EVgo Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 5, 2025

Key Takeaways

  • Positive Sentiment: Q2 revenue was up 47% year-over-year and adjusted EBITDA improved by $6 million, moving the company closer to full-year breakeven adjusted EBITDA.
  • Positive Sentiment: EVgo closed a $225 million commercial bank facility (expandable to $300 million) with a $48 million initial drawdown, securing low-cost, non-dilutive capital to accelerate network expansion.
  • Positive Sentiment: Public stall guidance for 2029 rose by ~3,500 to roughly 14,000 stores, and annual build targets will ramp from ~825 stalls in 2025 to up to 5,000 by 2029, deepening EVgo’s competitive moat.
  • Positive Sentiment: Net CapEx per stall for 2025 vintage deployments is expected to fall by 28% versus initial estimates—driven by contractor savings, material sourcing efficiencies and higher state grant capture—boosting returns significantly.
  • Negative Sentiment: Firmware update issues and legacy hardware maintenance in Q2 caused temporary uptime challenges and higher costs, though throughput rebounded to ~300 kWh per stall per day in July after rectification.
AI Generated. May Contain Errors.
Earnings Conference Call
EVgo Q2 2025
00:00 / 00:00

There are 13 speakers on the call.

Operator

Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the EVgo Q2 twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

Thank you. I would now like to turn the call over to Heather Davis, VP of Investor Relations. Please go ahead.

Speaker 1

Good morning, and welcome to EVgo's second quarter twenty twenty five earnings call. My name is Heather Davis, and I'm the Vice President of Investor Relations at EVgo. Joining me on today's call are Badar Khan, EVgo's Chief Executive Officer and Paul Dobson, EVgo's Chief Financial Officer. Today, we will be discussing EVgo's second quarter twenty twenty five financial results followed by a Q and A session. Today's call is being webcast and can be accessed on the Investors section of our website at investors.evgo.com.

Speaker 1

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 ks 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.

Speaker 1

Also, 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 Badar Khan, IndiGo's CEO.

Speaker 2

Thank you, Heather. IndiGo had yet another excellent quarter with strong operational performance and achievement of important strategic milestones. We had particularly strong revenue this quarter, up 47% versus the same quarter last year. Adjusted EBITDA was more than £6,000,000 better than last year, bringing us closer to our goal of breakeven adjusted EBITDA for the full year. We had 4,350 stores in operation and ended the quarter with £183,000,000 in cash, cash equivalents and restricted cash, which is £12,000,000 higher than the prior quarter.

Speaker 2

And most importantly does not include £65,000,000 in gross proceeds from the first drawdown from our commercial bank facility and expected 30C sale proceeds in August. On July 23, we closed the largest and first of its kind commercial bank financing for charging infrastructure in The U. S. For two twenty five million dollars with the ability to expand to $300,000,000 and have already received a $48,000,000 first drawdown. This is a major strategic milestone for the company, enabling us to accelerate our expansion and diversifying our funding sources with low cost non dilutive capital.

Speaker 2

As you will see, we expect to be able to increase our ending 2029 public store guidance by approximately 3,500 more stores than we had previously estimated to roughly 14,000 stores. Strategically, EVgo is now very well positioned competitively as one of the best capitalized players in the sector. As always, we are focused on being disciplined in allocating capital, leveraging debt funding sources and the growth of our balance sheet. At this time, we do not have a request in front of the DOE LPO for our next advance. One of the many attractive features of the DOE loan is that there is no time limit where we need to request advances for specific tranches of eligible costs we incur other than the overall five year availability period.

Speaker 2

Finally, we've passed enough milestones this year to be able to forecast a reduction in net CapEx per stall for twenty twenty five vintage stalls by 28% versus our initial expectations. A reduction in net CapEx per stall of this magnitude results in significantly higher returns. The outlook for EVgo as an owner operator of DC fast charging remains very bright with demand growth outstripping supply growth. The latest independent forecasts project that the increase in electric vehicles in operation is outpacing the more modest increase in the number of DCSC stores in The U. S.

Speaker 2

These latest forecasts take into account all of the federal administration's policies in electric vehicles which results in EVVIO over four times higher than today by 02/1930. As we're seeing from GM, Ford and many others, major automakers continue to prioritize a growing lineup of affordable electric vehicles that appeal to all customer segments. Forecasts of the growth in DCFC stalls are not as robust, but anecdotally, we see a slowdown taking place among both the large number of smaller companies who are likely going to struggle to attract capital in this environment and also the small number of larger companies whose parents may be allocating capital to other priorities. The DCFC forecast shown here represents the industry continuing to grow at the same pace it did over the last twelve months. As a result, we expect that the recent trend of more electric vehicles per fast charger is likely to continue, resulting in a promising macro environment for EVgo in this coming five year period, which we expect will continue to drive up both EVgo market share and throughput per store.

Speaker 2

This macro environment continues to be supplemented by multiple additional tailwinds that continue to show positive trends like the electrification of rideshare, autonomous electric vehicles and more affordable vehicles in both the new and used electric vehicle markets, attracting more customers without at home charging and thus reliant on public fast charging. In June, Uber disclosed that the number of their EV drivers globally was up more than 60% versus the year prior. And in The U. S, only just over a third had a dedicated home charger. We are very pleased to have closed the commercial bank facility provided by the syndicate of global project finance banks led by SMBC and includes World Bank of Canada, ING, Bank of Montreal and Investec.

