Ladies and gentlemen, good afternoon. My name is Maya, and I’ll be your conference operator for today. At this time, I would like to welcome everyone to the ChargePoint Second Quarter Fiscal 2022 Earnings Conference Call and Webcast. All participants’ lines have been placed in listen-only mode to prevent any background noise. After the speakers’ remarks, there’ll be a question-and-answer session. I would now like to turn the call over to Patrick Hamer, ChargePoint’s Vice President of Capital Markets and Investor Relations. Patrick, please go ahead.

Good afternoon, and thank you for joining us on today’s conference call to discuss ChargePoint’s second quarter of fiscal 2022. This call is being broadcast over the web and can be accessed on the Investors section of our website at investors.chargepoint.com. With me on today’s call are Pasquale Romano, our President, Chief Executive Officer; and Rex Jackson, our Chief Financial Officer. This afternoon, we issued our press release announcing results for the second quarter of fiscal 2022 ended July 31, 2021, which can be found on our website. We would like to remind you that during the conference call, management will be making forward-looking statements, including our fiscal third quarter and full year 2022 outlook and our expected investment and growth initiatives. These forward-looking statements involve risks and uncertainties, many of which are beyond our control and could cause actual results to differ materially from our expectations. These forward-looking statements apply as of today, and we undertake no obligation to update these statements after the call. For a more detailed description of factors that could cause actual results to differ, please refer to our Form 10-Q filed with the SEC on June 11, 2021, and our earnings release posted today on our website and filed with the SEC on Form 8-K. Also, please note that certain financial measures we use on this call are non-GAAP. We reconcile these non-GAAP financial measures to GAAP financial measures for the current quarter in our earnings release and for our historical periods in our investor presentation posted on the Investors section of our website. And finally, we’ll be posting the transcript of our call today to our Investor Relations website under the quarterly results section. And with that, I’ll turn the call over to Pasquale.

Thanks, Pat, and thanks to all for your interest in ChargePoint and joining us for our second quarter earnings call. I’ll provide a business update to give you some perspective before turning the call over to Rex for financials and an update of our guidance reflecting our revenue event. We are pleased to share more about the execution against our plan and our strong quarter for ChargePoint. The results from this quarter can be described with one word: scale, scale across our three verticals and scale in both North America and Europe. We are a larger company than we were pre-COVID and growing more quickly. This quarter, from both a quarter-over-quarter and year-over-year perspective, exceeds revenue growth rates from the quarter that ended on July of 2019. We had strong commercial execution as businesses of all types continue to invest and we’ll be charging for their customers, employees and visitors. Interest in EV charging solutions from fleet operators continues to be high. In June, we announced the industry’s most comprehensive fleet charging portfolio. Earlier this month, we announced the acquisition of ViriCiti, a leading fleet vehicle management provider. And we expect the addition of team, customers and technology from this acquisition to further strengthen our reach in eBus and commercial fleet. In residential, demand for home charging continues to be strong and our ability to serve all types of residential settings is a differentiator. From a geographical perspective, our North American execution remains strong as businesses continue to recover from the effects of COVID. Europe is growing quickly. Our activated port count is up 44% in Europe for the first half of the year versus BloombergNEF European public connector growth of 13% over the same period, and we expect our position in Europe will expand meaningfully following the close of…

Thanks, Pasquale. Good afternoon, everyone. First, my comments are non-GAAP, where we principally exclude stock-based compensation and the effect of the valuation of our stock warrants. This quarter, we also exclude legal expenses associated with our secondary offering completed in July, our ViriCiti acquisition completed in August and our pending acquisition of has·to·be we announced in July and we expect to close later this calendar year. For a reconciliation of these non-GAAP results to GAAP, please see our earnings release. Second, after a quick review of our results, I will provide revenue estimates for fiscal Q3 and for the fiscal year. Third, consistent with our March and June calls and as you can see in our earnings release, we report revenue along three lines: networked charging systems, subscriptions and other. Networked charging systems represents our hardware, all sold with our cloud services solutions. Subscriptions includes those cloud services or assure warranties and our ChargePoint-as-a-service offerings where we bundle our solutions into a recurring subscription. Other consists of energy credits, professional services and certain nonmaterial revenue streams. Q2 revenue was $56 million, up 61% year-over-year, well above the high end of our previously announced guidance range of $46 million to $51 million and up 39% sequentially. The top line success was across all verticals and geographies. Networked charging systems at $41 million was 73% of total revenue for the quarter and grew 91% year-on-year and 53% sequentially. Subscription revenue of $12 million was 22% of total revenue and up 23% year-on-year and 12% sequentially. Subscription growth trails networked charging systems revenue growth for three primary reasons: First, mix as both DC networked charging systems and home have a lower ratio of subscription to hardware revenue than our overall average. Second, our quarterly sales are typically strongest in the third month of…

