ChargePoint's Strategic Pivot Positions It to Capture EV Charging Boom

ChargePoint Holdings (CHPT) delivered a mixed but strategically significant Q1 2026 earnings report, underscoring its evolution from a hardware-centric EV charging provider to a software-driven infrastructure leader. While revenue dipped 9% year-over-year to $98 million due to macroeconomic headwinds, the company's margin improvements, partnerships, and network expansion paint a compelling picture of a business poised to capitalize on the EV revolution. Here's why investors should take notice now.

The Strategic Shift: From Hardware to Software Dominance

ChargePoint's Q1 results highlighted a critical transition: its subscription revenue grew 14% year-over-year to $38 million, now accounting for 39% of total revenue. This recurring revenue stream, underpinned by its SaaS platform, boasts a staggering 60% gross margin, far exceeding the 31% non-GAAP gross margin for the business overall. The shift reflects management's focus on monetizing its network scale rather than relying on volatile hardware sales.

This pivot is paying off. Even as networked hardware revenue fell 20% to $52 million, the company's non-GAAP gross margin expanded 7 percentage points year-over-year to 31%, driven by higher software contributions and cost discipline. With plans to launch a new bidirectional AC charging architecture (first model by July 2025) and a partnership with Eaton to integrate power management systems, ChargePoint is building a defensible moat around its software ecosystem.

Network Scale and Partnerships: The Cornerstone of Dominance

ChargePoint now manages 352,000 charging ports globally, including 35,000 DC fast chargers—a critical asset as EV adoption accelerates. Its roaming network provides access to 1.25 million ports worldwide, ensuring drivers can charge seamlessly across brands and regions. This interoperability is a key differentiator in a fragmented market.

The Eaton partnership, set to launch integrated solutions by September 2025, is a game-changer. By bundling EV charging with Eaton's power management systems, ChargePoint addresses a major pain point for commercial customers: simplifying the installation of charging infrastructure. This could drive adoption in markets like North America (85% of revenue) and Europe, where regulatory mandates are pushing businesses to electrify fleets and public transport.

Valuation: A Discounted Leader in a Growing Market

Despite Q1's revenue softness, ChargePoint's valuation appears compelling. With a market cap of ~$1.2 billion and $196 million in cash, the stock trades at just 6.7x forward sales—a significant discount to peers like EVgo (EVGO) (12.5x) or Blink Charging (BLNK) (10.8x). While unprofitable today, ChargePoint's path to non-GAAP EBITDA positivity in 2026 is credible, with margins improving at a 22% clip year-over-year.

The stock's ~25% decline year-to-date has created a buying opportunity as the market underreacts to long-term catalysts. For context, global EV sales grew 16-22% in Q1 2026, with regulatory tailwinds (e.g., EU's 2035 combustion engine ban) ensuring sustained demand for charging infrastructure.

Risks and Near-Term Challenges

• Revenue Volatility: Hardware sales remain lumpy, with Q1's $52 million down 20% year-over-year. Management attributes this to delayed customer spending, but macro risks persist.
• Geographic Concentration: North America accounts for 85% of revenue, leaving the company exposed to U.S. policy shifts or economic downturns.
• Margin Pressures: While EBITDA narrowed to -$23 million (vs. -$36 million in Q1 2025), further improvements hinge on inventory reductions and new product launches.

The Bottom Line: A Buy at Current Levels

ChargePoint's Q1 results confirm its transition to a software-led, margin-focused growth model. With $38 million in subscription revenue and a $1.25 million global roaming network, it's building a scalable business in one of the decade's most critical infrastructure plays. At 6.7x sales and with EBITDA positivity within reach, the stock offers asymmetric upside as EV adoption accelerates.

Investors should act now: The EV charging sector is consolidating, and ChargePoint's strategic moves—partnering with Eaton, launching cost-effective hardware, and expanding its software platform—position it to win market share. This is a buy for portfolios focused on thematic growth and infrastructure plays.

The EV revolution isn't a fad—it's an inevitability. ChargePoint, with its network scale and strategic foresight, is a prime beneficiary.