Speaker 2

With an initial $3.25 basis point spread, this loan demonstrates the creditworthiness of our business that these commercial banks see and the confidence the banks have in the resilience of the cash flows generated by the ultrafast charging infrastructure EVgo is building across The United States to give customers more choices to charge their electric vehicles. This facility is complementary and incremental to our $1,250,000,000 DOE loan with a similar structure with standard project finance terms. It offers tremendous flexibility and can be used to finance the build out of more EVgo owned store types, including dedicated hubs for autonomous vehicle partners. We received a $48,000,000 advance on July 24, and we have the ability to draw down on the facility monthly. We have the ability to go faster and build a higher number of stalls or go slower with lower deployment targets.

Speaker 2

All new eVigo owned stalls can now be levered going forward. Additionally, this bank facility represents an important milestone in establishing long term relationships with commercial lenders. We believe the opening of the commercial bank project financing market as a source of capital for public fast charging infrastructure reflects the majority of the company, the profitability of the EVgo network and confidence in management. With the financing we now have in place, together with our targeted CapEx per store and reinvesting excess operational cash flow over the next five years, we now expect to be able to more than quintuple our annual store build schedule from eight twenty five stores in 2025 to up to 5,000 by 2029. That rate of growth in 2029 is more than double our earlier estimates.

Speaker 2

This accelerated pace meaningfully differentiates EVgo amongst U. S. Fast charging companies and results in a level of scale that will become harder for others to replicate over time and deepens the competitive moat around our business. The second strategic development this quarter is that we're now forecasting a 28% reduction in 2025 vintage net CapEx per store from our original estimate. This is an exciting milestone.

Speaker 2

Even including the impact of global tariffs, we are still expecting an 8% improvement in vintage gross CapEx per stall versus what we initially expected for 2025. This improvement is driven by savings from lower contractor pricing, material sourcing and increased use of prefabricated skids, some of which we shared in the last earnings call. Today, however, I'm able to share that we now expect vintage CapEx offsets to be around 50% higher than we originally expected because more stalls we're operationalizing this year are expected to have state grants associated with them. Unlike many other charging companies, we have a large enough project pipeline where we can now move the timing of operationalizing assets from one quarter to another and from one year to another. That flexibility allows us to capture more state grants wherever those opportunities may arise.

Speaker 2

As a reminder, capital offsets come from three sources: state and utility incentives, OEM infrastructure payments and federal incentives like 30C. Our forecasted performance this year is a reminder that regardless of recent changes to federal incentives, state grants and incentives are alive and well. 30C will remain in effect for assets placed in service until the June 2026, nine months longer than many other incentives created by the IRA. As a result, we expect net vintage CapEx per stall to be significantly lower this year, materially enhancing our return on capital, especially considering the top 15% of our stalls are already generating $50,000 in cash flow per stall per year against a net one time average CapEx of $74,000 Two consequences of shifting our project portfolio to capture state grants that a certain number of stalls that were due to be operationalized in Q3 will now shift to Q4. And secondly, stalls with state grants tend to be a little less productive in terms of throughput per stall in the first year or two than other stalls without state grants.

Speaker 2

However, the lower CapEx more than makes up for it when we look at project returns. Our long term expectation is to continue lowering gross CapEx per stall as a result of our next generation charging architecture that remains on track for the end of next year. That said, we conservatively do not assume capital offsets are as high as the last two years, which still results in very favorable project returns, especially given the higher annual cash flow per store levels we expect to reach by 2029. Let's now briefly turn to progress on our four key priorities: improving the customer experience operating and CapEx efficiencies capturing and retaining high value customers and securing additional complementary non dilutive financing to accelerate growth. Improving customer experience remains our number one priority and our strong momentum from last year continues.

Speaker 2

This quarter, we experienced lower uptime on certain equipment types due to faulty firmware updates that were largely rectified in July and we decided to take that opportunity to tackle some legacy hardware issues across multiple charger types that resulted in higher associated maintenance costs. These efforts are fully aligned with our goal to continually improve the customer experience, and we are already seeing these efforts pay off with much higher throughput per stall in July. Building larger public sites with six to eight stalls is now our standard configuration. At the end of the second quarter, 24% of our sites had six stalls or more. We continue to deploy high power chargers.

Speaker 2

The number of stalls served by a three fifty kilowatt charger is now 57%, up from 41% a year ago and twenty five percent two years ago. AutoChargePlus, our seamless plug and charge capability, continued to gain traction, accounting for 28% of sessions initiated. Finally, our customer success metric or one and done increased one percentage point this quarter versus last year with 95% of sessions resulting in a successful charge on the first try. As we detailed in our first quarter earnings call in May, we expect that the impact of increased tariffs on our CapEx will be more than offset with capital efficiencies we've identified and implemented. And there is near zero impact on our operating costs from tariffs.

Speaker 2

EVgo continues to meet all our milestones in the development of our next generation charging architecture we are jointly developing with Delta Electronics. We are on track to have our prototype and initial deployment in the 2026. We remain focused on improving the profitability of the overall business while investing in the future growth of the company. We expect continued improvement in G and A as a percent of revenue throughout 2025. Over half of our throughput in Q2 came from frequent use sources: rideshare, OEM charging credit programs and easygo subscription plans.

Speaker 2

This quarter, we've added to our dynamic pricing, digital marketing and customer acquisition and reactivation capabilities with the deployment and use of AI agents to optimize and increase the effectiveness of our campaigns. Certain geographies, we launched seasonal based pricing to help cover the increased costs from summer utility tariffs. Our second pilot site with native MAX cables went live in June. The focus of the initial pilot in February was to validate technology. And for the second pilot, our focus is to get an early read on our ability to attract Tesla drivers with the NAX cables installed.

