EVgo Inc (EVGO) 2023 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the EVgo, Inc. Q2 2023 Earnings Call. I would now like to turn the call over to Heather Davis, Vice President, Investor Relations. Please go ahead.

Good morning, and welcome to EVgo's Second Quarter 2023 Earnings Call. My name is Heather Davis, and I'm the Head of Investor Relations at EVgo.

Joining me on today's call are Cathy Zoe, EVgo's Chief Executive Officer; and Dennis Kish, Chief Operating Officer. We'd like to send our congratulations to our CFO, Olga Shevorenkova, on the arrival of her baby. Stephanie Lee, the company's SVP of Accounting and Interim Chief Financial Officer, will cover our financial results this quarter.

Today we will be discussing EVgo's Second quarter of 2023 financial results and outlook for the remainder of 2023, followed by a Q&A session. Today's call is being webcast and can be accessed on the Investors section of our website at investors.evgo.com. The call will be archived and available there, along with the company's earnings release and investor presentation after the conclusion of this call.

During the call, management will be making forward-looking statements that are subject to risks and uncertainties, including expectations about future performance. Factors that could cause actual results to differ materially from our expectations are detailed in our SEC filings, including in the Risk Factors section of our most recent annual report on Form 10-K and quarterly reports on Form 10-Q. The company's SEC filings are available on the Investors section of our website. These forward-looking statements apply as of today, and we undertake no obligation to update these statements after the call.

Also, please note that we will be referring to certain non-GAAP financial measures on this call. Information about these non-GAAP measures, including a reconciliation to the corresponding GAAP measures can be found in the earnings materials available on the Investors section of our website.

With that, I'll turn the call over to Cathy Zoi, EVgo's CEO.

Thank you, Heather, and good afternoon, everyone. I'm so pleased with the continued strong performance and results the EVgo team has achieved in the second quarter. Before we get into the details, I want to address the CEO succession plan as we announced today.

As you've likely seen, I've decided to retire as CEO and from the Board effective following our next earnings call expected around November 9. After thorough consideration and process, the Board has decided that Badar Khan will be the net CEO of EVgo. Badar joined the Board of EVgo shortly after we went public, and served as our Lead Independent Director since that time.

I just want to say that it has been a highlight of my career leading EVgo, from a 50-person private enterprise focused on a then-nascent EV sector in 2017 to what it is today, a market-leading public company serving nearly 700,000 customers across the $1 trillion EV market.

With EVgo's talented team, we built a durable business, yielding unprecedented growth in charger deployments, network utilization and company revenues. The company's next opportunity lies in scaling the business to meet the ever-increasing and evolving fast charging demand. And I'm absolutely confident that EVgo will be in extremely capable hands with Badar as CEO.

I've been fortunate to know and to have worked with Badar in his capacity as a member of EVgo's Board. And I've seen firsthand the breadth of his talent. For those of you who are unfamiliar with Badar, he is a 25-year veteran of the clean energy transformation and utility space. Badar has significant executive leadership experience overseeing large customer-facing energy organizations like National Grid U.S.A. and Direct Energy.

This experience aligns ideally with the opportunity ahead for EVgo. He has a deep understanding of the dynamics of our business and is the right person to build on our successes and work with our outstanding executive team to take EVgo to the next level. He embodies the energy and vision that will take this company far.

I want to offer my sincerest congratulations to my friend and colleague, Badar, on this appointment and express to all of you, my enthusiasm for the opportunity to continue working closely with Badar and my fellow EVgo colleagues and the management team to ensure a smooth transition.

I will remain fully engaged in day-to-day CEO until Badar formally steps into the role in November. After which, I will serve in an active advisory capacity until the end of the year. I'm grateful that we are able to take these steps and put in place a transition plan that will set the company up for continued success.

Let's now move into a discussion of EVgo's tremendous second quarter results. EVgo had a phenomenal second quarter. Our growth momentum continued across all key areas of the business: stalls in operation, customers, utilization, network throughput and revenue. EVgo achieved over $50 million in revenue, an incredible nearly fivefold year-over-year increase. And network throughput more than doubled versus Q2 last year.

Results like this demonstrate the ability of EVgo's DC fast charging business model to scale rapidly alongside EV adoption. We expected an inflection point in our business, but it is coming faster than many anticipated. Currently there are over 3 million EVs on U.S. roads today. Just imagine the possibilities for EVgo when electric vehicles are adopted at scale over the next 10 years and we're even better-positioned to capitalize on our first-mover advantage.

Coupled with our rigorous underwriting criteria for asset deployment and multiple possible capital funding vehicles, the future of EVgo is brighter than ever. It is truly exciting to be accelerating the electrification of transportation in the United States through EV charging. EVgo's network of over 2,500 operational DC stalls delivered an impressive 24.9 gigawatt hours in the second quarter, with strength in all sectors.

Retail throughput more than doubled and fleet throughput grew 4x. Total charging sessions on the network increased 85% year-over-year. Throughput on the network grew faster than session growth and significantly higher than operational stall growth and EV sales combined. The growth in throughput accelerated from the impressive growth demonstrated in the first quarter.