We’d like to thank you again for your interest in ChargePoint. We are very proud of our quarter defined by broad and accelerating scale in North America and Europe across each of our three verticals. We believe our technology, capital-light business model and market share position us well to continue to execute in this very exciting market.

The first question is from Gabe Daoud with Cowen.

Hey. Good afternoon, everyone. I was hoping we could maybe just start with the financials for a bit. Just noticed there’s a margin degradation on the subscription line quarter-over-quarter. It looked like it was only 35% in 2Q, I think you’ve been closer to 50% in prior quarters. Is there anything that, Rex, you can maybe point to there as to what drove that degradation sequentially?

So, as you know, in the subscription line, and you’re talking about just a pull in, yes, so the two things that we charge against that line from a COGS perspective are the call center costs to where we’re supporting hosts and drivers. And then we also, clearly, when you have sure warranties in your favor -- or sorry, in your contract, any cost of repair that we have though against that. I would say there’s nothing unusual in the quarter that would suggest something there’s a long-term trend in that regard. So, I think it’s just an anomaly. Thank you.

Got it. Thanks, Rex. And then, I guess, as a follow-up, could you maybe just talk a little bit about the supply chain situation currently? Obviously, you guys continue to do a nice job offsetting an increase in logistical costs, but just curious what you guys are anticipating moving throughout the rest of this year.

So, that’s a great question. In Q2, I’d say, we did a nice job managing it. You could probably tell looking at the balance sheet, we’re not able to build inventories. So, we’re very much procuring and shipping. We did run into a little bit of more demand than we could meet, so there were some shipments that didn’t happen due to supply chain. The biggest issue is mostly higher logistics costs, but to a lesser degree, there are some component shortages out in the market. So, I do think -- again, I think we managed it really well. It hit us 3 points in Q2. Without that, we would have hit 26% gross margin showing some nice progression from Q1. If you look at the second half of the year, we’ve got a pretty steep ramp for Q2, Q3 from a revenue perspective. So, we’re putting an enormous amount of pressure on our operations team and our supply chain partners and CMs to meet those numbers. And so, we have -- in our guidance, we’ve tried to take all of that into account. So, I do think there’s going to be X numbers of points, mid to low single digits. Pressure on us from a gross margin standpoint as we bang through that. I will just tell you, and Pat, back me up on this. We’ve -- because it’s of our model, which is land-and-expand with the customer, you need to -- we’re pushing top line to make sure we capture the territories or the customers as we go. So, that’s where the emphasis is. And so, if we have to make that trade-off, we will.

One more point on that. Because every port that we sell is associated with the subscription to software, that’s very low churn. The way we look at the overall contribution from a port from a margin perspective is over the lifetime of that port. Because the churn rate is so low, it -- the software revenue accumulates nicely over the years. So, it’s imperative that we ship as many ports as we humanly possibly can, so biasing our supply chain activities to making sure that we can not only acquire the customers but expand within the footprint that we have. I think we get it back in spades over the years. We just have to have to meet our customer demands right now.

Understood. That makes sense. Thanks, Pasquale and Rex. Just one more. Just now with ViriCiti in the fold, could you maybe just talk about conversations with fleet operators? Obviously, there’s plenty of competition within that channel. Could you maybe just highlight how impactful having the vehicle telematics is from a potential business perspective? And maybe also just talk a little bit about some of the ChargePoint’s competitive advantages on the software side for fleets versus some of your competitors.