Speaker 2

While it remains very early, we are encouraged by the fact that since going live to the MAX cables, this site has had significantly more usage from Tesla drivers as it had prior to installing the MAX cables. Once we scale these cables across the rest of our network and because our charging stations are faster than Tesla and closer to where Tesla drivers live, work and go about their lives, we expect to see potentially significant growth in usage per store. This is because we expect to attract a greater share of tester drivers than before, and these drivers still make up the majority of EVs on the road. In August, we expect to add 30 more cables to more sites, and we expect to add around 100 NACS cables to sites on a retrofit basis through the rest of the year. And finally, we are in construction of our first flagship sites with General Motors.

Speaker 2

We look forward to opening these stations, which will feature up to 20 stalls and offer features like overhead canopies, lighting for an elevated customer experience. We've made huge strategic progress on financing this quarter with the closing of a low cost commercial bank facility. We expect to close our second sale of 30C income tax credits this week for our 2024 vintage portfolio for an anticipated $17,000,000 of gross proceeds. As I said earlier, we now expect 45% CapEx offsets for our twenty twenty five vintage stores. Paul will now cover more detail on the commercial bank facility and how that relates to higher long term estimates, our financial performance for Q2 and our updated outlook for 2025.

Speaker 3

Thank you, Panhard. I'll walk us through a summary loan terms in this facility. The flexible loan structure allows EB Go to build over 1,500 new public and dedicated stalls over the next three years and finances the 400 existing public stalls we added as collateral. As Watter mentioned earlier, facility allows us to finance stalls that wouldn't have been eligible for debt financing under the DOE loan. The interest rate is sulphur plus 3.25%, with a 25 basis point increase at the beginning of year five.

Speaker 3

Facility has a five year term and a three year deployment period. EVgo will be able to draw against the loan facility monthly after Stall is operationalised for 60% of costs, including CapEx, capitalized G and A and $31,000 of deployment expenses. As collateral for the loan, EB Go contributed 400 operational stalls into a project level SPV, and we received £48,000,000 of gross proceeds in July after closing. We expect to see incremental network growth from this facility starting in 2026 as it typically takes EVgo twelve to eighteen months to get the site operational. In terms of expected stalls in operation, we are now including estimates of growth net of removals, averaging roughly 130 per year through our evego renew program over this entire period, where we are removing legacy equipment from the network.

Speaker 3

EVgo now is fully capitalized to have roughly 14,000 projected public stalls by the 2029, which will increase operational efficiencies by leveraging economies of scale. This is approximately 3,500 stalls more than our previous estimate. As described in our fourth quarter twenty twenty four earnings call in March, our unit economics continue to grow, and we expect to realize the operating leverage in our model through increased throughput per stall per day, leveraging fixed costs, install, competitive costs such as rent, and a reduction in maintenance costs through our next generation charging architecture. DidiGo anticipates that in 2029, our stalls will generate £90,000 to £104,000 per year in revenue, charging network gross margin per stall in the range of 50% to 52% and annual cash flow per stall in the £38,000 to £47,000 range. Adjusted EBITDA generation is also particularly strong.

Speaker 3

Because these per stall cash flows include all costs other than fixed costs, which will be covered by this year, these stall based cash flows fall straight to the bottom line. So by 2029, the additional roughly 5,000 stalls that we plan to build that year will generate approximately £200,000,000 incremental adjusted EBITDA annually. As we have discussed before, this represents a very compelling annual return on a onetime net CapEx per stall of $95,000 Applying this high and low end annual cash flow per stall from our unit economics to the anticipated stalls in operation at the 2029, you have a very compelling business of £1,200,000,000 to £1,500,000,000 in annual revenue from the owned and operated charging business, generating £380,000,000 to £570,000,000 in annual adjusted EBITDA at 32% to 38% margins. We are assuming our total adjusted G and A increases up to 2x in real dollar terms as we add to our growth G and A to build out the network, which again demonstrates the operating leverage in this business as the network is growing 4x. With the full utilisation of the current loans, we expect to exit 2029 with a low net debt to adjusted EBITDA ratio of under 2.5x, which provides us with additional debt capacity to finance growth well into the future.

Speaker 3

Since infrastructure companies with predictable adjusted EBITDA generation and margins typically have higher leverage ratios of five to 6x, our expected ratio of less than 2.5 would provide us with significant incremental leverage capacity. Now turning to more detail on our second quarter results. Over the past three years, we have grown our operational stall base by 2.6x, while our revenues have grown 14x. Increasing our scale and maintaining our focus on costs allows us to deliver improving bottom line performance. Our public network throughput per stall has grown 2.5x in the last two years, significantly outpacing our public charging network stall growth of 1.4x.

Speaker 3

Throughput per public stall was two eighty one kilowatt hours per stall per day in Q2 compared to two thirty a year ago, a 22% increase and up 6% sequentially. After a recent firmware update and incremental investment in Q2 maintenance, July average daily throughput approached 300 kilowatt hours per stall per day. In the second quarter, total public network utilization increased to 22%, up from 20 a year ago. Total throughput on the public network during the second quarter was 88 gigawatt hours, a 35% increase compared to last year. Revenue for Q2 was £98,000,000 which represents 47% year over year increase with growth in nearly all revenue categories.

Speaker 3

Total charging network revenues were £51,800,000 exhibiting a 46% year over year increase. Xtend revenues were £37,400,000 delivering growth of 35%. We delivered more charging equipment to PFG in the second quarter than anticipated as they accelerated their purchases. Ancillary revenues of £8,800,000 were up 157% versus last year, driven primarily by growth of the hubs business for autonomous vehicle companies. Charging network gross margin in the second quarter was 37.2%, up two ten basis points from the prior year.

Speaker 3

Adjusted gross profit of $28,400,000 in the 2025 is up from $17,700,000 in the 2024. Adjusted gross margin was 28.9 in Q2, an increase of two forty basis points compared to last year. Adjusted G and A as a percentage of revenue also improved from 38.5% in the 2024 to 30.9% in Q2 of this year, demonstrating the operating leverage effect. Adjusted EBITDA was negative £1,900,000 in the 2025, a $6,000,000 improvement versus the 2024. Now turning to our 2025 guidance.

Speaker 3

DbGo anticipates we'll add 800 to eight fifty new public and dedicated stalls in 2025, with over half the stalls going operational in the fourth quarter. Total fiscal net CapEx has been reduced to $140,000,000 to $160,000,000 reflecting the capital efficiencies we are realizing this year and faster expected development time lines, resulting in less capital spend in 2025 through twenty twenty six engine stalls. In addition, we forecast to add new Xtend stalls of four seventy five to five twenty five this year. Revenue for the full year is expected to be £350,000,000 to £380,000,000 an increase of £5,000,000 at the midpoint compared to our prior guidance. Charging network revenue are estimated to be roughly 60% of total revenues in 2025.

Speaker 3

We're expecting sequential improvement in the third and fourth quarters for charging network revenues. We expect the 2025 charging network margin profile to be like 2024. Our third quarter charging network margin will decrease seasonally due to higher summer electricity rates and resume its upward trajectory in Q4. Full year Xtend revenues are anticipated to increase around 25% versus last year, and ancillary revenues will be more than double this year. We expect both Xtend and ancillary revenues will be lower than Q2 in the third quarter.

Speaker 3

Xtend revenues are expected to be relatively evenly distributed in the third and fourth quarter. Ancillary revenues are anticipated to have a much higher fourth quarter following revenue recognition milestones. We're investing in accelerating the growth of EVgo, including investments in our operations and deployment team to increase stall growth as well as our next generation architecture. Adjusted G and A for 2025 is expected to be flat to Q4 twenty twenty four run rate plus inflation, reflecting investments in growth with some offsets due to efficiencies. These investments for accelerated growth will continue in 2026, and we therefore anticipate similar growth in adjusted G and A next year.

Speaker 3

EVgo continues to make progress towards adjusted EBITDA breakeven. In 2025, we continue to expect adjusted EBITDA in the range of negative £5,000,000 to positive £10,000,000 Following our anticipated revenue trajectory for the back half of the year, we expect Q3 adjusted EBITDA to be negative and lower than Q2 and positive for the fourth quarter. Top line growth financed with low cost, non dilutive capital, coupled with leverage in our operating model, is expected to deliver compelling shareholder returns. We look forward to keeping you apprised of our progress. Operator, we can now open the call for Q

Operator

Your first question comes from the line of David Arcaro with Morgan Stanley. Your line is open.

Speaker 4

Hi, thanks. Good morning.

Speaker 2

Good morning.

Speaker 4

Maybe first on the CapEx trends and offsets here. Great to see and I was just wondering if there was a geographic trend that's driving the capital offsets going to 45%. Were you targeting states in a different way based on demand that you're seeing? Or were there changes in state incentives? Just wondering what shifted that geographic trend around.

Speaker 5

Yes. Well, look, I think the thank you, Dave, for the question. I think that one of the key things we wanted to communicate here is that not only are we focused on EBITDA generation with strong margins, we are also very much focused on delivering strong returns on capital for shareholders. And so being able to lower our vintage CapEx per stall by almost 30% is is very much aligned with that. Our first priority, of course, is to lower gross CapEx per stall, which is a trajectory we've been on for some time, and we've been successful at, and we are looking to continue with our next generation architecture.

Speaker 5

On the offsets, we're absolutely pleased with where we are this year. We had a very high level of offsets for Vintage 2024 in the 50% range. This year, the offsets are also looking like they're gonna be very strong. We've seen that already for our first half year deployments where offsets are at that sort of 45% range. And these these grants are really coming from all over the The United States, to be perfectly honest.

Speaker 5

For the first half of the year, we have a lot of grants in grants and and incentives from California, but the rest are coming from states like Florida, Ohio, Pennsylvania, Washington. And so it's, you know, it's really all over The United States. I think a key point here, of course, is that, regardless of what happens with federal incentives, state grants and utility incentives remain alive and well.

Speaker 4

Excellent. Yeah. Thanks for that color. Good to see. And I was just wondering, any updates on the DOE loan in terms of availability, any recent conversations you've had around drawdowns that you would highlight?

Speaker 4

I know you're not currently looking for one, but curious, just any background color there.

Speaker 5

Yes. I mean the project is performing very strongly, and that's the nature of the dialogue that we have with the DOE. It represents excellent credit quality, which hopefully you can see from the our earnings today. We are not dependent on the IRA or 30 c remaining in place, and so our dialogue with the DOE LPO staff remains, you know, a very productive conversation. I think the big strategic news this quarter is that we are no longer reliant on just one source of financing.

Speaker 5

The proceeds as you as as we just laid out today from the commercial bank loan and the pros the gross proceeds from 30 c are three times what a quarterly advance, would have been if we, from the DOE, this quarter. And so we're very focused on not just being disciplined in our allocation of capital, but also disciplined in the growth of our balance sheet. And I think the good news well, one of the many sources of good news is that there's really no time limit on when we request advances for eligible CapEx with the DOE loan other than the five year availability period. And so we can incur the CapEx down. And if we wanna drop it into the DOE loans, you know, at some point within the next five years, we can or with the with the commercial bank facility.

Speaker 5

Of course, the commercial bank facility also allows us to fund stores that are not eligible for the DOE loan, which I think is also very attractive. It allows all of our stores at this point to be levered going forward.

Speaker 4

Yes. Absolutely. Okay. Great. Well, thank you so much.

