EVgo (EVGO) - 2023 Q3 - Quarterly Report

Cautionary Statement Regarding Forward-Looking Statements This section highlights forward-looking statements, their inherent risks, uncertainties, and assumptions, cautioning against reliance - This section highlights that the report contains forward-looking statements, which are not guarantees of future performance and are subject to various risks, uncertainties, and assumptions Readers should not rely on them as predictions of future events[7][10] - Key risks include changes affecting EVgo's business, cyclical demand, revenue fluctuations, capital market disruptions, competition, ability to adapt to industry standards, EV market growth, expansion capabilities, new feature development, integration of acquisitions, personnel retention, legal risks, dependence on third-party contractors, capital access, supply chain issues, regulatory changes, partnerships, intellectual property, and general economic/political conditions[7][8][11] Frequently Used Terms This section defines key terms used throughout the Quarterly Report, including 'Board of Directors,' 'DCFC,' 'EV,' and 'OEM' - This section defines key terms used throughout the Quarterly Report, such as 'Board of Directors,' 'Business Combination Agreement,' 'Class A common stock,' 'DCFC' (direct current fast charging), 'EV' (electric vehicle), 'OEM' (original equipment manufacturer), 'SEC' (U.S Securities and Exchange Commission), and various company-specific entities like 'EVgo Inc.' and 'EVgo OpCo'[13][14][15][16][17][18][19][20][21][22][23][24][25][26][27][28][29][31][32][33][34][35][36][37] PART I. FINANCIAL INFORMATION This part presents EVgo Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis Item 1. Financial Statements This section presents EVgo Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations and comprehensive income (loss), statements of stockholders' deficit, and statements of cash flows, along with detailed notes explaining significant accounting policies, revenue recognition, lease accounting, and other financial details for the periods ended September 30, 2023, and December 31, 2022 Condensed Consolidated Balance Sheets This section presents EVgo Inc.'s unaudited condensed consolidated balance sheets as of September 30, 2023, and December 31, 2022 Condensed Consolidated Balance Sheets (in thousands) | Metric | Sep 30, 2023 (unaudited) | Dec 31, 2022 | | :-------------------------------- | :----------------------- | :----------- | | Total assets | $817,297 | $729,724 | | Total liabilities | $248,862 | $212,598 | | Redeemable noncontrolling interest | $661,804 | $875,226 | | Total stockholders' deficit | $(93,369) | $(358,100) | - Total assets increased by $87.6 million (12.0%) from December 31, 2022, to September 30, 2023, primarily driven by an increase in property, equipment, and software, net[45] - Total liabilities increased by $36.3 million (17.0%) over the nine-month period, with significant increases in accounts payable and noncurrent deferred revenue[45] - Stockholders' deficit improved significantly, reducing from $(358.1) million to $(93.4) million, largely due to an increase in additional paid-in capital[47] Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) This section presents EVgo Inc.'s unaudited condensed consolidated statements of operations and comprehensive income (loss) for the specified periods Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenue | $35,107 | $10,509 | $110,959 | $27,285 | | Gross profit (loss) | $604 | $(3,208) | $6,174 | $(4,552) | | Operating loss | $(36,372) | $(40,046) | $(112,591) | $(107,015) | | Net loss | $(28,257) | $(50,922) | $(98,877) | $(89,191) | | Net loss attributable to Class A common stockholders | $(9,721) | $(13,218) | $(29,823) | $(23,138) | | Net loss per share, basic and diluted | $(0.09) | $(0.19) | $(0.34) | $(0.33) | - Revenue for the three months ended September 30, 2023, increased by 234% YoY to $35.1 million, and for the nine months, it increased by 307% YoY to $111.0 million, indicating strong growth[50] - Gross profit turned positive for both the three-month ($0.6 million) and nine-month ($6.2 million) periods in 2023, compared to losses in the prior year, reflecting improved operational efficiency[50] - Net loss decreased for the three months ended September 30, 2023, to $(28.3) million from $(50.9) million YoY, but increased for the nine months to $(98.9) million from $(89.2) million YoY[50] Condensed Consolidated Statements of Stockholders' Deficit This section presents EVgo Inc.'s unaudited condensed consolidated statements of stockholders' deficit for the specified periods Condensed Consolidated Statements of Stockholders' Deficit (in thousands) | Metric | Dec 31, 2022 | Sep 30, 2023 | | :-------------------------------- | :----------- | :----------- | | Total Stockholders' Deficit | $(358,100) | $(93,369) | | Class A Common Stock (shares) | 70,248 | 102,721 | | Additional Paid-In Capital | $17,533 | $142,543 | | Accumulated Deficit | $(375,660) | $(235,942) | - The total stockholders' deficit significantly decreased from $(358.1) million at December 31, 2022, to $(93.4) million at September 30, 2023, primarily due to substantial increases in additional paid-in capital from equity offerings[51] - Additional paid-in capital increased by $125.0 million, largely from the issuance of Class A common stock under an equity offering ($123.4 million net) and the ATM program ($5.7 million net)[51] - The accumulated deficit improved from $(375.7) million to $(235.9) million, despite ongoing net losses, due to adjustments related to redeemable noncontrolling interest[51] Condensed Consolidated Statements of Cash Flows This section presents EVgo Inc.'s unaudited condensed consolidated statements of cash flows for the specified periods Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :----------------------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(29,781) | $(57,337) | | Net cash used in investing activities | $(123,843) | $(133,322) | | Net cash provided by financing activities | $135,840 | $6,458 | | Net decrease in cash, cash equivalents and restricted cash | $(17,784) | $(184,201) | - Net cash used in operating activities significantly decreased by $27.6 million (48.1%) to $(29.8) million for the nine months ended September 30, 2023, compared to the prior year, primarily due to increased cash flows from deferred revenue and operating income[60][248] - Net cash provided by financing activities increased substantially to $135.8 million, up from $6.5 million in the prior year, driven by proceeds from Class A common stock issuances through an equity offering and the ATM program[60][250] - The net decrease in cash, cash equivalents, and restricted cash was $(17.8) million for the nine months ended September 30, 2023, a significant improvement from the $(184.2) million decrease in the prior year[60] Notes to Condensed Consolidated Financial Statements This section provides detailed notes explaining significant accounting policies, revenue recognition, lease accounting, and other financial details Note 1 – Description of Business and Nature of Operations This note describes EVgo Inc.'s business as an owner and operator of a public DC fast charging network for EVs in the U.S - EVgo Inc owns and operates a public direct current (DC) fast charging network for electric vehicles (EVs) in the U.S., partnering with OEMs, fleet operators, retail hosts, and governments[63] - The Company was incorporated in Delaware on August 4, 2020, and consummated a business combination with CRIS on July 1, 2021, adopting an 'Up-C' structure[65][66] - As of September 30, 2023, EVgo Holdings held 65.4% of EVgo OpCo Units and Class B common stock, representing a 67.4% voting interest in the Company[68] Note 2 – Summary of Significant Accounting Policies This note outlines significant accounting policies, including estimates and recent adoptions, used in financial statement preparation - The condensed consolidated financial statements are unaudited and prepared in accordance with GAAP, consolidating the accounts of the Company and its subsidiaries[70] - Significant estimates include variable consideration for revenue, depreciable lives of assets, asset retirement obligations, fair value of operating lease assets/liabilities, share-based compensation, earnout liability, and warrant liabilities[73] - The Company adopted ASU 2021-08 (Business Combinations) and ASC 326 (Credit Losses) prospectively on January 1, 2023, with no material impact on financial statements[82][83] - As of September 30, 2023, two customers comprised 41.5% of net accounts receivable, and one customer represented 29.6% of revenue for the three months ended September 30, 2023[76] Note 3 – Revenue Recognition This note details EVgo's revenue recognition policies and disaggregates revenue by type for the specified periods Revenue Disaggregation (in thousands) | Revenue Type | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Charging revenue, retail | $13,357 | $5,176 | $29,057 | $13,067 | | Charging revenue, commercial | $4,042 | $678 | $8,175 | $2,041 | | Charging revenue, OEM | $1,477 | $252 | $3,015 | $592 | | Regulatory credit sales | $1,807 | $1,178 | $4,635 | $4,684 | | Network revenue, OEM | $1,114 | $448 | $4,555 | $1,825 | | eXtend revenue | $10,475 | $1,543 | $54,048 | $1,754 | | Ancillary revenue | $2,835 | $1,234 | $7,474 | $3,322 | | Total revenue | $35,107 | $10,509 | $110,959 | $27,285 | - Total revenue for the three months ended September 30, 2023, increased by 234% YoY to $35.1 million, and for the nine months, it increased by 307% YoY to $111.0 million[85] - eXtend revenue showed the most significant growth, increasing by 579% YoY to $10.5 million for the three months and by over 999% YoY to $54.0 million for the nine months, driven by increased projects and equipment sales[85] - Contract liabilities increased by $19.2 million (33%) to $77.0 million as of September 30, 2023, reflecting the timing difference between cash receipt and performance obligation satisfaction[86] Note 4 – Lease Accounting This note describes EVgo's operating lease agreements for charging stations, offices, and warehouses, and presents associated costs and income - EVgo has operating lease agreements with Site Hosts for charging stations and leases offices/warehouses, with terms generally ranging from one to 15 years[89] Operating Lease Costs (in thousands) | Lease Cost Type | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Operating lease costs (Cost of sales) | $1,731 | $824 | $4,522 | $1,915 | | Operating lease costs (G&A) | $1,073 | $1,036 | $3,513 | $2,316 | | Variable lease costs (Cost of sales) | $559 | $122 | $1,376 | $309 | | Variable lease costs (G&A) | $44 | $34 | $101 | $70 | | Short-term lease costs | $10 | $24 | $69 | $68 | | Total lease costs | $3,417 | $2,040 | $9,581 | $4,678 | - Total lease costs increased by 67.5% YoY for the three months and 104.8% YoY for the nine months ended September 30, 2023, reflecting business expansion[90] Operating Lease Income (in thousands) | Lease Income Type | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :---------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Fixed lease income | $542 | $152 | $1,534 | $616 | | Sublease income | $403 | $99 | $937 | $117 | | Total operating lease income | $945 | $251 | $2,471 | $733 | Note 5 – Property, Equipment and Software, Net This note details EVgo's property, equipment, and software, net, including changes and related depreciation and amortization expenses Property, Equipment and Software, Net (in thousands) | Asset Category | Sep 30, 2023 | Dec 31, 2022 | | :------------------------------------ | :----------- | :----------- | | Total property, equipment and software | $477,481 | $357,710 | | Less accumulated depreciation and amortization | $(79,554) | $(49,598) | | Property, equipment and software, net | $397,927 | $308,112 | - Net property, equipment, and software increased by $89.8 million (29.2%) from December 31, 2022, to September 30, 2023, primarily due to increased charging station installation costs and equipment[95] Depreciation, Amortization, Impairment, and Loss on Disposal (in thousands) | Expense Type | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Depreciation of property and equipment (Cost of sales) | $10,328 | $6,508 | $27,214 | $16,493 | | Amortization of capital-build liability | $(1,709) | $(1,321) | $(4,970) | $(3,751) | | Impairment expense | $1,789 | $1,254 | $7,614 | $3,248 | | Total | $12,323 | $7,528 | $34,475 | $18,984 | Note 6 – Intangible Assets, Net This note details EVgo's intangible assets, net, including gross carrying amounts, accumulated amortization, and remaining amortization periods Intangible Assets, Net (in thousands, as of Sep 30, 2023) | Asset Category | Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | Remaining Weighted Average Amortization Period | | :--------------------- | :-------------------- | :----------------------- | :----------------- | :--------------------------------------------- | | Site Host relationships | $41,500 | $(12,829) | $28,671 | 8.3 years | | Customer relationships | $19,000 | $(15,154) | $3,846 | 1.0 years | | Developed technology | $14,000 | $(3,408) | $10,592 | 10.8 years | | User base | $11,000 | $(6,121) | $4,879 | 1.8 years | | Trade name | $5,000 | $(1,087) | $3,913 | 12.8 years | | Total | $90,500 | $(38,599) | $51,901 | | - Total net intangible assets were $51.9 million as of September 30, 2023, with Site Host relationships being the largest component at $28.7 million[96] - Amortization of intangible assets was $2.9 million for both the three months ended September 30, 2023 and 2022, and $8.7 million for both the nine months ended September 30, 2023 and 2022[96] Note 7 – Asset Retirement Obligations This note explains EVgo's asset retirement obligations, representing estimated costs to remove charging stations and restore sites - Asset retirement obligations represent the estimated costs to remove charging stations and restore sites[97] Asset Retirement Obligation Activity (in thousands, 9 Months Ended Sep 30, 2023) | Activity | Amount | | :-------------------------------- | :------- | | Balance as of December 31, 2022 | $15,473 | | Liabilities incurred | $2,606 | | Accretion expense | $1,665 | | Change in estimate | $(14) | | Liabilities settled | $(375) | | Balance as of September 30, 2023 | $19,355 | - The balance of asset retirement obligations increased by $3.9 million (25.1%) to $19.4 million as of September 30, 2023, primarily due to newly incurred liabilities and accretion expense[97] Note 8 – Equity This note details changes in EVgo's equity, including proceeds from Class A common stock issuances under ATM Program and equity offerings - EVgo sold 889,340 shares of Class A common stock under its ATM Program in April 2023, generating net proceeds of approximately $5.7 million[98] - The Company completed an underwritten equity offering of 30,123,129 shares of Class A common stock, generating net proceeds of $123.4 million during the three months ended June 30, 2023[99] - Issuance costs of $0.4 million for the nine months ended September 30, 2023, were recorded as a reduction of additional paid-in capital[100] Note 9 – Commitments and Contingencies This note outlines EVgo's significant commitments and contingencies, including infrastructure agreements and purchase order commitments - EVgo has a Pilot Infrastructure Agreement with Pilot Travel Centers LLC and General Motors LLC to build, operate, and maintain up to 2,000 DC fast charging stalls, with construction milestones and potential liquidated damages for delays[101][102] - The GM Agreement requires EVgo to install 3,250 charger stalls by March 31, 2026, with 44% by December 31, 2023, and maintain 95% network availability, facing potential liquidated damages of up to $15.0 million for non-compliance[105][106][107] - EVgo has a Nissan Agreement for joint marketing, charging credit programs, and a capital-build program, with potential penalties for failing to meet the Build Schedule[109] - As of September 30, 2023, EVgo had $76.0 million in short-term purchase order commitments for charging equipment and $14.7 million in other material commitments[115] Note 10 – Fair Value Measurements This note provides information on fair value measurements of EVgo's financial assets and liabilities, including cash, earnout, and warrant liabilities Fair Value of Financial Assets and Liabilities (in thousands) | Item | Level | Sep 30, 2023 Balance | Level | Dec 31, 2022 Balance | | :-------------------------------- | :---- | :------------------- | :---- | :------------------- | | Cash equivalents (Money market funds) | 1 | $201,125 | 1 | $150,125 | | Earnout liability | 3 | $855 | 3 | $1,730 | | Warrant liability – Public Warrants | 1 | $5,381 | 1 | $10,164 | | Warrant liability – Private Placement Warrants | 3 | $1,138 | 2 | $2,140 | | Total liabilities | | $7,374 | | $14,034 | - The fair value of earnout liability decreased from $1.7 million to $0.9 million, and warrant liabilities decreased from $12.3 million to $6.5 million, primarily due to market-to-market adjustments[117][169] - Private Placement Warrants were valued using a Monte Carlo simulation methodology (Level 3) as of September 30, 2023, with a stock price of $3.38 and expected volatility of 71%[120] Note 11 – Income Taxes This note details EVgo's provision for income taxes, including a full valuation allowance against net deferred tax assets - EVgo's provision for income taxes primarily relates to federal and state jurisdictions where business is conducted, specifically concerning its ownership in EVgo OpCo[122] - A full valuation allowance has been established against net deferred tax assets as of September 30, 2023, and December 31, 2022, due to significant uncertainty regarding future realization of tax benefits[123] - There were no unrecognized tax benefits for uncertain tax positions as of September 30, 2023, and December 31, 2022[124] Note 12 – Tax Receivable Agreement This note describes EVgo's Tax Receivable Agreement (TRA), obligating the Company to pay TRA Holders 85% of net cash savings - EVgo entered into a Tax Receivable Agreement (TRA) in connection with the CRIS Business Combination, obligating the Company Group to pay TRA Holders 85% of net cash savings from certain tax basis increases[125] - Payments under the TRA are expected to be substantial and could be accelerated upon early termination or change of control, potentially impacting EVgo's liquidity[247] - As of September 30, 2023, no transactions have occurred that would trigger the recording of a liability under the TRA[126] Note 13 – Net Loss Per Share This note presents the calculation of EVgo's net loss per share for Class A common stockholders, including basic and diluted figures Net Loss Per Share (in thousands, except per share data) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss attributable to Class A common stockholders | $(9,721) | $(13,218) | $(29,823) | $(23,138) | | Weighted average common stock outstanding, basic and diluted | 102,687 | 68,621 | 86,449 | 68,507 | | Net loss per share – basic and diluted | $(0.09) | $(0.19) | $(0.34) | $(0.33) | - Net loss per share for Class A common stockholders improved to $(0.09) for the three months ended September 30, 2023, from $(0.19) in the prior year, but slightly deteriorated to $(0.34) for the nine months from $(0.33)[127] - Potentially dilutive securities, including Public Warrants, Private Placement Warrants, RSUs, and stock options, totaling 27.6 million shares (2023) and 21.9 million shares (2022), were excluded from diluted EPS calculation due to their antidilutive effect[129] Note 14 – Share-Based Compensation This note details EVgo's share-based compensation expense, including the impact of RSU and stock option awards Total Share-Based Compensation Expense (in thousands) | Expense Category | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Cost of sales | $58 | $28 | $121 | $65 | | General and administrative expenses | $6,043 | $6,865 | $20,902 | $17,376 | | Total share-based compensation expense | $6,101 | $6,893 | $21,023 | $17,441 | - Total share-based compensation expense decreased by 11.5% YoY for the three months ended September 30, 2023, but increased by 20.5% YoY for the nine months, primarily in general and administrative expenses[130] - A transition agreement with the former CEO, Catherine Zoi, resulted in a modification of RSU and stock option awards, with an incremental fair value of $4.2 million recognized over the period to her separation date[130] - As of September 30, 2023, unrecognized share-based compensation expense was approximately $2.6 million for stock options (over 1.5 years) and $29.4 million for unvested RSUs (over 1.5 years)[133][136] Note 15 – Redeemable Noncontrolling Interest This note explains the classification and changes in EVgo's redeemable noncontrolling interest, representing EVgo Holdings' economic ownership - As of September 30, 2023, EVgo Holdings held 195,800,000 EVgo OpCo Units, representing a 65.6% economic ownership interest in EVgo OpCo and a 65.4% voting interest in the Company[139] - The EVgo OpCo Units are classified as redeemable noncontrolling interest (temporary equity) due to a cash redemption feature outside the Company's control[140] Reconciliation of Changes in Redeemable Noncontrolling Interest (in thousands, 9 Months Ended Sep 30, 2023) | Activity | Amount | | :-------------------------------------------------------------------------------- | :------- | | Balance as of December 31, 2022 | $875,226 | | Net loss attributable to redeemable noncontrolling interest | $(69,054) | | Equity-based compensation attributable to redeemable noncontrolling interest | $1,843 | | Adjustment to revise redeemable noncontrolling interest to its redemption value at period-end | $(146,211) | | Balance as of September 30, 2023 | $661,804 | Note 16 – Subsequent Events This note discloses significant events occurring after the reporting period, including real estate sales and associated lease agreements - In November 2023, EVgo subsidiaries sold three parcels of real estate for an aggregate purchase price of $16.5 million, receiving net proceeds of $14.6 million[143] - Concurrently, the Real Estate Subsidiaries entered into ten-year lease agreements with the purchaser for these parcels, with six 5-year renewal options and conditional termination rights[143] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on EVgo's financial condition and results of operations, detailing revenue streams, cost components, key performance indicators, and factors influencing the business It includes a comprehensive analysis of financial performance for the three and nine months ended September 30, 2023 and 2022, liquidity, capital resources, and critical accounting policies Overview EVgo is a leader in EV charging solutions, building and operating infrastructure for individual drivers, rideshare, commercial fleets, and businesses, with its network powered by renewable energy certificates since 2019 - EVgo is a leader in EV charging solutions, building and operating infrastructure for individual drivers, rideshare, commercial fleets, and businesses, with its network powered by renewable energy certificates since 2019[146] - The Company employs a flexible business model with multiple revenue streams, including direct electricity sales (retail, commercial, OEM), regulatory credit sales (e.g., LCFS), network services for OEMs, eXtend services (hardware, design, O&M for customer-owned assets), and various software-driven ancillary services[147][148][149][150] - EVgo's offerings aim to attract Site Hosts by providing EV charging capabilities at no cost, often with additional revenue from license payments[148] Recent Developments The global economy faces disruption from geopolitical instability, rising inflation, and slowing economic growth, which could impact EVgo's operating and financial results - The global economy faces disruption from geopolitical instability (Ukraine, Israel, Middle East), rising inflation, slowing economic growth, and financial system concerns, which could impact EVgo's operating and financial results[152][153] - Government EV initiatives like the Bipartisan Infrastructure Law and Inflation Reduction Act provide incentives for EV adoption and charging infrastructure, but new requirements (e.g., Buy America, domestic content) may cause delays or increased costs for EVgo and its suppliers[154][155] - Badar Khan was appointed to succeed Catherine Zoi as the Company's Chief Executive Officer, effective around November 9, 2023[158] Key Components of Results of Operations This section outlines EVgo's primary revenue streams, cost components, and other income/expense items that influence its operating results - Revenue is primarily generated from charging services (retail, commercial, OEM), eXtend offerings, regulatory credit sales, and ancillary services[159] - Cost of sales includes cost of revenue (energy, O&M, warranty, site lease) and depreciation, net of capital-build amortization, which is partially offset by third-party funding[160][161] - Operating expenses consist of general and administrative expenses (payroll, IT, customer service, professional services) and depreciation, amortization, and accretion (non-charging equipment, intangible assets, asset retirement obligations)[163][164] - Other income/expense items include interest income, unrealized gains/losses on marketable securities, and changes in fair value of warrant and earnout liabilities[167][168][169] Key Performance Indicators EVgo uses Network Throughput and Number of DC Stalls to measure operational performance, and Total Receipts to monitor commercial performance and liquidity - EVgo uses Network Throughput (total GWh consumed on its network, excluding eXtend) and Number of DC Stalls (energized, inspected, commissioned) to measure operational performance[172][174] Network Throughput and DC Stalls | Metric | Sep 30, 2023 | Sep 30, 2022 | | :------------------------------------------ | :----------- | :----------- | | Network throughput (GWh) for the three months ended | 37 | 12 | | Network throughput (GWh) for the nine months ended | 80 | 30 | | Number of DC Stalls on EVgo Network (in thousands) as of | 2.7 | 2.1 | - Network throughput increased significantly, with 37 GWh for the three months (up 208% YoY) and 80 GWh for the nine months (up 167% YoY) ended September 30, 2023[174] - Receipts (total revenue + change in deferred revenue) are used to monitor commercial performance, liquidity, and growth, as OEM customers often pay in advance[175] Total Receipts (in thousands) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | GAAP revenue | $35,107 | $10,509 | $110,959 | $27,285 | | GAAP changes in deferred revenue | $7,216 | $4,116 | $26,155 | $3,544 | | Total Receipts | $42,323 | $14,625 | $137,114 | $30,829 | | Year-over-year percentage change in total Receipts | 189% | | 345% | | Factors Affecting EVgo's Operating Results EVgo's operating results are influenced by EV adoption, market competition, government incentives, technology risks, and regulatory credit market dynamics - EVgo's revenue growth is directly tied to the adoption and usage of EVs; factors like consumer perception, range anxiety, charging convenience, and supply chain issues can impact EV sales[178][180] - Competition in the EV charging industry is increasing, with factors like charger count, location, reliability, charging speed, software offerings, and brand reputation being key competitive differentiators[182] - Government mandates, incentives (e.g., tax credits like Section 30C, NEVI program), and regulatory programs significantly influence the EV market, but changes or new requirements (e.g., Buy America) could adversely affect EVgo's business and increase costs[183][185][186] - Technology risks include reliance on mobile operating systems and third-party software (like Driivz), and the need to adapt to evolving EV technology (e.g., NACS standard adoption by OEMs), requiring significant investment[187] - Revenue from regulatory credits (e.g., LCFS) is subject to market and supply/demand dynamics, leading to price volatility and dependence on continued governmental support for these programs[189] Results of Operations for the Three Months Ended September 30, 2023 and 2022 This section analyzes EVgo's financial performance for the three months ended September 30, 2023 and 2022, detailing revenue, costs, and profitability Revenue This section details EVgo's revenue breakdown for the three months ended September 30, 2023 and 2022, by various revenue streams Revenue (in thousands, 3 Months Ended Sep 30) | Revenue Type | 2023 | 2022 | Change ($) | Change (%) | | :-------------------------- | :----- | :----- | :--------- | :--------- | | Charging revenue, retail | $13,357 | $5,176 | $8,181 | 158% | | Charging revenue, commercial | $4,042 | $678 | $3,364 | 496% | | Charging revenue, OEM | $1,477 | $252 | $1,225 | 486% | | Regulatory credit sales | $1,807 | $1,178 | $629 | 53% | | Network revenue, OEM | $1,114 | $448 | $666 | 149% | | eXtend revenue | $10,475 | $1,543 | $8,932 | 579% | | Ancillary revenue | $2,835 | $1,234 | $1,601 | 130% | | Total revenue | $35,107 | $10,509 | $24,598 | 234% | - Total revenue increased by $24.6 million (234%) to $35.1 million, primarily driven by eXtend revenue (up $8.9 million or 579%) and retail charging revenue (up $8.2 million or 158%)[191] - Commercial and OEM charging revenues also saw substantial growth, increasing by 496% and 486% respectively, due to higher charging volumes[193][194] Cost of Sales This section analyzes EVgo's cost of sales for the three months ended September 30, 2023 and 2022 - Cost of revenue increased by $17.4 million (203%) to $25.9 million, mainly due to $8.3 million in eXtend costs, $6.6 million in energy/variable charging costs, and $1.6 million in fixed charging costs[200] - Depreciation, net of capital-build amortization, increased by $3.4 million (66%) to $8.6 million, reflecting the growth of EVgo's charging network[201] Gross Profit (Loss) and Gross Margin This section analyzes EVgo's gross profit (loss) and gross margin for the three months ended September 30, 2023 and 2022 - Gross profit improved to $0.6 million from a gross loss of $3.2 million in the prior year, driven by increased charging and eXtend revenues[202] - Gross margin improved significantly to 1.7% from negative 30.5%, due to better leveraging of charging station costs and higher margins on eXtend and charging revenue[202] Operating Expenses This section details EVgo's operating expenses for the three months ended September 30, 2023 and 2022 - General and administrative expenses slightly decreased by $0.3 million (1%) to $32.0 million, mainly due to lower professional services and insurance costs, partially offset by lower insurance recoveries[203] - Depreciation, amortization, and accretion expenses increased by $0.5 million (10%) to $5.0 million, primarily due to higher software amortization[204] Operating Loss and Operating Margin This section analyzes EVgo's operating loss and operating margin for the three months ended September 30, 2023 and 2022 - Operating loss improved by $3.7 million (9%) to $(36.4) million, driven by increased gross profit[205] - Operating margin improved to negative 103.6% from negative 381.1%, reflecting better leveraging of operating expenses and improved gross margin[205] Interest Income This section details EVgo's interest income for the three months ended September 30, 2023 and 2022 - Interest income increased by $1.3 million (77%) to $2.9 million, due to higher cash and cash equivalents held in high-interest accounts[206] Other Income (Expense), Net This section details EVgo's other income (expense), net, for the three months ended September 30, 2023 and 2022 - Other income, net, was de minimis compared to an expense of $0.3 million in the prior year, primarily due to losses on investments in 2022[207] Changes in Fair Values of Warrant and Earnout Liabilities This section details changes in fair values of EVgo's warrant and earnout liabilities for the three months ended September 30, 2023 and 2022 - A $5.2 million gain was recorded from changes in fair values of warrant and earnout liabilities, a significant improvement from a $12.2 million loss in the prior year, due to a decrease in fair values[208] Income Taxes This section details EVgo's income taxes for the three months ended September 30, 2023 and 2022 - No income taxes were due for the three months ended September 30, 2023 and 2022, due to a full valuation allowance on net deferred tax assets[209] Net (Loss) Income This section analyzes EVgo's net loss for the three months ended September 30, 2023 and 2022 - Net loss decreased to $(28.3) million from $(50.9) million, driven by the $17.4 million impact from fair value changes in liabilities, $3.8 million gross profit improvement, and $1.3 million interest income increase[210] Results of Operations for the Nine Months Ended September 30, 2023 and 2022 This section analyzes EVgo's financial performance for the nine months ended September 30, 2023 and 2022, detailing revenue, costs, and profitability Revenue This section details EVgo's revenue breakdown for the nine months ended September 30, 2023 and 2022, by various revenue streams Revenue (in thousands, 9 Months Ended Sep 30) | Revenue Type | 2023 | 2022 | Change ($) | Change (%) | | :-------------------------- | :------- | :------- | :--------- | :--------- | | Charging revenue, retail | $29,057 | $13,067 | $15,990 | 122% | | Charging revenue, commercial | $8,175 | $2,041 | $6,134 | 301% | | Charging revenue, OEM | $3,015 | $592 | $2,423 | 409% | | Regulatory credit sales | $4,635 | $4,684 | $(49) | (1)% | | Network revenue, OEM | $4,555 | $1,825 | $2,730 | 150% | | eXtend revenue | $54,048 | $1,754 | $52,294 | >999% | | Ancillary revenue | $7,474 | $3,322 | $4,152 | 125% | | Total revenue | $110,959 | $27,285 | $83,674 | 307% | - Total revenue increased by $83.7 million (307%) to $111.0 million, primarily driven by a $52.3 million increase in eXtend revenue (over 999% growth) and a $16.0 million increase in retail charging revenue (122% growth)[213] - Commercial and OEM charging revenues also experienced significant growth of 301% and 409% respectively, due to higher charging volumes and customer enrollments[215][216] Cost of Sales This section analyzes EVgo's cost of sales for the nine months ended September 30, 2023 and 2022 - Cost of revenue increased by $63.4 million (332%) to $82.5 million, mainly due to a $41.7 million increase in eXtend costs, $14.2 million in energy/variable charging costs, and $6.2 million in fixed charging costs[222] - Depreciation, net of capital-build amortization, increased by $9.5 million (75%) to $22.2 million, reflecting the expansion of EVgo's charging network[223] Gross Profit (Loss) and Gross Margin This