ChargePoint's Q3 2026: Contradictions Emerge on Product Innovation, Eaton Partnership, and Inventory/Gross Margins

Date of Call: October 31, 2025

Financials Results

• Revenue: $106M, up 7% sequentially and up 6% year-over-year; exceeded the high end of guidance ($90M–$100M)
• Gross Margin: 33% non-GAAP, flat sequentially and up 7 percentage points year-over-year (record high)

Guidance:

• Revenue for Q4 FY2026 expected to be $100M to $110M (midpoint implies ~3% YoY growth)
• Management remains cautious on macro but expects revenue growth to continue as strategic initiatives execute
• No specific timing provided for adjusted EBITDA profitability; management expects EBITDA to improve with revenue growth

Business Commentary:

• Revenue Growth and Market Performance:
• ChargePoint reported revenue of $106 million for Q3, surpassing the top end of their guidance and marking a return to growth.

• This growth was driven by strong sales demand in North America and accelerating demand in Europe, as well as new product ramp-ups and the Eaton partnership.

• Improved Financial Position:

• The completion of a debt exchange transaction reduced total debt by $172 million, more than half of the previous balance, and extended debt maturity to 2030.
• This transaction strengthens ChargePoint's financial position and reflects the company's focus on disciplined capital management and creating long-term value for shareholders.

• Expansion in Europe and Strategic Partnerships:
• European demand for ChargePoint's products is robust and accelerating, with significant opportunities emerging across key markets.
• The Eaton partnership is accelerating, leading to innovative new products and operational synergies, such as co-branded product shipments.

• Innovation and Product Pipeline:
• ChargePoint's innovation engine is performing strongly, with new product lines like ChargePoint Express and AC products integrating Eaton's technology.
• These new products are expected to drive market share gains, margin improvements, and are well-received by customers, with positive reactions to their AI-driven software advancements.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management stated revenue 'surpassed the top end of our guidance' at $106M and called this a 'return to growth.' Non-GAAP gross margin hit a record 33% and cash usage improved to $14M this quarter. The debt exchange reduced total debt by $172M and extended maturities, which management described as 'strengthening our financial foundation.'

Q&A:

• Question from Colin Rusch (Oppenheimer): Congrats on the capital optimization here. I'm curious about the product evolution and the confidence that you're projecting around calendar year next year. Can you talk a little bit about any demand that you're seeing from virtual power plants, some of the geographies that are potentially in kind of tight supply situations from an electricity standpoint and products that you're seeing that are starting to emerge outside of NEVI that could actually help inflect demand in a meaningful way as you go through the calendar year next year?
  Response: Management highlighted two product lines: Flex (full V2G/V2H, pairs with Eaton smart breaker) and Express DC (DC grid integration, bidirectional); both expected to drive demand and roll out starting in 2026.

• Question from Colin Rusch (Oppenheimer): And I guess if I can have a follow-up, I'm just curious about the potential for inventory reduction throughout the course of this year as you work through some of the remaining items that you have on the balance sheet and go through some of this product transition.
  Response: Expect a small inventory decline in Q4 and a more material reduction in the next fiscal year as existing inventory is sold through and certain contract manufacturing commitments are wound down.

• Question from Mark Delaney (Goldman Sachs): I also had one on inventory but more with respect to the gross margin potential. And I think in the past, the company had thought that as it works through some of the older inventory and shift these new products, there is an opportunity for that to expand margins. With what you're seeing in the business today and some momentum you've spoken about with these newer products, can you speak a bit more around whether or not you still expect those new products to drive gross margins to the upside as they start to become a bigger contribution to the mix. And just anything you can share in terms of the timing as to when you may start seeing a bigger mix of those as you think about the inventory dynamic.
  Response: Hardware margin improvements will be mix-driven; margins should stay near current levels until existing inventory is sold through, with larger improvements from Asia manufacturing and new products expected in the latter half of next year.

• Question from Christopher Pierce (Needham): You've spoken kind of constantly to the second half of calendar next year and projects in Europe. Can you just remind us like lead times, are these projects that you're sort of already negotiating and feel confident that you've won? Or is this just confidence in the new product suite that you're rolling out?
  Response: Management said it's more the former: they have active customer discussions in Europe and are confident they will win significant deals as the new products enter the market in H2 next year.

• Question from Christopher Pierce (Needham): And then just lastly, are these consumer-like passenger car products? Or are these -- are you starting to see fleet wins? Or are there not enough fleet vehicles out there? I just kind of want to get a sense of where you're seeing the momentum.
  Response: Momentum spans both passenger EV DC fast charging and megawatt truck charging; the new DC architecture suits both use cases.

• Question from William Peterson (JPMorgan): I guess sort of housekeeping relative to your expectations on the last quarter call, you came in nicely ahead of expectations. Can you provide some color of what came in better than expected? And then anything notable within the network hardware in terms of mix? And then just adding the second question on here to get back in the queue. Within your expectations for the second half of next year, your growth expectations, would this, in your view, be enough to push you to profitability?
  Response: Beat was driven mainly by a residential/home sales surge tied to expiration of federal EV credits (commercial also improved). On profitability, management gave no EBITDA timing but reiterated EBITDA should improve as revenue grows and expects a strong second half next year.