Speaker 4

Your

Operator

next question comes from the line of Chris Dendrinos with RBC Capital Markets. I

Speaker 6

wanted to ask a little bit on the utilization rate this quarter. And I think you mentioned that there was a firmware update that went through. And then in July, you you all had, like, I guess, maybe a significant increase in in the utilization rate as that that got rectified. Can you maybe just provide a bit more detail about that? Maybe how long the the issue was was lasting and and sort of what you're seeing now coming out of that?

Speaker 6

Thanks.

Speaker 5

Thanks, Chris. Yeah. We we did have a faulty firmware update, at the beginning of the quarter, in q two, which, you know, is largely addressed at this point. We given that we had these issues, we did proactively take that opportunity to address some legacy charger issues at the same time and invested in maintenance to get really just to get a stronger network. We, we thought that made sense to tackle both issues at the same time.

Speaker 5

And then as we said on the call, we can see average throughput per store for July approach 300, which is quite a bit higher than, what we saw in the q two average. I think what's really kinda most interesting here is that as an indication of true demand on the network, the average throughput on the chargers that where we weren't experiencing these issues was meaningfully higher, than the chargers where we were, taking these, steps on maintenance and the and the firmware. And I think that actually also really validates the decision and the path that we're on with our with our next generation architecture where, as I've said before, I don't believe that really anybody else in our sector or very many others in our sector is able to do where we own the firmware and the development of critical components, you know, like the dispenser. And it's it's very much part of our journey of of taking that customer experience to the next level.

Speaker 6

Got it. Thanks. And then maybe on the on the next cable, and you and you highlighted some promising, I guess, call it initial results from some of the deployments that you've done so far. I guess, how are you thinking about deploying those longer term and sort of what are you looking for that would maybe drive you to accelerate deployment? Or are you already seeing things given the kind of results you've so far that would would drive you to maybe try to accelerate the deployment of those next cables?

Speaker 6

Thanks.

Speaker 5

Chris, I mean, I think that the next cable and the autonomous vehicle space are are both, I think, really interesting sources of upside for for the company here. And I'll we can talk about the AV space maybe later on. But on the next, you know, we had a couple of pilot sites in the first half of the year. One was around technology validation. It's super important that we are, you know, again, focusing on the customer experience, making sure the technology works.

Speaker 5

But the second side was really geared around, are we able to attract more Tesla drivers? And I and I would say that. I think the team is, you know, really pretty excited about the results. They're they're early, but, you know, what what they said in the call is that Tesla driver usage was significantly higher on that site than preinstallation of the next cable. Yeah.

Speaker 5

I I do think it's early days. We're gonna have about 30 cables, next cables, installed in August, and we're at this point, we're looking at a 100 for the full year. These are all retrofit before we start doing native. So not retrofit, but original equipment connectors in next year. But, like, I mean, I think that if we continue to see what we saw so far, you know, for sure, we'll be looking at our ability to deploy more next cables.

Speaker 5

But, you know, we wanna just be certain about this. Everything that we've done at at AV Go has been very thoughtful and very analytically based, whether it's the algorithms and site selection, you know, through to the AI in our marketing or AI agents in our marketing and customer outreach. Here, we don't wanna pull out a productive CCS cable unless we're sure we can make it an even more productive MAX cable, which, again, the first sight is definitely showing, but that's what we're looking at.

Speaker 6

Got it. Thank you.

Operator

Your next question comes from the line of Bill Peterson with JPMorgan. Your line is open.

Speaker 7

Hi, Good morning. This is Kakani on for Bill. Thanks so much for taking our questions. Your updated build schedule looks quite robust, especially in the 2028 to 2029 timeframe. Can you help us understand why the builds are so back half weighted if you have the liquidity available to you now?

Speaker 7

And how do you think about balancing the EV, VIO to DCFC ratio across the market versus capturing market share early on from, you know, competitors potentially?

Speaker 5

Yeah. I mean, look, I think the on the build schedule, there are really three things that have increased the schedule versus what we last indicated, which would have been about six months ago after the the DOE loan. Those are the the Voyager the the commercial bank facility, and the fact that we are lowering our CapEx per stall. We've been talking about it for a year, but we never reflected that lower CapEx per stall in our long term forecasts. And then lastly, we are generating quite significant excess operational cash flow.

Speaker 5

And so we thought for simplicity's sake, we would assume that we'd be reinvesting that cash flow into into new stores. To be honest, the reality is, as Paul said, we've actually got fairly significant you know, fairly, you know, a reasonable amount of, of capacity, for additional leverage, in the back half of this five year period. But regardless, we think that's a good enough proxy. In term and that results in a very significant increase in in of stalls that we deploy that we're now fully capitalized for, which I think is the important point. In terms of whether we could go faster in the very near term, the next year or two, you know, we really are we've been talking about a twelve to eighteen month timeline that takes from start to finish to deploy stools, and that's that's still, you know, I think, in place.

Speaker 5

I think in the, in the medium term, though, you know, we are looking at ways where we can reduce that, overall elapsed time. You know, we know and the market knows that it is possible to deploy at a much higher rate. We've seen certainly one competitor deploy at a And, of course, we've got a lot of folks in our team from Tesla today. And so, you know, I expect that over the course of the next year or so, you may hear me provide updates on what we're doing to be able to reduce that elapsed time and effectively go bigger and faster.

Speaker 7

Appreciate that color. Thank you. Maybe to follow-up on an earlier question about utilization. Should we expect to see any kind of seasonality from here on out? And do you maybe expect to see increased usage by Tesla users with the next integration driving higher utilization over time?

Speaker 7

Also totally recognize that also we've seen third party reports that utilization kinda fell in the second quarter across The US public network. So if there's anything else to call out there, that'd be great.

