Badar Khan: No, we have very different customer segments that are charging on our network. We have rideshare segments, so high frequency custom, high usage customers, and that’s when you put them all that put all the sort of higher usage customers together, it’s over half of our kilowatt hours, which I consider to be quite sticky and more predictable and reliable and love to have more and we’re expecting to target and have more. But as we think about pricing, there’s different, different times of the day and/or pricing will appeal to different customers. So we are shifting some of our higher usage customers to or to times of the day where it’s, where there’s less utilization on our network. Earlier times, we call them early bird or off peak rates.
They tend to be lower rates that frees up the locations for customers that are less frequent users and potentially less sensitive towards price. So that’s the kind of work we’re doing. It’s time-based pricing, location-based pricing. Dynamic pricing is not a, a dynamic demand-based pricing is not a new concept. And it’s not something that we’re considering. We are now deploying it. So, less, around 5% of our network today has dynamic demand-based pricing and we expect to roll that out over the course of this year. And I expect that’ll deliver some fairly solid improvements to actually our margins, which have already improved over the course of the last year. As you see in our results, margins from our charging business have gone, have doubled over the course of the last year.
And that’s partly or significantly driven through the, the leverage that exists in our cost of sales.
Chris Pierce: Okay. And if I could just ask one last question for Olga, on ancillary revenue, you know, we’ve seen that grow, you know, pretty dramatically. I know we’re talking about smaller numbers, but what is the margin profile of this business? And is that since, you know, the 10-K talks about the software, digital revenues, are we talking 75%, 80% gross margins, that type of business? And that is providing a gross margin uplift as well, or am I not thinking about that the right way?
Badar Khan: Olga, do you want to take that question?
Olga Shevorenkova: Yes, I’m sorry, I’m using myself. So, so yes, so most of that revenue is coming from Plexure. It’s the Yelp of Georgian company which we bought roughly three years ago. But it also has our behind the fence fleet contract, which is a couple of them, which we talked about on prior earnings calls. So the margin profile is a mixture of the two. And of course, any software driven revenue, including Plexure will be very high margin. So look at any SaaS type of a company, and you’ll get an idea what kind of gross margins we’re talking about. The other business which gets mixed in here, which is behind the fence, has a more eXtend like margin profile, which will be more like in a low double digit territory. So the there is a bit of a game of a revenue mix happening here.
But considering that it’s a very small, it’s still relatively small revenue contribution. Most margin trends are being played by interplay of eXtend and the core charging business rather than answering.
Chris Pierce: Okay, perfect. Thank you.
Badar Khan: Thanks, Chris.
Operator: Your next question comes from the line of Andres Sheppard from Cantor Fitzgerald. Your line is open.
Badar Khan: Hi, Andres.
Andres Sheppard: Hey, everyone. Good morning. And congratulations on the quarter and thanks for taking our questions.
Badar Khan: Yes, thank you.
Andres Sheppard: I just wanted to maybe come back to the utilization rate. That seems to be growing, again, at a very rapid pace, which is great. I’m just wondering, I realize you don’t guide this, but just maybe some direction here would be helpful. How should we think about that network throughput throughout the year? I know you touched on seasonality a little bit, but at this rate, should we be thinking of that gigawatt hour to be north of 200 or 215 for the year? In other words, how should we think about the network throughput throughout the rest of this year? Thank you.
Badar Khan: Yes, I mean, look, let me just, I’ll ask Olga to give you some thoughts about 2024 specifically. But as you can see in the compelling economic slide, and we talked about in our webinar a few weeks ago, utilization, the top 15% of our network is already at 41%. Now, we’re not expecting 41% utilization across our entire network. In fact, we’ve said that we expect to see utilization in three to five years in the low 20s. We don’t expect anything more than that to get the double digit returns. That’s a way of thinking about utilization in the medium term. It’s obviously a combination of utilization and charge rate that delivers throughput per store, which is the queue in a revenue formula. But maybe Olga you want to just provide some thoughts from 2024 specifically.
Olga Shevorenkova: Yes. So as you correctly mentioned, we do not guide you to gigawatt hours, but maybe I can give you a little bit of our paths to get to there yourself. So, we give color during our last call that we expect eXtend revenue to be roughly 35% of our revenue this year at a midpoint of the range, and the range is to 220 to 270. So if you subtract that, right, then the rest of our variability comes from still a prevailing uncertainty of EV sales this year. Set as a waste, it comes from uncertainty on a final number or the throughput number. So if you take our average pricing, which you can derive from our financial statements, you can very easily get to a range of gigawatt hours, which we’re thinking about for this year.
Andres Sheppard: Okay, I guess that’s helpful. But then, to assume maybe a higher, some more seasonality in Q4, since that’s usually the strongest EV quarter. I’m just trying to figure out like, should it be a smooth gradual number quarter over quarter, or should we account for some seasonality throughout the year?
Olga Shevorenkova: Yes. So we do expect smooth. However, again, EV sales is something we don’t have control and do not kind of understand exactly how it will play out for the rest of the year. We have an expectation that it will be smooth. But if you think about specifics as an analogy in the driving patents, then Bureau of Transportation Statistics actually publishes that it’s publicly available data and you could see how the driving patents play out between the quarters by using that information. I think it will be actually quite helpful.
Andres Sheppard: Okay, thanks. We’ll take a look at that.
Badar Khan: Andres just as a reminder, EV sales obviously is a driver of revenue, but our throughput grew four times faster than the growth of EV-VIO quarter-over-quarter, which we’ve talked about for several quarters at this point. So it’s new sales, but it’s also the share of DC fast charging. It’s ride share growth. It’s more affordable vehicles leading to customers who don’t have private driveways charging on public infrastructure. So our revenue is a function of all of these things combined, and we expect to see it grow sequentially over the quarter, over the year.
Andres Sheppard: Yes, and I think it’s also a result of the utilization rates of the average utilization rates per charger, which is continuing to increase, right, which you mentioned earlier. Okay, maybe just one last question. And by the way, Olga, sorry, I wish you all the best in your future.
Olga Shevorenkova: Thank you.
Andres Sheppard: We’ll certainly miss you. Maybe one last question for you, I guess, is just on the liquidity. Let me just remind us with the, let’s call it $176 million in liquidity as of Q1. Excluding any maybe funding or any external funding, what is the expected run rate with that liquidity on hand? Is that still into well into 2025? Or what’s the message there? Thank you.
Olga Shevorenkova: Correct. We’re confirming that still the message. However, I’m not excluding any grants, which we will be collecting. It’s not necessarily never is a big driver, but as we discussed at length, as previous call, we have applied and have been awarded a variety of different grants across the country from a variety of different programs that are awarded to us. And the collection is just a question of execution and timing. So that is baked into all of our central planning and budgets and whatnot. So when we talk about cash, that is certainly included because that is part of the business model.
Andres Sheppard: Okay, got it. Very helpful. Thanks again. Congratulations on the quarter. I’ll pass it on.
Olga Shevorenkova: Thank you.
Badar Khan: Thanks Andres.
Operator: Your next question comes from a line of Bill Peterson from JP Morgan. Your line is open.
Badar Khan: Hi, Bill.
Bill Peterson: Yes. Hi. Good morning. Thanks for taking the questions. I wanted to ask about reliability and uptime. How are the trends, I guess, proceeding on your network and your way to quantify the operational benefits from the renewed program that you’ve been sort of playing last year, but can you quantify what you’ve seen this past?