• Question from Christopher Dendrinos (RBC Capital Markets): I wanted to follow up a bit more on the Eaton partnership and hopefully, just asking you to provide a bit more information about where you're at with that relationship? How that partnership is going? And I guess just any broadly, any extra information you can provide?
  Response: Partnership with Eaton is exceeding expectations; collaboration has unlocked product innovation, co-branded shipments occurred this quarter, and the relationship is operationally strong with growth expected to continue.

• Question from Craig Irwin (ROTH Capital Partners): So Rick, the part of your prepared comments that was a big surprise is the NEVI funding. The fact that this is driving installations today. Can you maybe talk about the runway here as far as the financing? And whether or not you're seeing some of the financing from the states come through in a more material way now that some of the uncertainty out of DC is behind us? And are you seeing similar levels of support similar levels of financial support and sort of subsidy for new stations? Or are these basically flat, improving? How would you characterize any change there?
  Response: NEVI projects are moving with ~40 states active and awarding contracts; state-level support has essentially returned to pre-legislation levels.

Contradiction Point 1

Product Innovation and Market Demand

It involves the company's product development strategy and market demand expectations, which are crucial for strategic planning and investor confidence.

Are there specific demand trends in virtual power plants, supply-constrained regions, or products that could drive demand growth next year? - Colin Rusch (Oppenheimer)

20251205-2026 Q3: Two products: the Flex product line, fully V2G and V2H enabled, and the DC fast charging Express line, which can integrate with DC grids, reducing power conversion costs. - Richard Wilmer(CEO)

Can you discuss product evolution and confidence in next year's outlook, specifically demand from virtual power plants, regions with electricity supply challenges, and products driving demand growth? - Colin Rusch (Oppenheimer & Co. Inc., Research Division)

2026Q3: ChargePoint has announced two new product lines that cater to different needs: the Flex product line, fully V2G and V2H enabled, and the Express DC product line with integration capabilities for solar and battery systems. - Richard Wilmer(CEO)

Contradiction Point 2

Eaton Partnership and Product Collaboration

It involves the progress and impact of a strategic partnership, which is key to the company's growth and market positioning.

Can you provide more details on the Eaton partnership? - Christopher Dendrinos (RBC Capital Markets)

20251205-2026 Q3: The partnership with Eaton has exceeded expectations, enabling co-branded product shipments, and resulting in innovative solutions in the home-to-vehicle and DC fast charging areas. - Richard Wilmer(CEO)

Can you update us on the Eaton partnership's progress? - Christopher Dendrinos (RBC Capital Markets, Research Division)

2026Q3: The partnership with Eaton has exceeded expectations, leading to differentiated products in home solutions and DC fast-charging, with significant operational collaboration and growth in co-branded products. - Richard Wilmer(CEO)

Contradiction Point 3

Product Demand and Rollout

It involves differing expectations and timelines for the rollout of new products, which are crucial for driving revenue growth and meeting market demands.

Are there current demand trends from virtual power plants, regions with tight supply, and products that could drive demand next year? - Colin Rusch(Oppenheimer)

20251205-2026 Q3: These products could provide significant economic benefits and are planned to roll out in 2026. - Richard Wilmer(CEO)

Can you discuss your new partnership with Eaton and its potential to drive top-line growth? Also, what international expansion opportunities exist outside Europe? - Colin William Rusch(Oppenheimer & Co. Inc., Research Division)

2026Q1: While the focus is on North America and Europe due to the size of the addressable markets, Eaton's capabilities open up possibilities for expansion into new geographies. - Richard Wilmer(President, CEO & Director)

Contradiction Point 4

Inventory Reduction and Revenue Growth

It involves differing expectations regarding the timing and extent of inventory reduction, which impacts revenue growth and operational efficiency.

Demand from virtual power plants? Supply-tight regions? Products driving demand next year? - Colin Rusch(Oppenheimer)

20251205-2026 Q3: Mansi Khetani added that the company will see a small decline in inventory in Q4, but a more material decrease is expected throughout next fiscal year as existing inventory is sold and supply is managed. - Mansi Khetani(CFO)

Can you outline the inventory reduction timeline in terms of expected decline and target levels? - Colin William Rusch(Oppenheimer & Co. Inc., Research Division)

2026Q1: Inventory reduction is expected to be gradual in Q2, with more significant reductions anticipated in the second half of the year as revenue growth picks up. - Mansi Khetani(CFO & Chief Accounting Officer)

Contradiction Point 5

Gross Margin Improvement

It involves financial expectations regarding gross margins, which are important indicators of the company's financial health and operational efficiency.

What is the gross margin potential and when will new products drive margins higher? - Mark Delaney (Goldman Sachs)

20251205-2026 Q3: Hardware margins will remain around current levels until existing inventory is sold. Improvements will come from Asia manufacturing as inventory is reduced. New products will drive margin improvement in the latter half of next year. - Mansi Khetani(CFO)

How is the shift to lower-cost products affecting hardware gross margins? - Mark Delaney (Goldman Sachs)

2026Q2: Hardware margins improved by a percentage point due to lower-cost products from Asia and efficiencies in non-BOM costs. Future benefits will depend on inventory sell-through and Asia manufacturing scale. - Mansi Khetani(CFO)