Speaker 5

Well, for sure on the the next cable, I mean, that's that's been the hypothesis that we've talked about. And so to the earlier question, you know, we we know we we are quite excited about that. It's early days, and we don't wanna get carried away. But I think I think it's really important just to bring out something that we've also been talking about, which is that we saw pretty healthy growth in throughput per stall sequentially, and that was because of rising charge rates. The higher the charge rate, the less the utilization we need for the same kilowatt hours dispensed.

Speaker 5

Our long term forecast is actually only 23 to 26% utilization, but with an 80 kilowatt charge rate. And that actually translates to about a a usage per stall kilowatt hours per stall that's about 60% greater than today. If we look back over the last three years, our charge rates have actually grown about 20 kilowatts in the last three years, and that's when we had slower chargers. Three years ago, only 12% of our chargers were three fifty kilowatt. Today, it's about 57%.

Speaker 5

Three years ago, the charge rates in the cars were slower. So, you know, 20 kilowatts in three years going backwards, our long term unit economics, as you can see in the chart, suggests a growth of just around 30 kilowatts in four and a half years, but with faster machines and faster charging cars. And so we're you know, this is a tailwind that we've been talking about, and I think we're really seeing that come through. And so, you know, it's it's really not just about utilization. It's really also about utilization and charge rate that's driving the the throughput per store up, and we're really pleased to see that.

Speaker 5

And and to your question about seasonality, yes, we do have seasonality in charge rates typically. We've seasonality in different parts of our business, but on charge rates, you know, they tend to be a little lower in the winter months, tend to be a little higher in the summer months. But the, you know, the growth that we've seen in the last three years, you know, Operator, can we go to the next question?

Operator

Your next question comes from the line of Andrew Shepherd with Cantor Fitzgerald. Your line is open.

Speaker 8

Hey, good morning, everyone. Congratulations on the quarter and thanks for taking our questions.

Speaker 5

Yes. Good morning.

Speaker 2

I think a lot

Speaker 8

of our key questions have been asked, but I wanted to maybe hone in on self driving technology. As we're ramping up robotaxis and self driving across the country. Curious if you can maybe give us a sense of kind of your strategy to capture as much of this market share as possible. How are you thinking about, capturing this autonomous vehicles that are ramping up? And and what are some plans to maybe differentiate EVgo?

Speaker 8

Thank you.

Speaker 5

Yeah. I mean, look, we the I mean, along with the next cable, I think that this is one of the two sources of of upside in the business that's that's probably not in anyone's forecasts. You know, we do think it's a really interesting and potentially significant source of upside if if indeed the AV space grows, which certainly it it does seem as though it's going to. I know as you've as I think you pointed out and others have, these are these are are elect these are gonna be electric vehicles, and they're not looking to be charged in slow charging locations. That makes sort of zero sense.

Speaker 5

So you know, we have been building and operating dedicated sites for autonomous vehicle partners for a number of years. Last year, we more than doubled the number of stalls at these dedicated sites to serve this space to a 110 stalls. And we actually separated it out in our stall disclosure and our public disclosure. It's sort of wrapped up in what we call ancillary at the beginning of this year. As Paul said in our guidance, we do expect to see, you know, more than doubling of ancillary revenues this year over over last year.

Speaker 5

And so we're we're pretty excited by it. You know, we think that the, you know, the the counterparties that we work with are are are pleased with the way that we're able to deploy fast charging speeds that that that are appropriate for for the for those vehicles. Obviously, we're pretty good at it, building building charging sites, whether they're public or for dedicated. And so, you know, we think that we've got, you know, a a great relationship with these folks, and we're excited about the dialogue that we're having with them. And, of course, now that we're fully capitalized and the commercial bank facility allows us to to lever those stalls where we don't think they're eligible for DOE loan funding.

Speaker 5

We think we're in actually a really pretty good space and pretty good place.

Speaker 8

Got it. Thanks, Vedar. That that's super helpful. Appreciate that color. And maybe just as a quick follow-up, can you just remind us what are maybe the key catalysts to look for maybe in Q3 and Q4?

Speaker 5

Well, look, I mean, you know, we we are just focused on on executing the business, you know, Andres. We are we we we're we're cap we know we're fully capitalized at this point. We we know the the charger issues that we talked about, the firmware, and our choice to invest in the maintenance of some of these legacy issues is largely behind us, but we expect to be pretty much wrapped up with that activity by, you know, the early part of this q three period. You know, I I think that sort of just watch us execute. That's where we're just heads down executing, and that's really what we're focused on.

Speaker 8

Got it. Thank you so much. Congrats again. I'll pass it on.

Speaker 5

Thanks so much.

Operator

Your next question comes from the line of Stephen Gengaro with Stifel. Your line is open.

Speaker 9

Thanks. Good morning, everybody.

Speaker 5

Hi, Stephen.

Speaker 9

Two things for me. The first is pretty straightforward. I'm I'm not sure you'll you'll wanna answer. But when we think about your guidance for this year, do you think as you get into next year, you'll be positive EBITDA in every quarter?

Speaker 5

Yeah. Steven, you know, we're not gonna we're we're not gonna get into the guidance for 2026 just so early. You know? But, you know, I think that, you know, if you think about what's really driving, EBITDA for us, it is, the measure that we've spoken about for the last year and, you know, last couple last several years now, which is that throughput per store per day, and that's rising. That continues to rise.

Speaker 5

It's rising sequentially. Yes. There's sometimes seasonality in that. Again, the winter months, it can be a little bit flattish in the q four to q one. But, yeah, that's gonna be a big driver of of growth in the business, and, you know, we're that's what we're seeing.

Speaker 5

So I think that's probably all I'm gonna share at this point in terms of 2020.

