was negative 51.0% compared to negative 101.5% for the nine months ended September 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.

Interest income for the nine months ended September 30, 2024 decreased $0.9 million, or 13%, to $6.1 million compared to $7.1 million for the nine months ended September 30, 2023.

The decrease was primarily due to the decreased cash held by the Company during the nine months ended September 30, 2024 compared to the same prior-year period.

Other (Expense) Income, Net

Other (expense) income, net, for the nine months ended September 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.

For the nine months ended September 30, 2024, there was a $0.6 million loss resulting from the change in fair values of warrant and earnout liabilities compared to a gain of $6.7 million for the nine months ended September 30, 2023.

The change between periods was primarily due to an increase in the fair values of the warrant and earnout liabilities during the nine months ended September 30, 2024, compared to a decrease 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 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 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.

For the nine months ended September 30, 2024 and 2023, EVgo’s income taxes and effective tax rates were de minimis.

As of September 30, 2024 and 2023, EVgo maintained a full valuation allowance on EVgo’s net deferred tax assets.

Net loss for the nine months ended September 30, 2024 was $91.1 million, compared to $98.9 million for the nine months ended September 30, 2023.

The improvement was primarily driven by increased gross profit of $13.4 million and a $3.1 million decrease in general and administrative expenses, partially offset by a $7.2 million decrease from changes in the fair values of the warrant and earnout liabilities.

Non-GAAP Financial Measures

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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 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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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(dollars in thousands)

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(dollars in thousands)

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Adjusted General and Administrative Expenses as a Percentage of Revenue

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").

For the nine months ended September 30, 2024, comprised primarily of costs and adjustments related to the organizational realignment announced by the Company on January 17, 2024.

For the nine months ended September 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").

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

Nine Months Ended

September 30,

(dollars in thousands)

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Adjusted EBITDA Margin

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.

For the nine months ended September 30, 2024, comprised primarily of costs and adjustments related to the organizational realignment announced by the Company on January 17, 2024.

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

Nine Months Ended

September 30,

(dollars in thousands)

GAAP capital expenditures

Capital offsets:

Less capital offsets:

OEM infrastructure payments

Proceeds from capital-build funding

Proceeds from transfer of 30C income tax credits, net

Total capital offsets

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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,

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.

As of September 30, 2024, EVgo had $153.4 million of cash, cash equivalents and restricted cash and working capital of $121.6 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, 2024 was $55.7 million.

EVgo believes its cash and cash equivalents on hand as of September 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 the transfer of 30C income tax credits, 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).

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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 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 60 days of receipt.

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

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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.

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The following table summarizes EVgo’s consolidated cash flows:

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

Cash flows used in operating activities

Cash flows provided by (used in) operating activities

Cash flows used in investing activities

Cash flows provided by financing activities

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

Net decrease in cash, cash equivalents and restricted cash

Operating Activities.

Cash used in operating activities for the six months ended June 30, 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.

Cash provided by operating activities for the nine months ended September 30, 2024 was $5.6 million compared to cash used in operating activities of $29.8 million for the nine months ended September 30, 2023.

The year-over-year change primarily reflected a $18.9 million increase in cash flows from operations, an $14.1 million increase in cash inflows from accounts receivable, net, and an $11.0 million increase in cash flows from other current and noncurrent liabilities, partially offset by a $4.2 million decrease in cash flows from deferred revenue, a $2.6 million decrease in cash flows from accounts payable, and a $1.8 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.

Cash used in investing activities for the nine months ended September 30, 2024 was $70.9 million, compared to $123.8 million for the nine months ended September 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.

Cash provided by financing activities for the nine months ended September 30, 2024 was $9.6 million compared to $135.8 million for the nine months ended September 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 the nine months ended September 30, 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.

EVgo’s working capital as of September 30, 2024 was $121.6 million, compared to $178.1 million as of December 31, 2023.

The decrease was driven primarily by a $55.7 million decrease in the Company’s cash, cash equivalents and restricted cash and a $10.8 million increase in other current liabilities, partially offset by a $6.5 million increase in accounts receivable, capital-build, and a $5.2 million increase in prepaid expenses and other current assets.

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.

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.

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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.

EVgo considers its critical accounting estimates to be those related to its revenue recognition, impairment of goodwill and intangible assets and warrant liabilities, which are described below.

Revenue Recognition

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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.

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.

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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.

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.

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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.

Financial Statements – Note 2 – Summary of Significant Accounting Policies ” as of and for the three and nine months ended September 30, 2024 and 2023.

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

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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.

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

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

Quantitative and Qualitative Disclosures About Market Risk

EVgo is a “smaller reporting company” as defined in 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.

The Company is not required to provide the information required by this Item 3.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis