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ChargePoint Earnings: Focus Remains on Progress Toward Profitability

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We maintain our $11 fair value estimate for no-moat ChargePoint CHPT following the company’s fiscal 2024 first-quarter results. We view the shares as fairly valued in light of our Very High Morningstar Uncertainty Rating.

ChargePoint’s first-quarter revenue was toward the upper end of its guidance range as new products supported sales in Europe and from fleet customers. Non-GAAP gross margin improved sequentially to 25% from 23%, consistent with management’s commentary for continued sequential improvement. One blemish from results was second-quarter revenue guidance, which was 8% below PitchBook consensus estimates as the company noted some weakness in its workplace and residential customer segments. We are leaving our full-year estimates largely unchanged; they are in line with consensus for revenue and gross margin.

ChargePoint remains focused on a combination of gross margin improvement and tight operating expense control to achieve breakeven profitability in the fourth quarter of calendar 2024. Management sought to reassure investor confidence in this path, saying it expects to reduce its first-quarter adjusted EBITDA loss ($49 million) by two thirds by the fourth quarter. While we view this as a sign of progress toward the company’s profitability targets, it is also broadly in line with our expectations.

The company had $314 million of cash and equivalents after issuing $18 million of equity in the first quarter. We wouldn’t be surprised to see it further bolster liquidity during the coming quarters.

We believe ChargePoint remains well positioned in the level 2 (alternating current) charging market but enjoys fewer advantages in the direct current fast-charge segment. We await further evidence that ChargePoint can garner similar margin levels with its DC product portfolio as it enjoys in the AC market before we become more positive on the shares.

(June 5, 2023): This has been updated to clarify in which quarter the company aims to achieve breakeven profitability.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Brett Castelli

Equity Analyst
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Brett Castelli is an equity analyst, energy and utilities, for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. His coverage focuses on clean energy companies across renewables and emerging technologies.

Before joining Morningstar in 2021, Castelli spent more than eight years in various analyst roles for TortoiseEcofin, a boutique asset manager. His coverage focused on North America and included companies within traditional energy, electric utilities, and renewables. Additionally, he assisted with the firm's environmental, social, and governance efforts and played an important role in integrating ESG into the investment process. Castelli spent a year at the firm's London office following an acquisition.

Castelli holds a bachelor's degree in finance from the University of Missouri's Trulaske College of Business. He also holds the Chartered Financial Analyst® designation.

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