What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-02 compared with 2023-05-09 · 212 added, 105 removed, 384 unchanged (45% of the section changed)

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

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

The discussion should be read in conjunction with EVgo’s unaudited condensed consolidated financial statements and related notes thereto as of June 30, 2023 and December 31, 2022 and for the three and six months ended June 30, 2023 and 2022 included elsewhere in this Quarterly Report, and the audited consolidated financial statements and related notes thereto as of and for the years ended December 31, 2022 and 2021 contained in the Annual Report.

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

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

Drivers can locate the chargers through EVgo’s mobile application, their vehicle’s in-dash navigation system or

third-party databases that license charger-location information from EVgo.

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

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

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

For example, the global outbreak of COVID-19 resulted in significant volatility in the global and domestic economies, changes in consumer and business behavior, market downturns and restrictions on business and individual activities, resulting in overall reduced economic activity.

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

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

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

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

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

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and systemic limitations on access to credit and liquidity sources.

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

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

Government EV Initiatives

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

EVgo believes the increase in promotion of EVs and the installation of related EV charging infrastructure will continue in part due to the ongoing implementation of the Infrastructure Investment and Jobs Act (the “Bipartisan Infrastructure Law”) and the recently enacted 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.

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

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.

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

facilities online, and EVgo may be unable to source Buy

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

facilities online, and EVgo may be unable to source Buy America-compliant chargers in time to take advantage of early NEVI funding opportunities or only at increased costs.

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

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

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

Granting of EVgo’s 205 Petition

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

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

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

Similarly, regulations proposed by the U.S.

Department of the Treasury on March 31, 2023, to implement domestic content and assembly eligibility requirements to qualify for EV tax credits passed in the Inflation Reduction Act, once finalized, may reduce incentives available to encourage the adoption of EVs, which could negatively affect the EV market and adversely impact EVgo’s business operations and expansion potential.

In addition to NEVI funding, which will be made available to every state department of transportation to administer grant programs to support the deployment of charging infrastructure, states including (but not limited to) California, Colorado, Delaware, Massachusetts, New Jersey and New York also offer various rebates, grants and tax credits to incentivize both EV and EVSE purchases.

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

Key Components of Results of Operations

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Interest Income

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

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

Other Income (Expense), Net

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

Net Earnings (Loss) Attributable to Redeemable Noncontrolling Interest

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

Net (Loss) Income Attributable to Redeemable Noncontrolling Interest

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

Key Performance Indicators

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

EVgo considers the following indicators to be of critical importance:

Network Throughput

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Network throughput (GWh) for the three months ended

Network throughput (GWh) for the six months ended

Number of DC stalls on EVgo network as of

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

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

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

Three Months Ended

(in thousands)

Six Months Ended

(dollars in thousands)

GAAP revenue 1

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Year-over-year percentage change in total Receipts

1 As presented in the condensed consolidated statements of operations.

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

1 As reflected in the condensed consolidated statements of operations.

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

Factors Affecting EVgo’s Operating Results

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

and increases in fuel efficiency.

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.

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

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

Fleet owners are generally

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

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

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

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

In particular, EVgo has historically generated and carried forward, for future benefit, federal tax credits under Section 30C of the Code, which effectively subsidizes the cost of placing into service EVgo’s charging stations.

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

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

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

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

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

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

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

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

The Inflation Reduction Act

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

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

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

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

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

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

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

Sales of Regulatory Credits

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

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

Results of Operations

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

Three Months Ended March 31,

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

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

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

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

Three Months Ended June 30,

(dollars in thousands)

Cost of revenue

Depreciation, net of capital-build amortization

Gross profit (loss)

General and administrative expenses

Depreciation, amortization and accretion

Operating loss

Interest expense

Interest income

Other expense, net

Change in fair value of earnout liability

Change in fair value of warrant liabilities

(Loss) income before income tax expense

Income tax expense

Net (loss) income

net (loss) income attributable to redeemable noncontrolling interest

Net (loss) income attributable to Class A common stockholders

Operating margin

Network throughput (GWh)

Number of DC stalls

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

Three Months Ended June 30,

(dollars in thousands)

Charging revenue, retail

Charging revenue, commercial

Charging revenue, OEM

Regulatory credit sales

Network revenue, OEM

eXtend revenue

Ancillary revenue

Total revenue

*Percentage greater than 999%

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

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

Charging Revenue, Retail.

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

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

Charging Revenue, Commercial.

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

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

Charging Revenue, OEM.

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

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

Regulatory Credit Sales.

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

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

Network Revenue, OEM.

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

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

eXtend Revenue.

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

Ancillary Revenue.

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

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

Cost of Sales

Cost of Revenue.