section analyzes EVgo's gross profit (loss) and gross margin for the nine months ended September 30, 2023 and 2022 - Gross profit improved to $6.2 million from a gross loss of $4.6 million in the prior year, driven by increased gross profit from eXtend and charging revenues[224] - Gross margin improved to 5.6% from negative 16.7%, due to better leveraging of charging station costs and higher margins on eXtend and charging revenue[224] Operating Expenses This section details EVgo's operating expenses for the nine months ended September 30, 2023 and 2022 - General and administrative expenses increased by $14.3 million (16%) to $104.2 million, primarily due to a $10.4 million increase in payroll expenses from higher headcount and a $4.4 million increase in impairment expense[225] - Depreciation, amortization, and accretion expenses increased by $2.0 million (16%) to $14.5 million, mainly due to higher software amortization[226] Operating Loss and Operating Margin This section analyzes EVgo's operating loss and operating margin for the nine months ended September 30, 2023 and 2022 - Operating loss deteriorated by $5.6 million (5%) to $(112.6) million, driven by increased general and administrative expenses, partially offset by increased gross profit[227] - Operating margin improved to negative 101.5% from negative 392.2%, reflecting improved leveraging of operating expenses and gross margin[227] Interest Expense This section details EVgo's interest expense for the nine months ended September 30, 2023 and 2022 - No interest expense was incurred for the nine months ended September 30, 2023, compared to a de minimis amount in the prior year[228] Interest Income This section details EVgo's interest income for the nine months ended September 30, 2023 and 2022 - Interest income increased by $4.8 million (205%) to $7.1 million, due to higher cash and cash equivalents held in high-interest accounts[229] Other Income (Expense), Net This section details EVgo's other income (expense), net, for the nine months ended September 30, 2023 and 2022 - Other income, net, was de minimis compared to an expense of $0.8 million in the prior year, primarily due to losses on investments in 2022[231] Changes in Fair Values of Warrant and Earnout Liabilities This section details changes in fair values of EVgo's warrant and earnout liabilities for the nine months ended September 30, 2023 and 2022 - A $6.7 million gain was recorded from changes in fair values of warrant and earnout liabilities, compared to a $16.3 million gain in the prior year, reflecting a smaller decrease in fair value[232] Income Taxes This section details EVgo's income taxes for the nine months ended September 30, 2023 and 2022 - Income taxes and effective tax rates were de minimis for the nine months ended September 30, 2023 and 2022[233] Net (Loss) Income This section analyzes EVgo's net loss for the nine months ended September 30, 2023 and 2022 - Net loss increased to $(98.9) million from $(89.2) million, driven by increased G&A expenses and the impact from fair value changes in liabilities, partially offset by increased gross profit and interest income[234] Non-GAAP Financial Measures EVgo uses non-GAAP financial measures like Adjusted Cost of Sales, Adjusted Gross Profit (Loss), Adjusted General and Administrative Expenses, EBITDA, and Adjusted EBITDA to evaluate performance and manage the business, believing they offer valuable insight into underlying business performance - EVgo uses non-GAAP financial measures like Adjusted Cost of Sales, Adjusted Gross Profit (Loss), Adjusted General and Administrative Expenses, EBITDA, and Adjusted EBITDA to evaluate performance and manage the business, believing they offer valuable insight into underlying business performance[235][236] Adjusted Gross Profit (Loss) and Margin (in thousands) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | GAAP gross profit (loss) | $604 | $(3,208) | $6,174 | $(4,552) | | Adjusted Gross Profit | $9,281 | $2,006 | $28,539 | $8,254 | | GAAP gross margin | 1.7% | (30.5%) | 5.6% | (16.7%) | | Adjusted Gross Margin | 26.4% | 19.1% | 25.7% | 30.3% | Adjusted EBITDA (in thousands) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | GAAP net loss | $(28,257) | $(50,922) | $(98,877) | $(89,191) | | EBITDA | $(17,561) | $(42,847) | $(69,144) | $(66,198) | | Adjusted EBITDA | $(14,248) | $(22,153) | $(44,868) | $(60,166) | | EBITDA Margin | (50.0%) | (407.7%) | (62.3%) | (242.6%) | | Adjusted EBITDA Margin | (40.6%) | (210.8%) | (40.4%) | (220.5%) | - Adjusted Gross Margin improved to 26.4% for the three months ended September 30, 2023, from 19.1% in the prior year, and Adjusted EBITDA improved to $(14.2) million from $(22.2) million[238][242] Liquidity and Capital Resources As of September 30, 2023, EVgo had $228.7 million in cash and equivalents, and $186.0 million in working capital, deemed sufficient for twelve months of operations - As of September 30, 2023, EVgo had $228.7 million in cash, cash equivalents, and restricted cash, and working capital of $186.0 million, which management believes is sufficient for current working capital and capital expenditure requirements for at least twelve months[244] - Primary liquidity sources include cash flows from the CRIS Business Combination, revenue, government grants, and proceeds from Class A common stock sales (ATM Program, equity offering)[245] - Cash used in operating activities decreased to $(29.8) million for the nine months ended September 30, 2023, from $(57.3) million in the prior year, while cash provided by financing activities significantly increased to $135.8 million from $6.5 million[248][250] - EVgo has material cash requirements for operating leases, purchase commitments (e.g., $76.0 million for charging equipment), and other liabilities, which it expects to fund through existing