CHPT Q1 Earnings Call: Revenue Misses Expectations Amid Inventory and Market Timing Challenges

EV charging solutions provider ChargePoint Holdings (NYSE: CHPT) fell short of the market’s revenue expectations in Q1 CY2025, with sales falling 8.8% year on year to $97.64 million. Its non-GAAP loss of $0.12 per share was significantly below analysts’ consensus estimates.

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StockStory’s Take

ChargePoint’s first quarter results were driven by softer hardware demand and project delays that management attributed to construction and infrastructure readiness issues at customer sites. CEO Rick Wilmer pointed to “eight figures worth of deals postponed to later quarters, primarily because of construction and infrastructure delays,” and described the inventory build as a deliberate move to maintain reliable partnerships with manufacturing suppliers. While subscription revenue showed year-over-year growth, hardware sales declined significantly. Management also highlighted operational improvements, including reduced operating expenses and a focus on cash management, as proof of disciplined execution. The team took a self-critical stance, noting that results “could have been better” absent project delays and inventory dynamics.

Looking ahead, ChargePoint’s outlook centers on a gradual improvement in hardware sales and margin recovery, contingent on the timing of large customer orders and the normalization of inventory levels. Management remains cautious in its near-term guidance, citing a persistent macroeconomic overhang and ongoing site readiness delays. CFO Mansi Khetani stated, “We have been prudent in our guidance because the macro overhang still exists,” and noted that the company expects a more pronounced revenue recovery in the second half of the year. The company’s path to positive adjusted EBITDA by year-end relies on accelerated top-line growth, cost reductions from partnerships with Asian manufacturing firms, and expanded software offerings. Management acknowledged execution risks tied to construction delays and evolving customer demand patterns.

Key Insights from Management’s Remarks

ChargePoint’s leadership attributed the quarter’s performance to postponed customer projects, strategic inventory moves, and transitions in hardware development and supply chain partnerships.

• Delayed project deployments: Several large hardware deals were postponed due to customer construction and infrastructure delays, shifting revenue recognition into future quarters and impacting near-term sales.
• Inventory management focus: Inventory levels increased as ChargePoint chose to accept additional finished goods from manufacturing partners to ensure supply reliability, with management expecting normalization by the end of the year.
• Expansion of manufacturing partnerships: The company added Wistron NeWeb (WNC) as a co-development partner alongside AcBel Polytech, aiming to accelerate hardware innovation and reduce production costs, particularly leveraging Southeast Asia’s supply chain strengths.
• Growing software and subscription traction: Subscription revenue, including software and services, remained resilient, supported by new features such as home charging reimbursement and enhanced fleet management tools, as well as the recent FedRAMP certification enabling government contracts.
• Shifts in market demand and utilization: Management noted a disconnect between EV sales and charging infrastructure demand, with commercial customers increasingly installing chargers to attract tenants and visitors even without direct correlation to vehicle sales, highlighting a shift in market behavior.

Drivers of Future Performance

ChargePoint’s forward guidance hinges on improving hardware availability, cost optimization from new manufacturing relationships, and continued growth in software-driven recurring revenue.

• Seasonal and macro headwinds: Management expects normal seasonality and lingering macroeconomic uncertainty to weigh on second quarter revenue, with improvement anticipated in the second half as delayed projects and larger deals enter the pipeline.
• Manufacturing cost reductions: Partnerships with Southeast Asian manufacturers are projected to lower hardware costs and improve gross margin once existing higher-cost inventory is sold through, though near-term margins may remain pressured until inventory normalizes.
• Subscription and software expansion: Expansion of software offerings and increased adoption of recurring subscription services—bolstered by recent government and enterprise wins—are expected to support more stable revenue streams and improved margin mix over time.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be tracking (1) the pace at which delayed commercial and fleet projects convert into recognized revenue, (2) the transition to lower-cost manufacturing and its effect on gross margins, and (3) the growth trajectory of subscription and software-driven revenue streams. The rollout of new hardware partnerships and the impact of government contract wins will also be key indicators of execution.

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