In the second quarter, we achieved double-digit utilization across the entire network for the first time. Utilization exceeded 15% at 30% of EVgo's charges stalls in June, and we're still only around 1% EV adoption in the U.S. EVgo is experiencing mid-teens utilization and above in California as well as markets outside of California, including Las Vegas, San Antonio, Dallas, Houston and Hartford, New Haven.

27 different metropolitan areas had utilization above 10% in June. This growth isn't a surprise to the team at EVgo. We've got over 10 years of experience in navigating the complexity of the fast charging and the know-how and relationships to rapidly expand that network to meet the needs of EV drivers and shareholders alike.

Our key strengths include, first, EVgo has built a growth engine. We identified great locations. We work collaboratively with OEMs, utilities, suppliers, site hosting contractors to construct and operate charging infrastructure. Secondly, EVgo is a financially disciplined operator. We will only build sites when they are projected to meet our double-digit return requirements.

Third, EVgo is a technology innovator. As a leader in a young and evolving sector, EVgo has developed best-in-class hardware IP for charging all EVs and proprietary software to create a seamless charging experience. This includes our mobile app, Autocharge+, EVgo Advantage, PlugShare, EVgo Reservations and EVgo Inside. Our in-house technology developed under the direction of a world-class engineering team is a major differentiator in the industry. And fourth, EVgo ReNew, our comprehensive network upgrading program is in full flight. After assessing our original equipment in the field, we've upgraded or replaced over 350 stalls in strategically important locations. And we'll continue to update the network as technology evolves.

As you know, EVgo currently operates one of the largest DCFC EV charging networks in the United States. This collection of nationally distributed assets will deliver more throughput and generate more cash as new EVs are sold, driving operating leverage, increasing cash yields and driving higher returns on invested capital.

Through our portfolio partners, EVgo currently has thousands of prospective locations in our pipeline that pass our internal hurdles for investment. This pipeline of locations provides ample opportunity for EVgo to capture more market share and create shareholder value by applying the same rigorous principles of financial discipline we've deployed over the past 6 years. We are in the very early innings for this sector with much, much more demand to come.

Today, there are roughly 30,000 fast chargers in the U.S. And by 2030, industry analysts estimate the country will need more than 300,000. No single company will meet that demand alone. But we believe our experience flywheels and first-emerge advantages position us to remain a charging leader. And we look forward to continuing to execute on our strategy of disciplined investments in the fast charging space while continuing to work closely with our OEM partners.

Let's turn to an update on General Motors. Our partnership with GM remains strong. And we will continue working with GM to expand our charging footprint and bring more fast charging to communities across the U.S. In fact, EVgo and GM announced yesterday that we have reached a milestone of 1,000 DCFC stalls deployed as part of our partnership to date.

Leadership from both EVgo and GM commemorated the occasion with a ribbon cutting in Metro Chicago on Tuesday, with speakers from our utility partners and the state government joining us. We've added new GM Ultium signage to our charges. We've identified locations where canopies make sense. And we're working together on integrating NACS connectors into the network in a timetable that will meet the needs of GM drivers.

As you know, EVgo eXtend is our capital-light business model where EVgo builds and operates charging stations on behalf of our eXtend partners. And its success demonstrates EVgo's agility to serve evolving market segments in an accretive manner. EVgo's seminal eXtend contracts with Pilot Flying J is going exceedingly well. We're making progress with the 2,000-stall PFJ program, which translated into considerable revenue for EVgo in this quarter. PFJ's first sites are commissioned, with more coming soon. And we expect new locations to be operational in the third quarter. EVgo and Pilot also partnered for NEVI grant applications and were recently awarded the majority of funds in the first phase of funding from Ohio. In fact, every PFJ EVgo eXtend application we jointly submitted has been awarded funds.

In addition to eXtend wins for Pilot, EVgo and Meijer also teamed up for several eXtend sites in Ohio that were selected for grant awards. Meijer is great site host for EVgo-owned locations. And they are seeking to bring EV charging to more of their stores through the eXtend model.

Given the national interest around NEVI grant, EVgo's business development team is in active commercial discussions with numerous others for eXtend deals. EVgo's success with PFJ, both in terms of network deployment and funding wins has put us in the poll position to partner with retailers who are keen to participate in the fast-charging game.

On fleet, EVgo continues to scale our strong partnerships with Uber and Lyft, making electrification accessible for rideshare drivers via partner-specific charging rates across the country. Growth in this segment will continue to climb as more electric vehicles become available to rideshare drivers.

Our fleet Hubs business also continues to grow with an exciting milestone cost this quarter when the EVgo team operationalized a new dedicated 18 stall charging hub site in San Francisco with one of our autonomous vehicle partners. This take-or-pay contract is an anchor in the hubs business, which we see as a significant area of growth in the medium term as AV robotaxis and last mile delivery companies adopt an all-electric fleet.