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

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

Depreciation, Net of Capital-Build Amortization.

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

Gross Profit (Loss) and Gross Margin

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

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

Operating Expenses

General and Administrative Expenses.

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

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

Depreciation, Amortization and Accretion.

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

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

Operating Loss

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

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

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

Interest Income

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

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

Other Expense, Net

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

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

Changes in Fair Values of Warrant and Earnout Liabilities

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

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

See “ Part I, Item 1.

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

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

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

Net (Loss) Income

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

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

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

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

Six Months Ended June 30,

(dollars in thousands)

Cost of revenue

Depreciation, net of capital-build amortization

Gross profit (loss)

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Operating loss

Interest expense

Interest income

Other income (expense), net

Other expense, net

Change in fair value of earnout liability

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Number of DC stalls

*Percentage greater than 999% or not meaningful

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

Three Months Ended March 31,

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

Six Months Ended June 30,

(dollars in thousands)

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Total revenue

*Percentage greater than 999% or not meaningful

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

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

* Percentage greater than 999%

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

As further discussed below, the increase in revenue was primarily due to a $43.4 million increase in eXtend revenue, a $7.8 million increase in retail charging revenue, a $2.8 million increase in commercial charging revenue, and a $2.6 million increase in ancillary revenue.

Charging Revenue, Retail.

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

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

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

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

Charging Revenue, Commercial.

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

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

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

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

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

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

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

Regulatory Credit Sales.

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

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

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

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

Network Revenue, OEM.

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

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

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

eXtend Revenue.

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

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

Ancillary Revenue.

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

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

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

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

Cost of Sales

Cost of Revenue.

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

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

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

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

Depreciation, Net of Capital-Build Amortization.

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

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

Gross Profit (Loss) and Gross Margin

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

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

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

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

Operating Expenses

General and Administrative Expenses.

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

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

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

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

Depreciation, Amortization and Accretion.

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

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

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

Operating Loss

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

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

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

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

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

Interest Income

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

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

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

Other Income (Expense), Net

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

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

The increase was a result of higher interest earned on cash and cash equivalents held in a high interest rate account by the Company during the six months ended June 30, 2023 compared to the same prior year period.

Other Expense, Net

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

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

Changes in Fair Values of Warrant and Earnout Liabilities

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

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

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

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

See “ Part I, Item 1.

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

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

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

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

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

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

Net (Loss) Income

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

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

Non-GAAP Financial Measures

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

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

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

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

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

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

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

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

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

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

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

Three Months Ended

Six Months Ended

(dollars in thousands)

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Adjusted Gross Margin

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

Three Months Ended

Six Months Ended

(dollars in thousands)

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Share-based compensation

Loss on disposal of property and equipment and impairment expense

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

Bad debt expense

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Adjusted General and Administrative Expenses as a Percentage of Revenue

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

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

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

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

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

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

2 For the six months ended June 30, 2023, comprised primarily of costs related to the reorganization of Company resources previously announced by the Company on February 23, 2023 and the petition filed by EVgo in the Delaware Court of Chancery in February 2023 seeking validation of EVgo's charter and share structure (the “205 Petition”), which are not expected to recur.

Three Months Ended

Six Months Ended

(dollars in thousands)

GAAP net loss

GAAP net loss margin

GAAP net (loss) income

GAAP net (loss) income margin

Depreciation, net of capital-build amortization

Interest income

Interest expense

Income tax expense

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Share-based compensation

Loss on disposal of property and equipment and impairment expense

(Gain) loss on investments

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

Loss on investments

Bad debt expense

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Adjusted EBITDA Margin

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

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

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

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

Liquidity and Capital Resources

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

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

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

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

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

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

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

The Company’s net cash inflow for the six months ended June 30, 2023 was $10.9 million.

EVgo believes its cash and cash equivalents on hand as of June 30, 2023 are sufficient to meet EVgo’s current working capital and capital expenditure requirements for a period of at least twelve months from the filing date of this Quarterly Report.

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).

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

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

Three Months Ended March 31,

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

Six Months Ended June 30,

(in thousands)

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Cash flows provided by financing activities

Net decrease in cash, cash equivalents and restricted cash

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

Operating Activities.

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

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

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

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

Investing Activities.

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

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

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

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

Financing Activities .

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

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

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

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

Working Capital .

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

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

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

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

Contractual Obligations and Commitments .

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Critical Accounting Policies and Estimates

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

The 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.

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Revisions to estimates are recognized prospectively.

for more information See “ Part I, Item 1.

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

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.

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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 quarters ended March 31, 2023 and 2022.

Financial Statements – Note 2 – Summary of Significant Accounting Policies ” as of and for the three and six months ended June 30, 2023 and 2022.

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis