ChargePoint's Q3 2026: Contradictions Emerge on Product Rollout, Inventory Management, and Eaton Partnership

Date of Call: December 4, 2025

Financials Results

• Revenue: $106M, up 7% sequentially and up 6% year-on-year
• Gross Margin: 33% non-GAAP, flat sequentially and up 7 percentage points year-on-year

Guidance:

• Revenue for Q4 FY2026 expected to be $100M–$110M (midpoint ~3% YoY growth)
• Company expects revenue growth to continue as new products ramp, Eaton partnership accelerates and Europe demand increases
• Small inventory decline likely in Q4; more material reduction anticipated next fiscal year as existing inventory sells through
• Continued sell-through and operational improvements should support cash generation; no specific EBITDA timing provided
• Material hardware margin improvement expected in latter half of calendar 2026 as new products and Asia manufacturing scale

Business Commentary:

• Revenue Growth and Product Innovation:
• ChargePoint Holdings reported revenue of $106 million for Q3, surpassing the top end of its guidance and marking a return to growth.

• The growth was driven by new product offerings and the ramp-up of partnerships, particularly with Eaton.

• Gross Margin and Expense Management:

• 
• The company's non-GAAP gross margin remained at a record high of 33%, with subscription margin achieving a new record of 63% on a GAAP basis.

• These improvements were due to economies of scale, ongoing efficiencies, and prudent expense management.

• Debt Reduction and Financial Strengthening:

• ChargePoint successfully completed a debt exchange, reducing its outstanding debt by $172 million and extending maturity to 2030.

• This transaction was a pivotal step in strengthening the company's financial foundation and reducing annual interest expenses.

• European Market Potential:

• Europe stands out as a potential growth engine for ChargePoint, with favorable regulatory support, rapid EV adoption, and substantial infrastructure investments.
• The company's optimism is driven by the receipt of positive feedback on its new product suite during meetings with European customers.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • "Financial performance this quarter exceeded expectations. Revenue surpassed the top end of our guidance, reaching $106 million, which marks a return to growth." "Non-GAAP gross margin remained at a record high of 33%." "For the fourth quarter of fiscal 2026, we expect revenue to be $100 million to $110 million representing a 3% year-on-year growth at the midpoint."

Q&A:

• Question from Colin Rusch (Oppenheimer & Co. Inc.): 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: Two new product lines will drive demand: the Flex AC line (V2G/V2H with Eaton integration) and the Express DC line (DC-grid integrable) — both rolling out in 2026 and designed to lower CapEx/OpEx and enable new use cases.

• Question from Colin Rusch (Oppenheimer & Co. Inc.): 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 next fiscal year as existing inventory is sold through and supply is managed.

• Question from Mark Delaney (Goldman Sachs Group, Inc.): 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: Near-term hardware margin improvement will be mix-driven; larger benefits from Asia manufacturing and new products are expected as existing inventory is sold — meaningful margin gains likely in the latter half of next year.

• Question from Christopher Pierce (Needham & Company, LLC): 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 has active customer engagements in Europe and is confident they will win significant deals in the second half of next year.

• Question from Christopher Pierce (Needham & Company, LLC): 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 DC fast charging and megawatt truck charging; the new DC architecture suits both segments, with customer interest in Europe for both use cases.

• Question from William Peterson (JPMorgan Chase & Co): 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 mainly driven by a surge in residential/home billings after federal EV credit expiration; commercial also improved. No EBITDA timing given—profitability is expected to follow revenue growth, with management targeting stronger performance in 2H next year.

• Question from Christopher Dendrinos (RBC Capital Markets): Yes. 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: The Eaton partnership has exceeded expectations, unlocking differentiated home and DC products; co-branded shipments increased this quarter and the collaboration is accelerating product innovation and growth.

• 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?
  Response: NEVI projects are moving forward—about 40 states are active and awarding contracts, and ChargePoint is participating in many of them.

• Question from Craig Irwin (ROTH Capital Partners): 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: State support and subsidies have returned to levels similar to pre-passage conditions.

Contradiction Point 1

Product Rollout and Market Strategy

It reflects differing views on the timing and impact of product rollouts and market strategies, which could affect investor expectations and competitive positioning.