And now let's talk a bit about charging technology. Following the European auto sector's conversions to CCS connectors in 2014, and Tesla's own switch over to CCS for its European vehicles in 2018, the presumption had been that the U.S. would follow. But last quarter, a number of leading automakers announced plans to migrate to Tesla's NACS connectors for model year 2025 or 2026 vehicles to be sold in North America.

What does this mean for the EV industry? Conversions to a standard connector will improve the customer experience and hence accelerate the march toward an all-electric future over the medium term. In the meantime, millions of CCS and CHAdeMO EVs will need to be supported on public fast charging networks for years to come and EVgo will serve them all.

In our sustained support for Electric For All, EVgo currently charges over 50 different models of EVs with a variety of connector types including CCS, CHAdeMO and Tesla. So we already live in a world of multiple connectors and remain committed to serving all EVs. Hence we'll be integrating NACS connector into the EVgo network as soon as they're available and have gone through appropriate reliability and safety testing.

Let me turn to financing. To deliver on charging infrastructure's long-term value opportunity, EVgo is deploying a holistic diversified approach to funding our capital needs. Historically, we have complemented our own investments with OEM partner funding, public brands and regulatory incentive programs. EVgo raised over $123 million in net proceeds through a primarily equity offering in Q2. While EVgo was already projected to be well-capitalized through most of 2024 prior to the raise, the equity raise bolstered our balance sheet and created a runway to pursue a rapidly expanding set of value-creating charging investments well into 2025. For 2023, we expect that most EVgo owned stalls that will be energized are being constructed under our General Motors agreement.

Under this $97 million program, GM pays EVgo approximately $33,000 per stall shortly after the stall is operational. This additional source of capital to EVgo contributes roughly 25% of the capital build costs for GM stalls. We're expecting to build roughly 700 GM stalls this year, which would amount to $23 million in cash funding.

And as we've outlined in previous calls, EVgo has a long history of applying for, winning and building charging stalls that receive a variety of public private incentives. Recently, we've highlighted $10 million of utility Make-Ready funding and $7.3 million of Cal EVIP funding awards, which are only a few examples of the many programs available to EVgo.

Emblematic of the massive funding available, the federal government's NEVI program just getting underway is a larger version of the state and local programs EVgo has been successful in securing funds from over the last decade. As a reminder, NEVI funds will be distributed through 50 different state-level programs and if passed as precedent will take 9 to 12 months to get from RFPs to selection of awardees. Following that, contracts are executed between state departments of transportation and awardees, which too can be a multi-month process. And then station construction can get underway. Fund is typically reimbursed to awardees after construction is complete and stations are energized. All this said, EVgo's combination of market leadership, grant application experience and track record of being a good partner to government policymakers positions us well for securing NEVI grants. And we are off to a good start.

EVgo and our eXtend partners were awarded $13.8 million for 20 sites under the Ohio NEVI program, winning 75% of the awards in that state's first round. This is a tremendous success for our operations, grants, network planning and public policy teams. Several states, including Colorado and Pennsylvania, are reviewing NEVI applications right now and are expected to announce awardees in the coming months. Numerous others, including Virginia, Georgia, Oklahoma, Indiana and Michigan are earlier in the process with requests for proposals or qualifications currently open, suggesting projects could start sometime in the first half of 2024 after contracts are signed.

In terms of government tax credits, Section 30C of the IRS code officially the Alternative Refueling Property Tax Credit can offset up to 30% or $100,000 per stall of charging infrastructure costs and now has a provision allowing transferability of the credit to qualified and registered tax paying entities. As such, 30C credits are considered when EVgo makes investment decisions on where to extend our network. We anticipate detailed guidance from the IRS before the end of 2023.

Notably, diverse funding sources can be stacked. For example, a stall that is part of EVgo's GM program receives a $33,000 CapEx offset. In addition, some locations may be awarded NEVI grants based on their [corridor] location as well as the eligible for a 30C credit. Availability of multiple funding sources extends the geographic footprint of stations that pass EVgo's investment hurdles and makes those locations more profitable, a genuine accelerant to EVgo's business. With billions of dollars of funding support becoming available from federal and state governments, we're excited to put more capital to work to increase shareholder value.

And now I'd like to turn the call over to Dennis, EVgo's world-class COO, to highlight some of the key elements of the growth engines we built at EVgo.

Thank you, Cathy. Since I started at EVgo, just over 18 months ago, we've been continuously expanding our team's ability to build a best-in-class charging network. EVgo has created a growth engine that can scale up to meet fast charging demand, and we had our best quarter ever just now, with revenue growth of 457% and throughput growth of 147% compared to a year ago, we also commissioned 210 stalls in the quarter and are at 2,500 operational stalls today.

Let me set the table by describing what we know definitively will bring customers to our network. EV drivers value 3 things the most. First, having lots of stalls at a site so they never have to wait. Second, having fast chargers available so they can fuel up quickly. And third, having a reliable charging solution that works right on the first try.

I'll cover our progress in all 3 areas and begin with an update on EVgo's typical station configuration. As Cathy mentioned, we've identified thousands of value-creating new locations within our portfolio partner network for future station builds. We currently target a minimum station size of 6 stalls. And we aim for 8 to 10 stalls, if the site host has space available. We're deploying ultrafast 350-kilowatt chargers in locations that are typically near great amenities such as shopping, dining and convenience stores.

In certain locations, EVgo will soon be adding canopies as well as pull-through charging for large trucks. Across the entire network, by the end of 2023, we expect to have approximately 30% more stalls per site and 50% higher maximum power per site than we did at the end of 2022. These station configuration updates yields several important customer benefits, including faster charges, less likelihood of waiting and higher uptime.

Generally, across the development cycle, we are beginning to see timetables improving. EVgo's supply chain is operating efficiently. We are managing our hardware suppliers well with long-term contracts in place with rolling forecasts so our partners can manage their supply chain to meet EVgo's needs.

Construction lead times are relatively flat, which is expected given the fact that we are now building larger sites. Local government permitting is generally getting faster as these authorities gain experience and familiarity with fast charging infrastructure deployments.

Utilities remain the longest pole in the tent. A combination of long lead times for switchgear and transformers along with internal resource demands for wholesale electrification is slowing many utilities. EVgo is working closely at the most senior levels with our utility partners, so they understand our project pipeline and how they can support our efforts to improve energization. We're sharing site-specific load road maps that are based on our network plan. And that has resulted in a higher total number of stalls being energized this quarter than last.

One pilot program that we launched this year has us particularly excited. It enables us to perform more tasks in parallel with the utility. And the early results show a 40% reduction in energization lead times. In addition to building the rapid growth engine for tech-enabled infrastructure deployment, we're relentlessly focused on enhancing the customer experience.

Last year we announced the EVgo ReNew program, a continuous improvement effort which builds on our regular maintenance program with a robust plan to upgrade or, in some cases, retire charging stations. In 2023, we expect to renew hundreds of stalls and are on track to meet our goals. Building on Cathy's comments about integrating NACS connectors into our network, we'll use the ReNew program lens to evaluate, which stalls to retrofit with NACS.

As EV technologies advance and the number of EV models grows, we remain committed to deploying equipment and software that will deliver the optimal customer experience and an efficient use of capital.

Internally, we track an important metric we call One & Done, which is the percentage of time a customer has a successful charging experience within a reasonable time window on their first try. It's a success metric as opposed to an availability metric, meaning that it tracks how often the customer gets what they came for, a completed charge. We're aiming to achieve One & Done success rates of over 95% and have already improved 6 percentage points this year. With literally hundreds of thousands of charging sessions a month, charging attempts can be unsuccessful for a variety of reasons associated with the vehicle, the charger, the driver or connections between any of those 3.

At EVgo, even if the chargers themselves aren't the culprits of an unsuccessful charge attempt, we view it as our responsibility to create a seamless charging experience for our customers. The good news is that over the past 4 months, EVgo's One & Done Tiger team has made excellent progress in identifying and running to ground key causes of unsuccessful charge attempts.

On the charger side, we recently identified 2 software bugs that were causing charging issues for customers, and promptly rolled out updates. And we're collaborating with our OEM partners to ensure that updates they're making to their EVs and software work with our charges. EVgo's innovation lab and satellite locations at OEM facilities have come in handy on this front.

In terms of driver education, EVgo recently highlighted a step-by-step charging tutorial in our online video series, Charge Talk, to help new EV drivers feel confident pulling up to a public charging station. It turns out that a sizable number of first-time EV drivers don't realize that the first step to EV charging is to plug in the connector because this order of operation is opposite of what we all learned to do when we went to a gas station.

EVgo won't rest easy until we identify and solve every technical EV charger or driver education problem that might stand in the way of reaching 100% One & Done success. I've spent my career leading complex operations efforts across the tech space. And I can say unequivocally that at EVgo we have built a growth engine with the processes in place to improve efficiency while delivering value for all of our stakeholders.

With our relentless focus on advancing first-mover technology, superior operations and customer experience, complemented by a backdrop of a rising sectorial tide, EVgo is poised for strong growth going forward.

With that, I'll turn the call over to Stephanie to discuss our quarterly financial results.

Thank you, Dennis. As Cathy and Dennis mentioned, EVgo reported record results for the second quarter of 2023, demonstrating the continued strength of our business and our strategy.

As a company, we are leaning into the incredible opportunity ahead of us to meet the demand that we believe is coming. We grew revenues across our core revenue streams during the second quarter. Second quarter revenue of $50.6 million grew nearly 5x year-over-year and nearly doubled from the prior quarter.

On a year-to-date basis, revenue in 2023 has already surpassed the revenue we generated in the entirety of 2022. The significant increase in revenue was driven by our EVgo eXtend contract with Pilot Flying J in partnership with GM as well as our growing retail, commercial and OEM charging revenues.

eXtend revenue was $33.3 million in the second quarter with a vast majority of this exceptional revenue increase tied to hardware sales to PFJ and, to a lesser extent, the construction of PFJ sites. Revenue recognized for PFJ hardware sales is expected to be minimal in Q3 and potentially Q4 as we await the availability of BABA-compliant chargers.