Well, from our perspective, especially given that it’s very early innings in fleet and fleet operators don’t have a tremendous amount of experience with electrification, to say the least, the completeness of a portfolio and the pre-integration, we think, is a huge differentiator in being able to establish ourselves early with these fleet customers as they convert their fleets from fossil fuels to electricity. So, pursuant to that, what we’re investing in both organically and with the ViriCiti acquisition inorganically is having as large a portfolio as possible. With respect to ViriCiti in particular, the functionality that they add on the vehicle side extends beyond just raw telematics. It includes high-level functionality like battery health monitoring and other driver vehicle support functions and reporting functions that they have. Where that comes into play is in specific subverticals within the fleet space. Very, very large fleets typically will already have a telematics provider that they’re working with and were pre-integrated with all of those the usual suspects there or continuing to integrate with a larger set. For the long-tail fleet, that is often not the case, and for eBus, that is often not the case. So having the specific vehicle telematic offering in the portfolio really reduces the integration complexity for someone that’s in one of the segments that is not -- hasn’t currently picked a partner or that doesn’t have the wherewithal internally to really do those sorts of integrations themselves. So, what we’re trying to do is much like -- the way I example it is the way that you would purchase potentially an ERP system, but you may not buy every plug-in for that ERP system from the ERP system vendor, but you like having the fact that some customers have the ability to pick and choose from a basket of things that surround the core functionality, I think this market has in generally the same direction. So, from a differentiation perspective, it’s the completeness of offering, check. We think we’ve got a good one there and are continuing to invest. But most importantly, I’ll draw also your attention to the number of third-party services that we’re integrating with as well that are in the fleet ecosystem on the software side to make the adoption of this very, very simple.

Very helpful. Thanks, guys.

Gabe, one thing, this is Rex again. On your first question, you caught me a little flat-footed there. It dawned on me that you’re looking at GAAP numbers, not non-GAAP numbers. So, the driver on that from a GAAP perspective is fundamentally stock-based comp, which is a new thing for the Company, obviously, since we’ve gone public. If you look at it on a non-GAAP basis, the software margin is actually up a point sequentially. Sorry, I didn’t rock that with you when you asked the question.

No, no worries, understood. So, that’s that $2 million that’s at the back, that’s all related to the networked -- subscriptions line, the $2 million?

The $2 million -- the delta is -- without stock-based comp, subscription gross margin went up.

The next question is from Colin Rusch with Oppenheimer.

Thanks, guys. Sorry if I missed this, but can you break out the increase in the guide? How much of that is coming from acquisitions, and how much of that is organic growth from the existing business?

Colin, this is Rex. So, our estimate for Q4 was that the acquisitions would contribute approximately $4 million, and so the balance in Q4 would be us. And then for Q3, we do -- we have ViriCiti for most of the quarter and hope to have has·to·be in quarter. So consider it baked in, but we’re sort of assuming in our view of the world that you should focus on the contribution in Q4.

Okay. That’s super helpful. And then, just in terms of the pipeline activity, can you speak to the number of potential targets you’re looking at, and how that’s grown year-over-year in terms of the land-and-expand model, getting any of those new customers in? How should we be thinking about the growth in those first-time customers that you guys can leverage?

So, you started with acquisitions and you want the customer count?

Customer count.

Acquisition is done. So, the second question is really about the pipeline and how that’s going here for first-time buyers of products?

Yes. So, on the acquisition front, super happy to have announced the two that we did. I can tell you, I think we follow beautifully what we as a management team assisted on, which is pick the two of your life and make sure you get them. And the question is -- I think the question is are we looking at that going forward, doing some additional or no?

No, I think the question, Rex...

No, no, no, it’s not about acquisitions at all. It is about new customers.

Pipeline.

Oh! Okay. I’m sorry. I’m sorry about the acquisition question. So pipeline, from a -- well, I’ll take your last thing, which is the whole customer growth question. So, from a customer growth perspective, we had a stellar quarter in Q2. We’re well past the number that we’ve had out in the market before. As you know, we are investing heavily in sales and marketing to make sure that we keep that trend going. I think we said probably six months ago that we’re around 500 new customers per quarter. We’re handily beating that now. And that’s organic, right? So obviously, the two acquisitions bring some additional customers, particularly in Europe and particularly in the eBus segment that we did not have, but our organic growth on the customer side is powerful.

The next question is from Craig Irwin with Roth Capital Partners.

So today, I had the opportunity to look very closely at your new fleet products in person, and I have to say I’m really impressed, particularly from the small component count in the different pieces, the dozen components in your DC conversion tower, the eight components in your, I guess, two-port dispenser tower. This kind of suggests like there may be an opportunity from a margin standpoint as these start to ramp in volume. Can you maybe talk us through whether or not these manufacturing efficiencies and the simplicity of these products will be accretive to margins over the next number of quarters? And there were some questions as far as the overall certification status of these new fleet products.