You've frequently mentioned projects in Europe for the second half of next year. Can you clarify whether these are projects already in negotiations that you're confident to win, or does this reflect confidence in the new product suite you're rolling out? - Christopher Pierce (Needham & Company, LLC, Research Division)

2026Q3: These are projects that we are already negotiating, based on positive customer response to new products. I am confident in winning significant deals in Europe as we bring new products to market in the second half of next year. - Richard Wilmer(CEO)

Are there higher-growth opportunities in Europe, especially through the Eaton partnership and global reach? - Christopher Dendrinos (RBC Capital Markets, Research Division)

2026Q2: We are optimistic about Europe due to a more positive macro environment and new products targeting that market. Many products driving incremental OpEx spend are aimed at Europe, such as the Flex product line and the new DC Express architecture, which will be launched there. - Richard Wilmer(CEO)

Contradiction Point 2

Inventory Management and Product Transition

It highlights differing perspectives on inventory management and product transition strategies, which could impact operational efficiency and financial performance.

What is the potential for inventory reduction this year as you address remaining balance sheet items and transition products? - Colin Rusch (Oppenheimer & Co. Inc., Research Division)

2026Q3: We've strategically decided to wind down certain contract manufacturer commitments, which might temporarily add to inventory. We expect a small decline in inventory in Q4, with a more material decrease throughout next fiscal year as we sell through existing inventory. - Mansi Khetani(CFO)

Can you discuss the ability to generate cash from the balance sheet and the impact of new products? - Craig Irwin (ROTH Capital Partners, LLC, Research Division)

2026Q2: We expect to continue declining annual cash usage, potentially generating cash before achieving EBITDA profitability. The new products should not impact inventory balance, and our supply chain timelines are aligned with sales cycles. - Mansi Khetani(CFO)

Contradiction Point 3

Inventory Management and Reduction Strategy

It involves differing expectations and strategies regarding inventory reduction, impacting operational efficiency and financial projections.

What is the potential for inventory reduction this year as you address remaining balance sheet items and navigate product transition? - Colin Rusch (Oppenheimer & Co. Inc., Research Division)

2026Q3: We've strategically decided to wind down certain contract manufacturer commitments, which might temporarily add to inventory. We expect a small decline in inventory in Q4, with a more material decrease throughout next fiscal year as we sell through existing inventory. - Mansi Khetani(CFO)

What is the expected quarterly inventory consumption range (low to mid-single-digit millions) and target inventory level for ongoing operations? - Colin William Rusch (Oppenheimer & Co. Inc., Research Division)

2026Q1: We expect gradual reduction probably in the second quarter with a more meaningful reduction coming in the second half as we see revenue growth. - Mansi Khetani(CFO)

Contradiction Point 4

Eaton Partnership and Product Innovation

It highlights differing perspectives on the Eaton partnership and its impact on product innovation, potentially affecting strategic direction and competitive positioning.

What is the current status of the Eaton partnership and how is the partnership progressing? Are there any additional updates or details you can share? - Christopher Dendrinos (RBC Capital Markets, Research Division)

2026Q3: The partnership with Eaton is exceeding expectations, leading to innovative products like our home solution and DC-only version. The collaboration is strong, and we expect co-branded product shipments to grow. - Richard Wilmer(CEO)

Given the Eaton partnership and the new AC product's market performance, how is the activity pipeline progressing, and when should we expect revenue growth for the new systems? - Colin William Rusch (Oppenheimer & Co. Inc., Research Division)

2026Q1: There's a variety of forces at play, some positive, some causing caution, such as macroeconomic conditions, tariffs, and general uncertainty. Some customers are conservative with spending. There's uncertainty around policies supporting electrification and transportation, particularly in the U.S., which are also headwinds. On the other hand, we're excited about our partnership with Eaton, which is expected to drive incremental growth. - Richard Wilmer(CEO)

Contradiction Point 5

Optimal Working Capital Balance

It highlights a shift in the company's expectations regarding the optimal working capital balance and how it's managed.

Is there potential for inventory reduction this year as you address remaining balance sheet items during the product transition? - Colin Rusch(Oppenheimer & Co. Inc., Research Division)

2026Q3: We've strategically decided to wind down certain contract manufacturer commitments, which might temporarily add to inventory. We expect a small decline in inventory in Q4, with a more material decrease throughout next fiscal year as we sell through existing inventory. - Mansi Khetani(CFO)

Can you explain the optimal working capital balance for your company, particularly regarding inventory levels, and how you plan to adjust it if necessary? - Colin Rusch(Oppenheimer)

2025Q4: We typically generate positive working capital due to the SaaS effect of our subscription revenue, where we get paid upfront for the entire portion of the contract value. This helps working capital significantly. Going forward, though, we expect inventory needs, payables, and other factors to balance out, and this is not a business that requires significant investment in working capital. - Mansi Khetani(CFO)