As a reminder, there are no BABA-compliant 350-kilowatt chargers currently being manufactured in the U.S. And our suppliers are working hard to complete construction of their U.S. facilities. BABA-compliant chargers must also be fully certified and tested before products can begin shipping.

Adjusted gross margin was 25.4% in the second quarter of 2023, which was consistent with the prior quarter. When compared to 37.3% in the second quarter of 2022, the year-over-year change was attributable to a lower mix of high-margin regulatory credit revenues in Q2 of 2023. Adjusted G&A as a percentage of revenue improved from 256% in Q2 of 2022 to 46% in Q2 of 2023, illustrating the leverage EVgo continues to realize from its existing network and ongoing investments in infrastructure, people and processes.

Adjusted EBITDA was negative $10.6 million in Q2 2023 versus negative $19.8 million in Q2 2022, reflecting the flow-through of the revenue growth. During the second quarter, cash, cash equivalents and restricted cash grew to $257.4 million as of June 30. This includes $5.7 million of net proceeds raised under our ATM program, followed by an additional $123.4 million of net proceeds under our equity offering completed during the second quarter of 2023.

We added approximately 210 new stalls to our network during the second quarter. And stalls in operation or under construction were approximately 3,200 as of June 30. As expected, we reduced our CapEx spending by nearly half from the previous quarter, with net CapEx of $32.6 million. We purchased most of our equipment needed for 2023 stall deployments in the first quarter of this year.

And CapEx for the third quarter of 2023 is expected to remain lower as a result. CapEx will begin to ramp back up in the fourth quarter of 2023 as we begin mobilization for stalls expected to be operationalized in the early parts of 2024. Overall, CapEx for 2023 is expected to be lower than CapEx for the prior year. We will continue to remain agile in our supply chain and capacity planning to ensure that we can pivot appropriately in response to the ever-changing regulatory landscape, including BABA, NEVI opportunities and NACS while continuing to capitalize on our position of strength and grow our stall base in a financially disciplined way to meet the ever-growing demand.

Moving on to our full year 2023 guidance. EVgo is updating our full year revenue guidance to a range of $120 million to $150 million. Charging revenue accounted for 25% of total consolidated revenue for the second quarter of 2023. We anticipate sequential quarterly growth in our charging revenues in the third and fourth quarters as we continue to expect quarter-over-quarter and year-over-year throughput growth and increases in our total customer accounts.

eXtend revenue accounted for 66% of total consolidated revenue for the second quarter of 2023. The vast majority of the eXtend revenues generated in the first half of 2023 were related to equipment sales to PFJ. And we expect that eXtend revenue for the second half of 2023 will be predominantly comprised of construction-related revenues. Equipment sales to PFJ for BABA-compliant chargers may not materialize to any significant degree until 2024, although our suppliers continue to make good progress on the build-out of their U.S. manufacturing facilities. Our guidance assumes some BABA equipment sales to PFJ in the second half of 2023.

EVgo is updating our full year adjusted EBITDA guidance to a range of negative $78 million to negative $68 million. EVgo will be making additional investments in the growth engine we've created, including dedicated fleet hubs, eXtend, PlugShare and ReNew in the second half of 2023.

We continue to expect to have a total of 3,400 to 4,000 DC fast charging stalls in operation or under construction by the end of 2023. As a reminder, this metric includes PFJ stalls.

With this, I will turn the call over to the operator for questions.

(Operator Instructions) Our first question comes from the line of James West from Evercore ISI.

And Cathy, congratulations on a great run at EVgo and all the things you've done for the company. I think you'll be sorely missed. But it sounds like you feel pretty good about Badar taking over, so congratulations to him as well. Congrats to you on a very successful run as CEO.

Thank you so much. It's been a joy.

I guess for my question, I'm really interested in this inflection point that's happening with respect to throughput versus stall growth because it seems like it's ramping up really nicely here, which is what we had always expected, but now it's kind of unfolding. It's probably a function of a lot of factors, but is it -- does it -- is it mostly new EV models that are coming to the market that are maybe non-Tesla? Is it the customer experience is improving and so you have more repeat customers? What do you think is the main thing that's driving this? Or is it just clearly more cars however?

Well, I think we should hire you, James. It is actually all of those things. I mean, we look at this with the light as well. So yes, absolutely what we're seeing is more EVs. The compounding effect, as we've talked about before, is those EVs that are coming to EVgo are more powerful. They've got bigger batteries and the ability to charge even faster. So throughput goes up for every sort of 15 minutes. You're pumping through more electricity. And we've got increased utilization because we've got high-mileage drivers coming on to the network. And I think one of the things that we're kind of excited about is the possibility that we're seeing, even folks with garages, it looks like they're coming to charge at our fast charging stations. So all of this for us is just like -- it's like our thesis is great, but even better than we might have thought.

Our next question comes from the line of Chris Pierce from Needham.