Yes. It’s a great set of questions, and thanks for checking out the product. I’m assuming that you were at the AC Trade Show. Is that where you saw them?

Yes.

Yes. So, what’s core to the strategy here is designing products that build from very few subcomponents. So, if you look across our product line, you’ll see the same subcomponents used in multiple products, and the reason for that is twofold. One is exactly what you’re alluding to. It’s long-term manufacturing efficiency and volume scale to yield a favorable cost structure there. But there’s a second factor, which is in most mission-critical or all mission-critical businesses, fleet or passenger car sparing capacity for self-maintainers or our own assure services, our -- essentially, our warranty services, maintaining a simple inventory management system to enable rapid repair and very high uptime is the second reason. So, it’s -- this is one of the few times in products where you get both the cost structure advantage due to scale concentration in a few components and a reliability and uptime kicker as well. And now, that’s our intent, is to continue to push the volume. And we expect that as we scale, and I believe Rex has mentioned on several earnings calls that as these products mature, that’s the underpinning of what we’ve talked about in terms of our margin recovery curve getting us back to previous historical levels on the margin.

Excellent, excellent. My next question is about products for Europe. So, my understanding also from looking at the products closely is that there’s an opportunity for a very small number of components to be changed versus the designs that are now starting to ship into North America. And can you maybe clarify for us whether or not this simplicity, this design approach that you’ve taken, maybe accelerates the margin accretion as you look to serve Europe a lot more aggressively for growth over the next number of quarters?

So, we’ve taken a design approach across the board that wherever possible, products are being designed to be world products either through simple final configuration steps in the factory or out-of-the-box world products. The reason for that is exactly what you’re alluding to, which is to combine scale between the two continents to drive not only supply chain efficiency, but common practices for repair and reliability. So, we -- the fast charge products, for example, that you saw at ACT and even some of the AC products, I don’t remember exactly which ones we had exhibited there, are -- the fast charge products are world products. They are designed to work everywhere, and the AC products for fleet in particular and for Europe are designed at their core to operate globally.

And then, if I could squeeze another one in. Workplace has been a very important market of ChargePoint over the last number of years. It’s a particular point of strength for the Company, and a lot of us are looking at our teams being back in the office. And I know that many other companies have similar policies. Can you maybe comment about recent conversations with your important customers in workplace, whether or not it’s fair to expect some building of the momentum there, maybe a return to the really impressive growth that you saw over the last couple of years?

So, if you look at the remarks that we made earlier before the Q&A, we pointed out that our business volume is now above pre-COVID levels and our growth rate is above pre-COVID levels, but COVID is not over yet. And so, what that says is that our modeling assumptions in that cars drive everything. And in our revenue model, cars do drive everything. It’s completely an attach rate model as to how we model our revenue forecasting. And over the last three quarters, I think we’ve done a pretty good job even in a COVID environment, forecasting our revenue. What we have seen is a mix shift due to COVID, but the overall growth in the space has been more than compensated for by the increased arrival rate in cars relative to the pre-COVID levels that we have seen. So, with all of that said, as workplace returns, it’s all upside.

Understood. Well, congratulations on the strong quarter. I’ll hop back in the queue.

The next question is from Shreyas Patil with Wolfe Research.

Hey. Thank you. So, you mentioned earlier that you’re having difficulty in meeting demand, and that was an issue in the quarter. I just wanted to see how we should think about the ability to increase manufacturing, if this were to continue for the next -- let’s say, the next few quarters? And is there any way to think about any upside potential to capacity for ChargePoint?

So, this is not a manufacturing capacity-driven problem on the supply chain side for us. Our contract manufacturers can deploy the labor and the capital equipment necessary to build physical product. The issue is the random onset of decommits in the supply chain for components and our teams’ -- with our contract manufacturers, deep focus on making sure that we exercise every potential source of supply and our engineering teams right behind them, qualifying second, third, fourth sources in some cases, so we can desensitize the risk, you can’t drive it to zero, but desensitize the risk to sudden decommits where you think you have a source of supply, but suddenly, they can’t meet shipment into the factory. Because as you’ve seen, the numbers are a bit higher than our original forecast, we’ve been able to scale on the component supply chain on the way in to generally meet that demand, not completely, but to generally meet that demand. And the team is working like crazy to put belt and suspenders in place to drive materials into the factories where the factory capacity again is not the problem, so we can meet the new guidance that we’ve set for you for the back half of the year. So, we’re working it. We haven’t been bitten by it yet, but we’re experienced enough in these matters to never take our eye of the ball and never advertise to you that we are immune to any problems.