Speaker 9

That's fair. And I guess the other thing, you mentioned earlier in the call in your prepared remarks about the the economics of some of the chargers that are being driven by grants and maybe being a bit lighter at the beginning of the life cycle. Is is that something that we will observe in the numbers with troughing throughput for STOL? Like, just so we kinda know what to look out for or it's just not big enough to kinda really move those numbers around too much?

Speaker 5

You know what? It can a little bit, Steven. You know? And I think that, you know, the I think the really important point here is there are a couple points here is that these are not federal incentives. Right?

Speaker 5

So that's, think, number one. I think that the the state and utility space is is,

Speaker 3

you

Speaker 5

know, very productive and supportive for EV charging infrastructure build out. I, you know, I think that the second point is that even if they're a little less productive in the first sort of periods, first few periods, these are phenomenally strong returns on capital invested. And so what you know, from our perspective, you know, yes, we're obviously looking at EBITDA generation and at very strong EBITDA margins, which is, you know, the business that we've laid out here. But it's also important to us that we're deploying capital that's delivering strong returns, you know, for shareholders on the capital invested. And I think that's what we're seeing with with some of our choices.

Speaker 5

I think the fact that we've got such a large pipeline, which, you know, a lot of other, you know, smaller charging companies just don't have, allows us to move some stores where we think we can get some some great grants from one quarter to another or from one year to another. And that's what we saw this year where we did actually move some of our sites around. We it record it it forced us to push some sites from q three into q four, but we thought that was worth it because the just the level of offsets is just so great, and the returns, of course, from that capital is just so strong.

Speaker 9

Great. That's great detail. And if I could ask you one other quick one. I understanding the next cable rollout, are we big fans of Tesla, but not everybody is these days. Is there any targeted marketing that you're thinking about or you've done for Tesla drivers?

Speaker 9

Could you receive these stickers on Tesla's that owners that are mad at Elon, etcetera? Is there has anybody thought about something like that you've done, or are you thinking about any kind of campaign like that?

Speaker 5

Yeah. I mean, look. As a look. I know that this space is very feels like it's very hell heavily politicized. We know we're running this business as an infrastructure business where we're deploying capital that's returning strong returns for shareholders and strong EBITDA generation, strong margins.

Speaker 5

We try not to get too political about stuff. We just think that's not necessarily always the best thing. However, you know, we're very analytical. So, you know, where we're putting these NACS cables over the course of this year are in locations where we know there are Tesla drivers, where we those Tesla drivers we expect will come over to our stations because there isn't a Tesla supercharger nearby. And as I said on the call today, you know, we're just taking our capabilities to the next level.

Speaker 5

We've got these AI agents now that are creating messages, and they are figuring out, you know, which customers to send which message to at what time. And I think that we're, you know, that's sort of, you know, broadly what we're doing to get sort of the right level of interest at our stations at the right time. And I think that for the next cables where we're attracting Tesla drivers with with, frankly, charging stations that are faster. These are three fifty largely three fifty kilowatt stalls that we're deploying today versus the supercharger network at two fifty and closer to where they label their amenities, we think that it's a very interesting and successful should be a very successful approach.

Speaker 9

Thanks. As always, great detail. I appreciate it.

Operator

Your next question comes from the line of Craig Irwin with ROTH Capital Partners. Your line is open.

Speaker 10

Good morning and thanks for taking my questions. Paul, in your prepared remarks, you mentioned the ancillary revenue progression over the next couple of quarters, the fact that we should have a pretty strong fourth quarter. Can you maybe give us a little bit of color as far as the strength that we had in the second quarter and how that's likely to materialize relative to your execution over the last couple of months? And anything else you could share to help us understand the way this is rolling out?

Speaker 11

Sure. Yep. So, yeah, we did have strong noncharging revenue, overall in in the quarter, both ancillary and the Xtend, the Xtend business. So the Xtend but the Xtend business, I'll

Speaker 3

just talk about that one

Speaker 11

for for a quick second. So we what we saw was higher level of equipment sales with Xtend, as, as our partners sought to bring forward equipment purchases. And then with that ancillary revenue, a large part of that growth is due to our due to our hubs business. So when we set our guidance for the year and the hubs business is a relatively new business. We're still learning, you know, what what the economics could be and and negotiated contracts.

Speaker 11

And so now we've got better line of sight overall into what our, you know, Hub's business is going to generate this year in terms of in terms of revenue. So with the with the ancillary revenues, which is, you know, largely the Hub's business, we expect it's gonna more than double from last year from 2024. We're expecting also to have a much higher fourth quarter as well given some of the revenue recognition nuances in the in the hubs business. Again, it's it's largely because we now have better line of sight, to the near term as to where we expect, it's going to end up. There is some lumpiness to it, I I will admit, with the Hubs business, due to some of the accounting.

Speaker 11

And as we go forward and it becomes a much bigger part of our of our revenue mix, we'll provide more specific guidance on it, that I think will be helpful.

Speaker 10

Thank you for that. So then, Badr, you're clearly executing well versus your financial targets. Right? You're you're delivering, you know, and you have been for several quarters. But it it does look like you're adding a little bit of expenses to the model.

Speaker 10

So maybe there's a bigger opportunity or a different opportunity set. Can you talk a little bit about your priorities as you look for opportunities for investment over the next couple of years? You know, real time pricing, I guess, is one thing that's got a lot of attention over the last several months. You know, there's several things we could touch on. What do you see as as the most important areas for investment, at EB Go over the next over the next several quarters?

Speaker 5

Thanks, Craig. I mean, look. The the the the single biggest, use of cash in this business is the capital, that goes into the charging, infrastructure. And so, you know, we are very focused on both capital efficiencies, on per stall. That's gross CapEx per stall, you know, which we've talked about offsets for quite a bit here.