I was wondering if you could just kind of give me some guidance on where could the upper bound of utilization go in the near term and the medium term? I know you guys have been sharing more in the past couple of quarters. So I'm just trying to get a sense of -- I mean I really just have no idea how to even think about it.

No, Chris, it's a great question. We model it with what we call an equilibrium utilization. So when we like sort of do our math on, is a station going to pencil to our double-digit returns, we basically sort of half it in like kind of a 20% -- between 20%, 25% just because we feel like if it's that good, that there's going to be other stations that will come into the market. So we model conservatively. With that said, we regularly have utilization at stations that is way higher than that. I mean we've got some stations on the network right now that are over 50% utilization. We've had different time periods where we had intense rideshare usage on certain locations. We were up in the 60%s and 50%s. So what we're doing to actually give us even more runway for that is adding bells and whistles like being able to make reservations, right, special like super off-peak rates for rideshare, all of those like sort of tools, software tools that you add on to the basic infrastructure will give us an ability to actually achieve utilization levels far greater than what we actually model when we do our underwriting. So in the short, I don't know how to answer it to you to model realistically. What we do is we model conservatively and then we surpass our own expectations of when we see it on the network.

Okay. Are we miles away from competitor X puts in a DC fast charger and you see lower utilization at your? I just want to get a sense of how much runway in terms of cars coming on network versus charges going on in the network. Is that something that you've built into your model as well?

We build in the best we can the pace at which new chargers are going to come on with the intelligence that we've got. So we're constantly sort of -- we have a very cool detailed network plan, national network plan that goes down to the census block. And so what we're doing is we're overlaying at any given time, and we update it continuously, at any given time how many charger is there, what is the EV penetration there, what are the sales forecasts we think for those metropolitan areas and down to those census block levels, what's the density of multi-unit housing. And it's kind of this big mash-up to forecast what's the need for the next incremental marginal fast charging station in that location. And it turns out historically we've been pretty darn good at forecasting what's going to work out.

Our next question comes from the line of Alex Vrabel from Bank of America.

And congrats to you, Cathy, and I guess Olga as well, given her recent announcements.

Yes, thanks, yes.

Thank you so much. I guess just to hit some of the commentary you're talking about there, Cathy, relative to some of these NACS movements. Just curious, we saw the other day, right, the sort of consortium of automakers talking about investing rather directly. When I thought about it, it actually sounded a little bit like a large eXtend partnership. Just curious as far as like your positioning, your thoughts around this standardization or sort of being more of a partner, if you will, to the OEMs, given these sort of gyrations. And I have a quick follow-up after that.

Alex, well, we may need to hire you and James West. No, it's exactly right. Look, the macro backdrop is that if we are going to go to hundreds of thousands of chargers by 2030 and the OEMs have an imperative to sell the EVs that they're investing trillions of dollars in manufacturing, that we need more fast chargers more quickly. So they're coming together and putting at least $1 billion on the table to accelerate that deployment. And we are excited about helping them do that. I mean, we are -- as you point out, we're ideally suited. We've got to do it either as a sort of a joint owner and be in the consortium with them or do it as an eXtend partner or anything. Anything. So we're excited about it and we're having conversations with them to keep them excited about it. But we see this as an opportunity to accelerate transportational expectation and get more people into EVs more quickly. I think it's all good for us.

Yes, makes perfect sense. Just a little bit more maybe of a mechanical question. Congrats on the eXtend revenue, big jump there. I guess a little but unfortunate with the BABA requirements that it will get choppy here. But just, I'm looking in the queue, I see that the COGS in eXtend seem to be kind of aligned with the revenue. I'm just curious as far as the margin you guys expect in that business, how you sort of see that gyrating around between equipment sales and more construction. If you can elaborate on that a little bit through the rest of the year.

Yes. So I think during the last call, Olga might have broke down the sort of the different buckets of revenue that we get from eXtend. And we don't talk explicitly about the margin from each, but we can give you some directional indications. And I'll turn it over to Stephanie to talk a little bit about why it's -- how it's going to bounce around for the remainder of the year perhaps.

Yes. And as I mentioned in my prepared remarks, currently the vast majority of the PFJ sales is really the hardware portion. And we expect the second half will really be more of the construction part of the PFJ contract. And so overall, in terms of our eXtend contract, it's going to be profitable. And it's really the timing base then, and it's really going to be dependent on when the BABA chargers are going to be available.

Our next question comes from the line of Bill Peterson from JPMorgan Chase.

Congrats to both Cathy and Olga, significant milestones. So good luck with the next endeavors. My first question is on the full year view. So obviously a big jump in eXtend, and you kind of gave some guidance on what's going to happen with eXtend, more construction-related. But I guess directionally it obviously would appear it has to come down, but how should we think about the mix between the third and fourth quarter, that has an impact on margins as well? But then as we think about the charging side of the business, we're seeing some indications that there's inventory building up on lots now. It's hard to predict what kind of growth we should see from the EV growth, but obviously, you've been driving better utilization and network throughput. So I'm trying to get a feel for how we should think about seasonality in the business. Big step up in 3Q followed by somewhat flattening in 4Q. Is that the right way to think about it? If you could just unpack the full year, that would be helpful.