Okay. And then, I wanted to switch to the fleet side of the business. You mentioned -- I think you mentioned 180% growth in the quarter, which is obviously really impressive. I wanted to -- as you’re thinking about the opportunity, obviously, now with ViriCiti and your -- I’m just trying to think through how the competitive landscape evolves here and how kind of ChargePoint is positioned. And in particular, we’ve seen announcements from OEMs that are looking to offer fleet charging as part of their product offering. Ford and then, recently, GM are two examples. So, how do you think about the ability to still provide a value-add solution as those OEMs are indicating interest in trying to sell towards their own customers?

Yes. So, we’ve addressed this question I think on the -- I think we got a very similar run on the last earnings call. There are almost no single OEM fleets out there. And so, we’re focusing on a solution that isn’t tied to any one particular OEM, and that is also broadly open to all of the other business system partners that fleets tend to integrate with, so we can be as pre-integrated as possible. And our focus from a competitive perspective is to be -- is to not have the customer be the integrator, is to enable a simple integration as possible by being pre-integrated. There’s never a perfect science here, but that’s what we consider to be our differentiator in a big way. I think the OEMs need a default offering, and we applaud that. I think, they need to have that. But, I think most of their customers don’t buy from just them. So, again, because most fleets are multi-OEM, we don’t see that as a negative.

The next question is from David Kelley with Jefferies.

I guess, two from my end, and maybe starting with the fleet charging portfolio that you unveiled a couple of months ago, clearly software-intensive. So, maybe if you could walk us through how you’re thinking about the longer term kind of subscription opportunity tied to the software for that product line, that would be great.

I mean, it would take more time than we have on this earnings call to give you a full rundown. It’s something we should -- we’ll certainly do as we have more technology-specific days for the analyst community. But in brief, the way that you should think about it is that there’s software that’s proportional to charging ports, which is pretty analogous to our traditional commercial charging -- commercial business for passenger cars and when we sell to workplaces or retailers, parking operators, et cetera. So, something proportional to keeping a port of charging on the ChargePoint network. Again, not power orient -- not making money on the sale of power, not utilization dependent, et cetera. Then, there’s the additional fleet services for charger scheduling based on needs for next-day routes or next-shift routes. That is built on a per vehicle basis, and now you can think of a new service above and beyond the charger management services that can be billed on a per vehicle basis for those kinds of services. And then, there’s site-wide energy management services come into play later. So, you have generally things that are proportional to chargers, proportional to vehicles and proportional to sites. In the commercial charging domain, it’s changing as well, except the proportional to vehicle component isn’t really as strong as the telematics play in there. I’ll point out one more thing relative to our commercial and our residential business’s relevance to lease. A lot of operators have take-home component to their fleet. Our residential offerings and our business offerings for lease codes in Europe that provide cars to employees as part of their compensation, that same technology package is being pointed at take-home fleets to enable electricity cost reimbursement when the employee takes the vehicle home and uses their own power essentially to charge a vehicle for work purposes. So, we’re seeing a lot of crossover there. And that’s the power of being involved in all these verticals, is being in any one vertical leaves you uncovered for the use cases that cross into the other vertical. The last is that being able to offer the on-route, in-the-wild charging capabilities with fuel card integration, so the payments consolidated, et cetera, is another avenue where our commercial offerings for drivers like you and I think drive a vehicle and park at a parking operator or an employer that uses those things. Well, imagine now, we can bring that world where fleet drivers can use those services but have integrated billing back to their employers through integration with fuel card providers, et cetera, and we’re going to keep expanding that leverage into that commercial segment. So really, all these things play together, and that’s what’s not really apparent yet to a lot of folks that are looking at the space. I’ll pause there. So, going to be a long answer if I keep going.