Speaker 5

But the the first priority is on gross CapEx per stall, which we've been lowering. But I think in part of that journey in terms of your question is the investment we're making into our next generation charging architecture. You know, we are you know, our strategy is to be able to get the benefits of being vertically integrated without being without without the the the risks and the costs of manufacturing. That's why that partnership with Delta Electronics is so important. It's why the you know, our taking ownership of the firmware, which is the the issue that we saw in q two, is so important, and it takes that customer experience to the next level.

Speaker 5

That is what we're investing in, and we see that investment show up in OpEx. But, ultimately, it's the goal there is to lower our gross CapEx per store in line with the slide that we showed earlier, know, for the 2026. But you're right. We're also investing in marketing, in customer marketing, customer approach, the databases, these AI agents. We've invested in over a long period in the algorithms behind our site selection, which we think is one of the many sources of competitive advantage for us.

Speaker 5

So you picked up on dynamic pricing as an area of investment since last year, again, which we can see paying off in the unit economics schedule. So we're we're thrilled. But, you know, I think the I think one major maybe the last point to leave is that the company has tremendous operating leverage. If you look at the fixed costs in this business versus the total g and a, it's pretty high. And so once you cover your fixed costs, all of that cash flow above fixed cost falls to the bottom line.

Speaker 5

And that's why this business model is just so, to me, so compelling. The the EBITDA generation after this year is is really pretty exciting, and that's what we're trying to convey, when we put every few months, we put out these long term financials.

Speaker 10

Fantastic. And and and just another one, if I may. Firmware, you mentioned the firmware issue in the quarter. Can you maybe share with us what sort of a headwind this was on throughputs across the network? Or any other color for us to understand the financial impact?

Speaker 5

Yeah. I mean, look, we we said that in July, the firmware issues, they're they're kinda at this point, they're they're largely behind us. We we are we we did, at the same time, decide to take some put some stalls into maintenance because we're seeing these issues anyway in terms of customer experience. So that'll be largely addressed through the first part of q three. But if you look at our July throughput, it's it was approaching 300 kilowatt hours per store per day, and that's, you know, that's quite a bit higher than what we saw in the average in q two.

Speaker 5

And that's, you know, that's probably a good enough proxy for, you know, where where throughput you know, for your question in terms of where throughput could have been.

Speaker 10

Excellent. Well, thanks again, and and congrats on the strong performance.

Speaker 5

Thanks so much.

Operator

Your next question comes from the line of Christopher Pierce with Needham and Company. Your line is open.

Speaker 12

Hey. Good morning, everyone. Was I just wondering, is it are you seeing increased competition for rideshare drivers? I mean, I know it's just one article, one headline, but we talked about 40 plus stalls going in at LAX and things like that. I just was wondering if sort of more people are realizing how interesting this business is or the frequency with which these drivers, you know, have to charge.

Speaker 5

I mean, look. It's it's hard look. Because there's so many companies in the space that are private and small. Know, it's hard it's hard to know, to be perfectly honest. When we look at our own, throughput, you know, rideshare, you know, has has been pretty steady in the '20 to 25% of our total kilowatt hours for I don't know how many quarters at this point.

Speaker 5

It's usually maybe a couple of years at this point. So, you know, rideshare's going great for us. It's been a steady contributor to our kilowatt hours in aggregate. That remains the case. We're thrilled.

Speaker 5

We've been saying forever that rideshare is a, a significant source of of upside. That's beyond that battery electric vehicle, the DCFC charging ratio, which is also a a macro supply demand factor that benefits the business. So, yeah, we're thrilled. I mean, I think that a lot of companies, smaller private companies in this space, you know you know, anecdotally, you know, we we we wonder whether they'll they'll be able to attract capital, quite honestly, just because they're smaller scale.

Speaker 12

Got it. Okay. And can you just touch on, lastly, ASP per watt? It looked like it was up pretty smartly quarter over quarter and that's after a 1Q increase from 4Q last year. I just wanted to kind of if you could touch on pricing power or is this dynamic pricing that you're kind of able to flex?

Speaker 12

Or is this people that are on a monthly plan but because of the firmware issue, they the charger that they go to was down, so you had a onetime benefit there.

Speaker 11

Yeah. So I'll take that one. So, yeah, we have seen our revenue per kilowatt hour pricing increase. As we've talked about on other other calls as well, we're continuously testing, you know, our pricing and our our pricing programs, dynamic pricing. We're just talking about rideshare and trying to incentivize rideshare drivers to go, you know, off peak and trying to, you know, influence the shape of our utilization curve as well.

Speaker 11

And it's all resulted in us, you know, having the ability and, you know, watching customers' reaction, seeing, you know, how much we can move prices up. We also, though you know, when we look to price, we also look at, you know, what is the what is the revenue minus our our throughput cost, which mostly are energy costs. And so as energy costs increase or decrease, you know, we wanna make sure that we maintain a spread or, you know, widen that spread to to some degree. And I think that's really the most important point, you know, in the quarter where we saw that spread increase last year from, I think, 29¢ a kilowatt hour to 32¢ a kilowatt hour, which is right in the middle of our long term guidance. So we're we're kind of approaching the spread where where we think, you know, long term, you know, it could end up.

Speaker 11

But we'll continue to test these programs with customers, making sure that we're delivering value to our customers, retain them, looking at the long term value of customers as well, not just the short term pricing opportunities, you know, to make sure that we're maximizing the value and and and increasing retention as well.

Speaker 12

Okay. Thanks for the detail. Appreciate it.

Speaker 5

Yep.

Operator

I will now turn the call back to Badar Khan, CEO, for closing remarks.

Speaker 5

Great. Well, thank you, everyone.

Operator

Ladies and gentlemen, that concludes today's call. You may now disconnect. Thank you, and have a great day.

Powered by Quartr