cash and future financing or operations[115][252] Critical Accounting Policies and Estimates Critical accounting estimates include revenue recognition, business combinations, and warrant liabilities, with EVgo benefiting from relaxed reporting requirements as an emerging growth company - Critical accounting estimates include revenue recognition (determining performance obligations, distinctness, and allocation of transaction price), business combinations, and warrant liabilities[255] - Revenue recognition requires significant judgment in identifying performance obligations, determining standalone selling prices (SSPs), and recognizing revenue over time or at a point in time[256][257][258][259] - Warrants are classified as equity or liability based on specific terms and accounting guidance, with liability-classified warrants remeasured at fair value each period using a Monte Carlo simulation methodology[260][261] - As an 'emerging growth company' (EGC) and 'smaller reporting company,' EVgo benefits from relaxed reporting requirements, including delayed adoption of new accounting standards and reduced disclosure obligations[262][263][264] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a 'smaller reporting company,' EVgo Inc is not required to provide quantitative and qualitative disclosures about market risk under Regulation S-K Item 305(e) - EVgo is exempt from providing quantitative and qualitative disclosures about market risk due to its status as a 'smaller reporting company' under Regulation S-K[265] Item 4. Controls and Procedures Management concluded that EVgo's disclosure controls and procedures were not effective as of September 30, 2023, due to identified material weaknesses in internal control over financial reporting The Company is implementing a remediation plan to address these weaknesses, including hiring additional personnel, enhancing risk assessment, and improving process-level and IT controls - Management concluded that EVgo's disclosure controls and procedures were not effective as of September 30, 2023, due to material weaknesses in internal control over financial reporting[267] - Identified material weaknesses include lacking sufficient trained resources for internal control, ineffective risk assessment, and inadequate information and communication processes, leading to deficiencies in process-level and general IT controls[272] - The remediation plan involves hiring additional accounting and financial reporting personnel, providing ongoing training, designing a comprehensive risk assessment process, implementing controls over information completeness/accuracy, and strengthening process-level and IT controls[273] - Despite the material weaknesses, management believes the condensed consolidated financial statements fairly present the Company's financial position, results of operations, and cash flows[268] PART II. OTHER INFORMATION This part provides other information, including legal proceedings, risk factors, and exhibits, supplementing financial disclosures Item 1. Legal Proceedings EVgo is not currently a party to any material legal proceedings, though it may be subject to ordinary course lawsuits, investigations, and claims Contingent liabilities from such litigation are not expected to materially adversely affect the Company's financial position - EVgo is not currently a party to any material legal proceedings[275] - The Company may be subject to ordinary course lawsuits, investigations, and claims, but contingent liabilities are not expected to have a material adverse effect on its financial position[113][114] Item 1A. Risk Factors This section supplements the risk factors previously disclosed in EVgo's Annual Report on Form 10-K, highlighting a new risk related to the Company's reliance on mobile operating systems, networks, and standards it does not control, as well as its partnership with Driivz for its software platform - EVgo's business relies on mobile operating systems (e.g., Android, iOS) and networks it does not control; changes in these systems could degrade application functionality or favor competitors[277] - A significant portion of EVgo's software platform depends on its partnership with Driivz, headquartered in Israel; geopolitical tensions or conflict involving Israel could disrupt Driivz's services and adversely impact EVgo's business[278] - The Company's ability to maintain its partnership with Driivz is critical, as a transition to another software offering could pose a material challenge[278] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable to the current report - This section is marked as 'Not applicable'[279] Item 3. Defaults Upon Senior Securities This item is not applicable to the current report - This section is marked as 'Not applicable'[280] Item 4. Mine Safety Disclosures This item is not applicable to the current report - This section is marked as 'Not applicable'[281] Item 5. Other Information This item indicates that there is no other information to report - This section states 'None'[282] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including organizational documents, warrant agreements, and certifications - The exhibit index includes the Third Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, Specimen Class A Common Stock Certificate, Warrant Agreement, and various employment and transition agreements[286] - Certifications from the Chief Executive Officer and Chief Financial Officer (Sarbanes-Oxley Act Section 302 and 906) are included, along with XBRL Instance Document and Taxonomy Extension files[286] Signatures This section contains the required signatures certifying the submission of the quarterly report - The report is signed by Catherine Zoi, Chief Executive Officer, and Olga Shevorenkova, Chief Financial Officer, on November 8, 2023, certifying its submission[289][291]