Okay. No, great. That’s super helpful, really appreciated it. And maybe just kind of to switch gears a bit, a high-level question on ESG and sustainability, and this might be a long answer as well. But clearly, we’re seeing a broader push in North America. So, maybe could you give us a window into the conversations you’re having with existing and new customers, how they see charging fit into their strategy? And could ESG boost, let’s call it, the longer-term rebuy algorithm for ChargePoint as we think out several years into the future?

Well, certainly could. I think businesses of all kinds are embracing charging for not only ESG reasons, but it’s also good for their employees and good for their customers because driving electric is, in the long term, much more cost effective than driving on fossil fuels. The car itself has a better cost profile over time and then fuel is story there. And obviously, all these companies are now being measured on ESG, so it has to factor in. Just the question is you don’t really need any more charging than the cars in the parking lot are driving. So, we can’t make an estimate right now of how that’s -- how much of that is prebaked into our attach rate model or not, and we’ll understand that as the market continues to unfold. But I agree with you. It’s certainly a tailwind. The question is how much.

The next question is from Vikram Bagri with Needham.

I just have two questions. One about near-term profitability and one about long-term outlook and profitability. Rex, you highlighted increase in outlook by BNEF recently, and I believe your long-term outlook was based on their forecast. You’ve made acquisitions, which are margin accretive. How does that change your outlook to achieve profitability, which was fiscal ‘25, a few months back? Could you just talk about puts and takes there? And in terms of near-term profitability, the initial guidance at the beginning of the year was about 31%. You mentioned about 3% hit to gross margin this year -- this quarter due to supply chain issues. There has been a shift in mix and the impact of prolonged shutdown due to COVID. Could you also explain the near-term sort of margin outlook using 31% as a base, what the puts and takes are? And if you can -- to the extent you can quantify them, that will be helpful. Thank you.

So, Vikram, based on your question, you clearly understand it really well already. But, so what I would say in -- so for this year, is absolutely true. We are running lighter in gross margin than we would have expected, though I think we posted a decent number in Q1. We held it in Q2 despite some external factors. And we’re going to bang through the second half of the year and deal with these factors as well. As I said earlier, we are definitely making a commitment to ourselves to drive the top line harder because land-and-expand is a ballgame and getting customers now is super, super important. That obviously puts a little pressure. If your margin is not performing, that puts pressure on you from a bottom line perspective. But again, for the long-term health of the business, it’s the top line is everything. And keep in mind, as we acquire customers, we’re acquiring customers who become ongoing customers from a software perspective at an appreciably higher margin versus the initial sale. So, if you look at -- so I do -- we don’t give a gross margin guidance specifically, but I think qualitatively, you could tell that there’s a gap between where we thought we’re going to be at the beginning of the year to where we are now. And as you referenced, mix is a big, big, big component of that. So, if the commercial business turns in additional quarters like it did this quarter because it came on extremely strong, that’s a place where we get a lot of margin power, so that could help us a lot. So, we need to stay tuned on that. I think you also asked a question about the acquisitions. I think the acquisitions are accretive on gross margin throughout. They will initially be more in terms of OpEx and the gross margin contributed, but I think that flips in the not-too-distant future. And then, there are also very positive benefits between stuff we do that drives more sales of the software we just acquired and stuff -- software we just acquired that drives more business from the ChargePoint side. So as that synergy kicks in, I think we should have a pretty good year with those two acquisitions next year. And then lastly, from an acquisition -- sorry, not acquisition standpoint, from a profitability perspective, we’ve actually talked in terms of calendar ‘24. We’re turning our models every day. I don’t think the acquisitions or our current blending of -- strategy of going for revenue and addressing gross margin issue is going to meaningfully change that. If we decide that that needs to be pushed out, we’ll let you know, but we’re not there yet.

The next question is from Itay Michaeli with Citi.

Hi, everybody. Apologies if I missed it earlier, I did join a bit late. But, did you have the rebuy percentage in North America for the quarter? And then, secondly, just going back to the gross margin discussion, Rex. As we think about the land-and-expand model and -- is the gross margin higher on like incremental ports that are installed at a particular customer? Meaning, is it worth it for you to investment in gross margin initially as you land and then as you expand, then the incremental margin on that would be higher?

