ChargePoint's Q2 2026 Earnings Call: Contradictions on Macroeconomic Impact, Inventory Strategy, Hardware Margins, and Customer Commitment

The above is the analysis of the conflicting points in this earnings call

Date of Call: September 3, 2025

Financials Results

• Revenue: $99M, down 9% YOY and up sequentially; at the top of guidance
• Gross Margin: 33% non-GAAP, up 3 ppt sequentially and 8 ppt YOY; highest since going public

Guidance:

• Q3 FY26 revenue expected at $90M–$100M.
• Non-GAAP adjusted EBITDA breakeven pushed beyond this year; continue progress toward profitability and lower cash burn.
• OpEx elevated in Q3 due to R&D/NRE for new AC/DC platforms; to trend down in Q4 and further next year.
• Expect hardware margins to benefit from Asia manufacturing, lower warranty/non-BOM costs, and new product designs.
• Subscription margins to continue improving with scale and support efficiencies.
• Inventory targeted to decline over coming quarters, releasing cash; revolver ($150M) undrawn.

Business Commentary:

• Revenue and Financial Performance:
• ChargePoint reported revenue of $99 million for Q2 fiscal 2026, landing at the top of the guidance range.
• While revenue was down 9% year-on-year, it was sequentially higher than the prior quarter due to strong performance in certain areas, particularly in Europe.

• The growth was driven by the increase in installed base, despite delays in major projects and uncertainties in North America.

• Earnings and Cash Management:

• The company achieved a non-GAAP gross margin of 33%, the highest since becoming a public company, despite tariffs.
• Cash management was exceptional, with an ending balance of $195 million, only $2 million below Q1's close.

• This was largely driven by structural operational expenditure changes and efficient cash usage.

• Product Innovation and Partnerships:

• ChargePoint is rapidly operationalizing its partnership with Eaton, which is expected to accelerate the deployment of electric vehicle charging infrastructure.
• The introduction of the co-branded product line is anticipated to generate new revenue streams and enhance market share.

• The integration of advanced energy management solutions is expected to create value for various stakeholders, including utilities and auto OEMs.

• Growth Opportunities in Europe:

• Europe is seen as a promising market for ChargePoint, with a 26% year-over-year increase in European EV sales during the first half of 2025.
• ChargePoint is well-positioned to capture this demand with new products and expanded product offerings in the region, despite a challenging macroeconomic environment in North America.

Sentiment Analysis:

• “Second quarter revenue was $99 million, landing at the top of our guidance range.” “Non-GAAP gross margin … 33% … the highest … since becoming a public company.” “Considering these delays … we … push out our EBITDA breakeven beyond this year.” “Within the U.S., passenger EV sales growth slowed to a 3% year-over-year increase … [and] delays for major projects … but no project cancellations.”

Q&A:

• Question from Colin Rusch (Oppenheimer & Co. Inc.): What is the OpEx trajectory given elevated R&D and G&A through the rest of the year?
  Response: OpEx is temporarily higher from R&D/NRE and contractors, remains elevated in Q3, then gradually declines in Q4 and further next year.

• Question from Colin Rusch (Oppenheimer & Co. Inc.): Where could Europe and Eaton expand growth, and are there geographies that could surprise on growth?
  Response: Europe looks stronger than North America; new Flex AC and Express DC products targeted at Europe with inventory in place should drive differentiated growth.

• Question from Christopher Dendrinos (RBC Capital Markets): Early interest and channel response for the new AC launch in Europe?
  Response: Very early but positive; initial inventory landed, early-access customers successful, approvals secured, focusing on the U.K., France, and Germany.

• Question from Christopher Dendrinos (RBC Capital Markets): Given a ‘lower for longer’ U.S. outlook, any strategic or investment changes?
  Response: No pullback; continue innovating within OpEx constraints, expecting EV demand to recover; ChargePoint remains well-positioned with broad HW/SW portfolio.

• Question from Mark Delaney (Goldman Sachs): What will get delayed North American projects moving, especially with 30C set to expire?
  Response: Await clarity post-tax-credit expiration; delays mainly from grid upgrades, permitting, construction; no project cancellations to date.

• Question from Mark Delaney (Goldman Sachs): Progress on transitioning to lower-cost manufacturing and impact on hardware margins?
  Response: Hardware margins rose ~1 ppt sequentially from Asia sourcing, warranty and non-BOM efficiencies; these benefits should continue as inventory sells through.

• Question from Michael Frederick Legg, Jr. (The Benchmark Company): How defensible is your software as peers push into operations platforms?
  Response: Platform is modernizing (hybrid cloud, AI) and delivers most value tightly integrated with our hardware, while still supporting third-party hardware.

• Question from Christopher Pierce (Needham & Company): Is DC fast charging taking share from Level 2?
  Response: No; use cases differ and most charging remains Level 2 at home/work; financing interest is rising for public DC deployments.

• Question from Christopher Pierce (Needham & Company): Any inventory or sourcing risk as new products ramp?
  Response: Inventory spans multiple products and is actively managed around launch timing; no shortages or sourcing shifts anticipated.

• Question from Craig Irwin (ROTH Capital Partners): Can you keep extracting cash from working capital and fund new product inventory?
  Response: Annual cash usage should keep declining; could generate cash before EBITDA breakeven; inventory reduction to release cash and supply lead times now align with sales cycles.

• Question from Craig Irwin (ROTH Capital Partners): Do new products share parts for purchasing leverage and will they be margin accretive?
  Response: Limited part commonality, but supplier concentration provides leverage; new products were designed for stronger baseline margin profiles.

• Question from Ryan Pfingst (B. Riley Securities): How large could Europe become in the mix and are economics different vs. North America?
  Response: Economics are similar; with proprietary hardware now for Europe, expect growth there, though no mix guidance provided.

• Question from William Peterson (JPMorgan): Steady-state margins for hardware/subscriptions and tariff impact?
  Response: Subscription margins should keep improving with scale; hardware margins depend on mix but benefit from Asia sourcing and efficiencies; tariffs largely mitigated currently.

• Question from Jonathan Windham (UBS): Any early signs of industry consolidation?
  Response: Discussions are active, but no specifics to share.

• Question from Jonathan Windham (UBS): What are the advantages of consolidation?
  Response: It alleviates overcrowding and price wars that undermine sustainable economics, improving industry viability.