Pasquale Romano: Well, I think the question is a valid question to check in with us on, do you see any fundamental market driver that would change the proportion of DC versus AC. The NACS component of your question, doesn’t really change my answer. The NACS component is simply, it’s a connector. It doesn’t change functionality whatsoever. It’s just a — the way we think about it as it’s a different shape. It’s something we have to contend with. And frankly, we’ve made an investment to make sure that we don’t put our customers in a position where they have to dedicate some percentage of parking spaces to NACS and some percentage to CCS, that would be complete failure, because you’ll never get that percentage right. And if you didn’t get it right today, it will change over time.
And so, it’ll put an undue burden on essentially remodeling risk with respect to a charging site, which is not what you want to have happened in the early days of the market. So, because of that connector, again, doesn’t change functionality whatsoever or change consumer behavior whatsoever, we see no fundamental split or shift, I should say in what would an AC business moving to DC or back, doesn’t really affect anything.
Joseph Osha: Okay. That’s clear. Thank you.
Operator: We’ll go next now to Stephen Gengaro at Stifel.
Stephen Gengaro: Thanks. Good afternoon, everybody. Two things for me. The first maybe for Rex. When we think about your target of getting to EBITDA breakeven. I know this was asked a little bit earlier, but can you talk us through in a little more detail to maybe increase the comfort level on kind of what type of revenue growth you need? I mean, I guess, it’s about mid-30s gross margins and kind of what has to happen on the operating cost side? I mean we’re just trying to get a kind of what’s behind this path, to this number with a little more detail?
Rex Jackson: Sure. And by the way, it’s not EBITDA breakeven, it’s EBITDA positive, sorry.
Stephen Gengaro: Okay. Well, that seems good (ph).
Rex Jackson: I couldn’t resist. Sorry, Stephen. There are — but we’re definitely thinking about the target. So, I think the best way for you to progress on that is to do what we do, which is we obviously model things out. We clearly have a lot more visibility than you do from a pipeline and a big deal perspective as we go into next year. But there’s a certain revenue level associated with a certain gross margin level. You know we have the levers to control from an OpEx perspective, which obviously we demonstrated today. It is — there are a set of assumptions, I think, are realistic that are very doable by the end of next year. If for some reason, the industry slows down considerably, which we wouldn’t expect, but just a thought experiment that could happen, yeah, it’s going to be a problem.
But we think we’re on the front end of a big wave and we’re going to move into continued growth next year. God forbid, fleet vehicles should actually show up. Prayer is a good thing. Hopefully, that happens. And we’ll have a strong year in the gross margin challenges that we’ve seen over the last quarter or so will be behind us. So, I think it’s very difficult. That’s all I’d say. I can’t really guide you more to it. I think that would be inappropriate.
Stephen Gengaro: Okay. Thanks. And the other question — and one of the things we get from investors a bit is when we think about NEVI funding, right, the — what the brain goes to is like the owner operators. And so, then when we think about your exposure to NEVI funding, how that kind of impacts ChargePoint, what should we be looking for? Should it be certain customers of yours who are basically utilizing you to put their NEVI dollars to work, like how should we think about exactly how ChargePoint gets the benefit from as leverage to the NEVI funding and when do you think we start to see that in the numbers?
Pasquale Romano: So there’s — I’ll give you some hints on how to process that. We are not directly an asset owner. In many cases, much like we did in the VW Appendix D days, the NEVI bids are structured at a very high level in a very similar vein. We may organize a collection of our customers to ultimately own and house the assets and continue to care for them on an ongoing basis and integrate them with their business. And in some cases, our name is on the particular NEVI proposal into a state. In many cases, our name is not on the proposal. And in also in many cases, there are multiple proposals from multiple parties that all are based on our technology because they’ve selected us as the technology partner for their bid. So, when you look at the results from a — when a state finally decides how they’re going to allocate their funds across the different bidders, you have to double-click one step deeper into the awards to check because we may be the awardee on multiple, which has been the case even recently.
There are four states that have decided how they want to allocate the Phase 1. And in Pennsylvania, for example, we’re named in one of them, but we’re also the technology supplier for 12, right? So, on the surface, it looks like we didn’t do very well. But when you peel the onion one more layer, we did quite well. And just to give you a data point, and again, you’ve got only four states that have made decisions, and this is only relevant to the first phase, we’ve got about a third or so win rate there on the monies that have been appropriated by the state. So, the win rate, we think is pretty good. It’s pretty consistent with what we’ve seen in other programs. And again, we’re getting behind businesses that want to build their charging presence on ChargePoint.
That’s the way to think about us. Some of these companies even branded themselves with us as an ingredient brand. So, in many cases, when they make announcements, they make announcements about their charging service because of the investments that they’re making. That’s a very — I would do the same thing. We’re very proud of the — being kind of a leading edge company making those investments. We are the technology behind a lot of businesses that build — they are building their charging business. And I think it’s very easy to overlook that.
Stephen Gengaro: Okay. Well, that’s why I asked the question. That’s good color. Thank you.
Operator: Thank you. We’ll go next now to Shreyas Patil at Wolfe Research.
Shreyas Patil: Hey. Thanks a lot for taking my question. Maybe just following up on an earlier question. And if I were to rephrase it, so as you think about getting to positive EBITDA, do you need to see a reacceleration in the top-line growth? And I ask because we’ve now seen three quarters of decelerating top-line growth and the guidance for Q3 is to decelerate further. So, just trying to think about that trajectory of revenue.
Rex Jackson: Yeah. So, two things. One, to clarify, Shreyas, because I wasn’t sure Stephen and I were 100% aligned on this. But pardon me, he said — is he talking full year, or is he talking just Q4? Our target is to get there for the fourth quarter. We can do it sooner, obviously, that would be nice, but it is for the fourth quarter, it’s not for the full year. Separately, from a revenue perspective, I think when you say acceleration, I think if we do sort of as well as we’re doing now, you are — you could be in the gun-sight. So, I don’t think we need to see — last year, we’re at 94%, 96%, I forgot the exact number — 94% year-on-year growth. This year, we’re going to be in the mid — high end to the mid-30s. If we can keep that going off of what should be a much bigger base as we exit the year, that’s a good pretty good spot to be. I don’t think we have to get back to a 60% growth rate. I don’t think that’s necessary.