Sure. In terms of the core charging revenues, as I mentioned, we're expecting sequential growth. Even though I think we've got some questions previously about seasonality in the business because we are such a growth business we haven't seen the impact of seasonality because of the quarter-over-quarter growth in our throughput as more EVs hit the road and for all the various reasons we just talked about. So the core charging business should sequentially grow is how I'd model that. And then as it relates to the eXtend part of the businesses, as I've mentioned, we will see a step down in that revenue in the second half, really going to be informed by how much of the BABA chargers are going to be available and how much hardware sales we're going to see.

Okay. My second question, it was discussed a bit last quarter on the Chevron Texaco gas station, but I want to try to get a feel for the timing and ramp for these retailers. And I guess I have a sort of related, Chevron, we're aware of them actually looking to implement battery buffered charging from a company called FreeWire. So I'm assuming the EVgo's arrangement is separate from the arrangement that Chevron has. But I guess holistically, I guess, how does EVgo view battery buffered as a potential option for service stations or maybe just rural sites in general where as the power may be harder to come by, especially taking the commentary around transformers and make-ready in the past.

Yes. Bill, I think we've said this before, we're quite open to putting batteries on site. And we've done at 14 different locations in California, actually at Chevron stations in over history. We did it in the past here because there was a California-like funding program to experiment with it. And basically it was a kind of a pilot program. Absent extra funding, it doesn't pencil yet. And there's no sort of, there's no commercial imperative for us to do it, but we remain excited about the possibility if there becomes a financial reason to actually do, put on-site storage. So we're open to it. But right now it actually doesn't seem to make financial sense in most places. And again, we haven't had Chevron actively asking us to do that yet as we sort of figure out what are the contours of that agreement. So but we're open to it. We've got teams of people that have experience with it here on the team, so.

Yes. And then on the first part on timing and ramp of those opportunities.

Look, Chevron, we have a master site agreement with Chevron and it's just still in the very, very early planning stages. So nothing specific to report on that yet.

Congrats again.

Our next question comes from the line of Craig Irwin from ROTH MKM.

So Cathy, over the last few months there's been some controversy out there in the market. And you guys have had a direct response with a couple of your press releases. There are some analysts out there saying that one company, one certain company is going to take the lion's share of the available subsidies in the EV charging market. It doesn't strike me that that's the way it's been working. Can you maybe talk about your ability to procure subsidies in the markets that you're serving and to work with your partners like Pilot Flying J to make sure that they have access to all the funding that's available?

Craig, maybe you restate the question. I'm a little confused about the oblique nature of the question. I'm happy to answer whatever it is, if I understand what the question is.

So there was an assertion name that Tesla would get the lion's share of the available EV subsidies or EV charging infrastructure subsidies often made by a couple of different analysts. And you had, in press releases where you got 75% share in different markets. Can you please respond directly to competitive procurement of subsidies and how EVgo is tracking across the country?

Sure. Yes, yes. Got it. Thank you. So as you know, there are 50 different state programs for NEVI. And each one has its own application process. So we happen to delighted, we're delighted. We were very, very successful in Ohio. I think we know what we're doing, and we write good grant applications because we've got a lot of experience with it. We've been doing grant applications and successfully procuring all kinds of state and local funding supports to help offset CapEx for 10 years. But again, Ohio was the first big announcement on NEVI. We're waiting to hear from Pennsylvania and Colorado. And then we're in the process of applying for a bunch of other states. We view every single application in its own, right, because the program designs are quite different. It's not like the common app for college. I mean every single application has to be done with great sort of care and scrutiny, and they have different criteria for selection. So obviously Ohio liked what they saw with EVgo. And look, we're hoping as we're carefully selecting where we want to apply where the project will pencil well for our shareholders, that we're hoping that we can make that same case in other places.

Our next question comes from the line of Andres Sheppard from Cantor.

Congrats on the quarter. And Cathy, I echo everyone's thoughts. Congrats on a great run, and you'll surely be missed. Some big shoes to fill.

Thanks, Andres.

A lot of our questions have been addressed. Maybe just to piggyback off the last one. There's been a lot of conversations lately about OEMs fortifying their own charging networks. We saw Tesla opening up their network. I think Rivian and Ford are among some of those as well. I realize your charges have always been compatible with all vehicles and had always been able to connect with Tesla's vehicles. I'm just curious, what are your thoughts on this competition from OEMs? Is that something to be mindful of as we -- as these new OEMs continue to introduce vehicles? So I'm just curious kind of your thoughts on if that additional competition is something that we should be focusing on closely. And maybe just to add to that is maybe additional commentary on the NEVI fundings. We saw you got the Ohio grants, which is great. Just curious what are the potential next bits or states that you think might make sense in the short term.