So, on your first question about the rebuy rate, we’re remarkably consistent. North of 60% of our business is rebuys. And that held this quarter, bounced around 63%, 67%, 61%. But, it has a 60 in front and very consistently there. In terms of land-and-expand and as the margin profile change, if you look at how fast people who buy, you can look at it in its entirety because over time, obviously, software is a meaningful component of the relationship with the customer, that helps. But, I’ve seen nothing that would suggest that we need to go in less expensive, take a margin hit to secure customers and then try to get it back over time. Obviously, if we have -- we have a couple -- we have a number of customers that have a couple of thousand ports, pushing 3,000 ports. Obviously, they get benefits in terms of pricing. But, in terms of the basic model, our ASPs are holding up very, very nicely. And we just haven’t seen a need in competitive situations to take that ahead upfront. We go in and we remain fairly consistent.

I just want to remind everyone on the call one thing as well related to that answer. Our installation does not go through our book.

That is true.

And so any efficiencies that would happen as the -- from the installation perspective, the deployment gets bigger at a particular customer, because there are economies of scale. We don’t see that because that’s not part of our revenue profile.

If I could sneak one more in, maybe back to the ESG discussion earlier. Do you have a rough sense of like what portion of your North America commercial customers kind of give away charging sessions for free, either all the time or at least partially?

I don’t have that. That number moves around a bit. I don’t have that off the top of my head. I can certainly find it, but I’ll give you some color. Workplaces in general do not attempt to use their employees as a revenue source. They treat this as an employee benefit. That typically is -- there have been a couple of questions on this call with respect to ESG alignment. And the cost structure associated with giving your employee power in a workplace setting is comparable to providing them coffee. And so, it’s not very high in the list of costs with respect to employee benefits on a site. For example, a cafeteria would be far more expensive if it was subsidized than giving an employee EV charging. Also, you’re effectively lowering your employees’ cost -- personal cost structure and -- because you’re enabling them to drive an electric vehicle. So, the stat is not ours, but the general industry status you’re 6 times more likely to buy an electric vehicle if your employer offers EV charging. So, there’s a pretty good indicator there for you and your thinking around the subject. With respect to retailers, in general, they typically -- if they set a price, it’s a cost recovery typically. A retail -- if they set a price at all, a retailer is more using it as a tool to engage a driver in the business, in their business. In the future, you’ll see more and more integrations with loyalty card programs there to potentially stratify the charging benefits a bit to providing incentive for you to sign up for a loyalty card program at a retail as our expectation, and other segments follow similar suit. So, there’s a healthy amount of charging -- for charging going on. But, I think in general, there’s also a very healthy amount of use of charging as an incentive or employee benefit.

The next question is from Matt Summerville with D.A. Davidson.

Thanks. Just two quick ones. I was wondering, especially given all the new customer additions you’ve been talking about, what trends you’ve been seeing in uptake rates for ChargePoint as a service, and how you expect that to scale from here going forward?

Sure. So, we’ve been running over the last sort of four to five quarters, it’s anywhere from 4% to 7% of our billings. It’s focused entirely on our L2 workplace product. So, we’re only just now rolling it out as to other products. So, when you think about our total billings, it’s going to hover in the 4% to 6%, and we were consistent with that in Q2, so. But looking forward, we’re aggressively looking at applying that to our DC products. It’s also something that we think is going to be a meaningful component of our fleet business because fleets like when and financing, too. So, they’re going to...

Multifamily.

And multifamily would be another place. So, I think the places where we end up as a -- providing things as a service is going to expand nicely over the next couple of, three years, but it’s been very consistent in the range we’re just thinking.

It’s already almost there in multifamily.

Yes.

It’s got to -- we have to true that up a bit, but it’s already a subscription-based service for that segment.

Got it. And then just as a follow-up, your cash burn rate in the quarter improved a bit sequentially. How should we be thinking about that looking out over the next couple of quarters? Maybe talk about some of the bigger pluses and minuses you would want to make us aware of.

So, we had with a nice matching of the fact in Q2 where we generated about $44 million from warrant redemptions in the quarter, which more or less matched the operational cash burned. I think, we’re going to be in a cash consuming posture for the foreseeable future. Keep in mind, the thing I said earlier about profitability. That still holds. So, if you look at our current run rate, I assume that’s going to be consistent, hopefully in that range, over the next couple of years we should be fine from a cash perspective at least for two years from now. Clearly, though, and given the comments a minute earlier about how -- when we turn cash flow positive, given the fact that we’ve done acquisitions, we obviously don’t have sufficient cash to get the entire way, and we’ll have to keep an eye on that.

