ChargePoint's 2026Q2 Earnings Call: Contradictions Emerge on Inventory Reduction, Tariff Impact, and OpEx Trends

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

Date of Call: None provided

Financials Results

• Revenue: $99.0M, down 9% YOY; sequentially higher; at top of guidance
• Gross Margin: 33% (non-GAAP), up 3 percentage points sequentially and 8 points YOY; highest since going public

Guidance:

• Revenue for next quarter expected to be $90M–$100M.
• Non-GAAP adjusted EBITDA breakeven pushed beyond this year; targeted in coming quarters.
• OpEx to remain elevated in Q3 due to R&D/NRE, then decline in Q4 and further next year.
• Inventory expected to decline over the next few quarters to free up cash; continued reduction in cash burn anticipated.

Business Commentary:

• Revenue and Gross Margin Performance:
• ChargePoint reported revenue of $99 million for Q2 Fiscal Year 2026, landing at the top of their guidance range.
• The non GAAP gross margin improved sequentially to 33%, the highest since becoming a public company.

• This was attributed to successful tariff mitigation efforts and higher hardware and subscription margins.

• Cash Management and Inventory:

• ChargePoint ended the quarter with a cash balance of $195 million, only $2 million below Q1's close.
• Inventory balance remained virtually flat at $212 million.

• Exceptional cash management and structural OpEx changes over the last year drove this performance.

• Market Development and New Products:

• ChargePoint introduced new products such as the Express line of DC charging solutions and a bidirectional home charging solution, expanding their reach and product offerings.

• These innovations, driven by partnerships with Eaton and GM, are expected to impact hardware gross margins positively and drive market share gains.

• Market Dynamics and Strategic Partnerships:

• Despite slower EV sales growth and tax credit uncertainties, ChargePoint maintained momentum, with over 363,000 ports managed globally.
• The collaboration with GM is progressing, and partnerships like Eaton are poised to accelerate charging infrastructure deployment across North America and Europe.

Sentiment Analysis:

• Management delivered $99M revenue at the top of guidance and a record 33% non-GAAP gross margin, with sharply reduced cash burn. However, projects are being delayed (not canceled), macro uncertainty persists, and the company is pushing out non-GAAP adjusted EBITDA breakeven beyond this year while guiding cautiously for the next quarter.

Q&A:

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

• Question from Colin Rusch (Oppenheimer): Where are the strongest growth opportunities outside North America, especially with Eaton?
  Response: Europe looks stronger; launching Flex AC and new DC Express tailored for Europe with inventory in place; expect growth as new products roll out.

• Question from Chris Dendronos (RBC Capital Markets): Early interest and channel response to the new AC architecture in Europe?
  Response: It’s early but positive; initial inventory deployed, approvals secured for UK/France/Germany, and channel engagement underway.

• Question from Chris Dendronos (RBC Capital Markets): With U.S. policy and demand uncertainty, do you need to change strategy or investments?
  Response: No; within OpEx limits, focus remains on innovation and commercialization; industry likely consolidates and ChargePoint is well positioned across NA/EU.

• Question from Mark Delaney (Goldman Sachs): What’s needed for delayed North American projects to proceed, especially with 30C expiring?
  Response: Customers remain committed; expect clarity post tax-credit expiration; typical delays stem from grid upgrades, permits, and construction timing.

• Question from Mark Delaney (Goldman Sachs): Progress on hardware gross margins as you transition to lower-cost manufacturing?
  Response: Hardware margins rose ~1 pt sequentially from Asia sourcing, lower warranty, and non-BOM efficiencies; further improvement expected as inventory sells through.

• Question from Mickey Legg (The Benchmark Company): How defensible is your software platform as peers push into operations/software?
  Response: Hybrid-cloud software with growing AI, tightly integrated with our hardware, creates differentiated value beyond standalone software.

• Question from Chris Pearce (Needham & Company): Is DC fast charging taking share from Level 2, and how are you positioned?
  Response: Use cases differ; Level 2 at home/work remains dominant, while financing interest is rising for public DC fast charging deployments.

• Question from Chris Pearce (Needham & Company): Any inventory or sourcing risks as new AC/DC products ramp?
  Response: Inventory spans products and is managed to release schedules; no shortages or re-sourcing needs identified.

• Question from Craig Irwin (ROTH Capital): Can you keep extracting cash from working capital, and do new products require incremental inventory cash?
  Response: Overall cash usage should keep declining with potential to generate cash in a quarter before EBITDA breakeven; inventory reduction should release cash and lead times now align with sales cycles.

• Question from Craig Irwin (ROTH Capital): Do new products share components to aid margins, and will they be margin accretive?
  Response: Part commonality is limited, but supplier leverage remains; new products are designed to be margin accretive.

• Question from Ryan Sings (B. Riley): How big could Europe become in your mix, and are economics different vs. North America?
  Response: Economics vary by country; not guiding mix, but Europe should grow as ChargePoint’s own hardware launches there.

• Question from Bill Peterson (JPMorgan): How should we think about steady-state hardware and subscription margins, 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; new products have higher baseline margins.

• Question from Jon Winhelm (UBS): Any signs and benefits of industry consolidation?
  Response: Activity appears high; consolidation can reduce overcrowding and price wars, improving industry economics.