Yes, yes. So on the competition front, look, at the end of the day, the OEMs' core business is selling cars. So they need to do what they need to do to sell cars. Sometimes they need to open dealerships, sometimes they need to do Super Bowl ads. And then sometimes they need to figure out that they need to make investments in charging so that they can sell those cars. This most recent announcement is that third category. And we are really well-positioned as an operator that offers both build-own-operate services and operate for other services through EVgo eXtend to help them do that. It's a different business. And I think if you ask GM about it, our collaboration with GM has been just that where we are working really closely together, where they're making the cars and we're making -- we're figuring out how to do the chargers that are going to work with those cars. We work together at our lab to make sure that it's a seamless experience, and we're going to continue to do that. We expect that our experience at being able to charge all EVs and to basically work on this One & Done metric that you heard Dennis talk about in the prepared remarks, we're going to be -- continue to be at the cutting edge of creating that seamless charging experience for EVs of all types, and that will help all the OEMs. So I'd say we're excited about the opportunity for more folks getting excited about making investments in charging infrastructure. And we'll be part of that equation for sure.

Got it. And sorry, and then just on the NEVI funding…

The NEVI.

Yes.

Yes. So look, we've got -- we're waiting -- like we kind of expect Colorado and Pennsylvania announcements to happen sometime this summer roughly. And then the other announcements might follow later in the year of the next sort of swath of applications. And again, remember what follows then is this contracting process that can take some months. I mean, people just think, once the award is announced, then people start digging. Unfortunately, it's not the case. We're really actually practically talking about NEVI projects are going to really get moving in probably -- some are going to get moving maybe this year, but the bulk of them are going to get moving in 2024 with some of them getting energized by the end of 2024, but some of them going into 2025. So we're excited about our applications. Craig asked about how you do it, we do it with great care. So we're hopeful that we get our piece of the action because we're identifying locations where we think we're going to be able to achieve and realize great returns for our shareholders.

Our final question comes from Doug Becker from Reef Capital Group.

Just curious about the expected timing for the BABA-compliant chargers. It looked like Signet opened up its Plano, Texas plant back in June, which certainly looks like a positive development.

Doug, this is Dennis. The BABA production is right on track. It's a big job to ramp up the supply chain and open the facilities here in the U.S. And we're looking to see our first production units start in Q3, late Q3 or early Q4. After that, they'll need to go through a UL certification cycle as well. But the relationships with the charging vendors are going very well, and they are pushing on those dates as hard as they can.

Yes. Sounds good. And then revenue guidance was raised. EBITDA guidance was lowered just a little bit. And I know there was, sounded like some increasing investment in the growth engine, but just maybe a little more reconciliation between the higher revenue guidance and the EBITDA guidance, just a little bit lower.

Yes. Great question. And it's true. So we pulled forward revenue as you saw in Q2 in terms of the $50 million that was generated in the quarter. And we talked about the eXtend revenue for the second half expected to be down as a result of more of -- less of the hardware sales kind of coming through. And so our revenue guidance for the year at the higher end of the range, we kept it the $150 million. And you're right, on the adjusted EBITDA, we adjusted it differently because of the additional investments we are expecting to make in the second half. As we've seen with the growth of our business and what all of us have been talking about, we have determined that we do need to make some additional investments in areas like the ReNew program. We talked about the NACS cables, right, and the connectors that have to get swapped out. So maintenance costs associated with that. We're also going to be making additional investments in our PlugShare app that we've seen continue to bring value to our partners. So in a number of areas, just thinking about the growth trajectory of the business, we felt it was prudent to continue to make some additional investments in a lot of those areas in our networks as well as the people processes and tools that we have across the company.

Okay. That makes sense. Cathy, congratulations.

And it appears we do have one more question from the line of Andres Sheppard from Cantor.

Just a quick one. With the new gross proceeds of the roughly $130 million through the equity program and now $257 million in total cash and liquidity. Just remind me, what is the run rate, what is the expected run rate with that liquidity? Does that push it into 2025? Just trying to get my head around that.

It does, Andreas. Thank you for that question. So the additional equity that we raised, prior to that we had indicated that we had run rate through most of 2024 and this additional capital raise is going to take us well into 2025. As Cathy mentioned about all of the different financing opportunities that are out there that are ahead of us, certainly our hope is that from a financing perspective we'll have additional opportunities to monetize, like some of these giant grant awards that we just talked about and these other opportunities with multimillions ahead of us. But the equity raise was going to take us well into 2025.

Wonderful. And congrats again on the quarter.

I would now like to turn the call over to Cathy Zoi for closing remarks.

EVgo had a phenomenal quarter with accelerated growth in all key areas as we've seen. The engine we've created at EVgo and our first-mover advantage is delivering substantial revenue. With increasing EV adoption, our financial model is poised to generate excess returns for shareholders. I'd like to thank the EVgo team, our key partners and our suppliers for their efforts in enabling fast charging across the U.S. Thank you to everyone for joining us, and I look forward to speaking to you again during our Q3 call.

Thank you, ladies and gentlemen. This does conclude today's call. Thank you for your participation. You may now disconnect.