The next question is from James West with Evercore.

First of all, I wanted to ask about something you mentioned right up from net scale. Clearly, you’re showing the benefits of scale right now. But as you outlined, there’s a lot of tailwinds in the business, whether that’s the EV sales and of course, many new models of EVs that are coming in the next 18 months, the policy tailwinds, the infrastructure tailwinds. How do you think longer term, not near term with the supply chain and the global supply chain somewhat fits array, which we all kind of know about. But how do you think longer term about how you scale this business and what the risks are, what the opportunities are? And maybe given that your software is your base, of course, and you think of you more as a software company, maybe that’s easy and circuit software, not hard to scale, but to maybe the two buckets of software versus a system.

I think you’re asking absolutely the right question of any company in this space, which is most of the markets in front of us, and we’re going to see an acceleration of adoption. So, how do you deal with that? So, I’ll give you a couple of things to kind of illustrate how we think about it internally. Number one is channel. You have to have a lot of muscle build in a company for a very long time selling through channels, which we do. That’s already built into our margin structure, which is very important. You have to have a margin structure that survives more than one tier distribution. You also have to have the training and channel enablement capabilities, so your product can be represented for its differentiation. You have to have all of the support capabilities in place to be able to deal with the scale. And then, you have to have the supply chain partners to be able to deal with the -- what is the delivery vehicle for software, the hardware products at the other end of the wire and the decisions we made there or to partner with large household names, contract manufacturers, of which we have multiple that are partners of ours, not too many because we obviously don’t want to spread ourselves too thin with respect to management bandwidth but enough there where there is plenty of capacity with reasonable -- very reasonable lead times to lay in more manufacturing scale in front of the growth of the Company. And lastly, what I’ll point out is that great throttle, even though I believe that we will have good growth in the industry for many years to come. The arrival rate of cars into a geography -- net new cars into geography for most fleets in commercial, that’s the real limiter. So, we are up against the production effectively of the vehicle OEMs that are in the space.

And if I could maybe ask one more on M&A, you were starting to address it earlier but then switched to a customer acquisition question, but I’m thinking about company acquisitions you made. Obviously, one recently, you got one pending. Are there technology gaps, are there holds, are there areas that you’re still looking at, are you done for now, or put it on hold as you integrate? How are you guys thinking about M&A?

So, we have a pretty tight lens on that. We assess opportunities on the basis of technology gaps, customer base, which is probably the most important factor as does it avail ourselves to a broader customer base inorganically, and then, is the team and culture of the company a good fit for us? Because you’re only -- as in an acquisition, you’re only as good as how low you can integrate it, and that’s a critical thing to have good alignment and vision for the market with acquisition, the company being acquired. More specifically, in terms of what the kinds of things we are paying attention to is how much -- even though our offerings are very complete, what are the other adjacencies we can add that either develop or inorganically add that add to the offering that we have that enables us to sell more high-margin software to our existing customer base or to new customers? So, that’s how we think about it. It’s a very tight evaluator. We’re not going to be -- we’re going to be very measured about how we evaluate things, but that’s sort of color on how we think about it.

I will now pass the conference back to the management team for additional remarks.

So, great questions, and thank you very much for your time. Really very thoughtful questions. What I’ll leave you with is just something that I tell the employees of recent in town halls. It’s been an amazing six months for the company. In six months, we’ve become public. This is our third earnings call because the first one was right pretty much after we had closed the transaction to take us public. We’ve announced two acquisitions, closed one of them. We’ve marketed an equity offering for selling shareholders. We’ve had to deal with the COVID impacts in our supply chain, increased forecast over our -- or increased performance in the market over our forecast. So, it’s almost -- for us, it’s been a very exciting start. We’re really proud of the accomplishments. I couldn’t be more proud of the team here at ChargePoint. I think they deserve all the credit for working tirelessly to get us to this point. And we’re very optimistic about our positioning for the future. We’re going to be very mindful and not get in front of that and really work hard to just continue to expand this business. But we’re super excited about what the future holds and look very much forward to doing one of these things again in three months. So, thank you.

That concludes the ChargePoint second quarter fiscal 2022 earnings conference call and webcast. Enjoy the rest of your day. Goodbye.