Ladies and gentlemen, good afternoon. My name is Heena, and I will be your coordinator -- conference operator for today’s call. At this time, I would like to welcome everyone to the ChargePoint Third Quarter Fiscal 2022 Earnings Conference Call and Webcast. All participants’ lines have been placed in a listen-only mode to prevent any background noise. After the speakers’ remarks, there’ll be a question-and-answer session. I would 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 third 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 Chief Executive Officer; and Rex Jackson, our Chief Financial Officer. This afternoon, we issued our press release announcing results for the third quarter of fiscal 2022 ended October 31, 2021, which can also be found on our website. We would like to remind you that during this conference call, management will be making forward-looking statements, including our fiscal fourth 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 certain factors that could cause actual results to differ, please refer to our Form 10-Q filed with the SEC on September 10, 2021, and our earnings release posted today on our website and filed with the SEC on Form 8-K. Also, please note that we use certain non-GAAP financial measures on this call, which we reconcile to GAAP financial measures for the current quarter in our earnings release and for 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 to our Investor Relations website under the quarterly results section. And with that, I’ll turn it over to Pasquale.

Thanks, Pat, and thank you all for joining us today. I’ll provide a business update, including details of our strong Q3 execution against plan before turning it over to Rex for financials. As I stated previously, our success is tied to the arrival of electric vehicles and this quarter we saw continued momentum in EV sales in both the passenger and fleet categories. According to BloombergNEF, as many as 2.9 million electric vehicles are expected to be sold across North America and Europe this year, an increase of approximately 67% from 2020. And accordingly, we are seeing strong demand from auto dealers for charging infrastructure, an indicator that they are prepping for high volume EV sales. Our strong financial performance throughout this year is the result of investments in a product and go-to-market strategy we have made over many years to be able to capture associated demand across commercial, fleet and residential verticals in both North America and Europe. Historically, our revenue has only been limited by a sufficient breath of and quantity of vehicle options available to consumers and fleets, and this further reinforces the ChargePoint is the equivalent of an index for the electrification of mobility. Our Q3 revenue of $65 million was at the high end of the guidance range we provided on September 1. This positions us to raise our expectations for the fourth quarter and full year, despite what continues to be a dynamic supply chain environment. I’d like to call your attention to a number of indicators at the scale we are delivering. First, we added more commercial and fleet customers in Q3 than any other quarter in the company’s history. It is clear that our customers are preparing for the future as evidenced by 89% year-on-year growth in our commercial business. We finished…

Thanks, Pasquale, and good afternoon, everyone. First, my comments are non-GAAP, where we principally exclude stock-based compensation, amortization of intangible assets and the effects of the valuation of our stock warrants. This quarter we also exclude professional service fees related to acquisitions. 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 Q4 and the full year. Third, consistent with our prior 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 vault sold with our Cloud Services solutions. Subscriptions include those Cloud Services or Assure warranties or ChargePoint-as-a-service offerings where we bundle our solutions into a recurring subscription and now software revenue from our ViriCiti, it has to be acquisitions. Other consists of energy credits, professional services and certainly non-material revenue streams. Q3 revenue was $65 million, up 79% year-over-year at the high end of our previously announced guidance range of $60 million to $65 million and up 16% sequentially. We are very pleased with his performance despite a number of supply chain challenges and demand in the quarter we could not meet has given us a good start on Q4. Networked charging systems at $48 million was 73% of total revenue for the quarter, consistent with Q2 and grew 111% year-over-year and 16% sequentially. Subscription revenue at 13 million was 21% of total revenue and up 24% year-on-year and 11% sequentially. As I mentioned last quarter, the delta in growth rates between networked charging systems and subscription revenue as a function of two main factors, mix and time lag. In Q3 mix again favored DC network charging systems and home which have…

Certainly. The first question is from the line of Shreyas Patil with Wolfe Research. You may proceed.

Hey. Thanks so much. Just -- the first one, Pat, I think you had mentioned that, you expect to see the federal stimulus to more meaningful manifest in 2023. Is there way to maybe frame how -- what kind of funding this number -- these additional dollars could support in terms of new charters being added? And maybe also can remind us what you’re seeing at the moment in terms of funding from utilities and certain states towards charging?

Thanks. Thanks, Shreyas. Good to hear your voice. And so it’s complicated question. The Federal Infrastructure Bill is much of the money, not all of that, much of the money is going to flow through states and the states have to design their programs. That’s why we’re estimating that we won’t see much of that in 2022. We may see some of the back half of the year, it’s hard to predict. And in terms of how much money is going to flow actually in that year versus subsequent years is, right now it’s too hard to call. I’m not trying to be evasive is this if you look at the, I will give you an example, the VW Appendix D program that was implemented in an analogous way, it was money that flew -- flowed from the Federal Government on the federal portion of the settlement anyway to all states but California, California had its own settlement carve out. It has taken multiple years for that to roll through, some states are quick to define a program, some are slower. So that’s why it’s challenging for us. And then the color of the program in terms of the exactly what the constraints are going to influence the installation costs versus the equipment costs, et cetera, so really hard to call. The sum total of money, like I said, we don’t expect to be the next year. I also want to draw your attention to one other thing is that the budget reconciliation and other associated conversations about where the government is trying to generate stimulus in other areas for EV charging, that could have faster effects. But again, it’s too hard to pin that down right now. In terms of your question with respect to mutual funding effectively amounts. Rex, do you want to comment on that? I don’t know if you have a current number?

I actually do not have a current number. My apologies.

Yeah. So just to remind everyone that the that represents approved utility programs and then those programs roll out over multiple years, not all the funds are relevant to our revenue even in those programs. So in previous quarters, we’ve reported, it’s similar or analogous to a backlog number associated with kind of the sum total of approved utility programs that are running in the United States. It’s not necessarily our backlog. But it’s sort of analogous in that domain from the industry’s view and we don’t have an update for you right now.

And so Pat, I was -- I would make sure that. I got a question in terms of what the programs are out there that’s available, because that’s how I heard the question. So those two…

Total. Yeah. Yes.

Yeah. We have a billings number for utilities for us. But in terms of total programs, it’s in the hundreds of millions of dollars. But in terms of the exact figure I -- hundreds of millions is the total.

Okay. And then, Rex, just looking at an OpEx, sorry, go ahead, was there something.

No. Go ahead.

Sorry. Okay. Looking at OpEx, is up modestly as a percent of revenue in Q3 versus Q2, but R&D was up more meaningfully. So why don’t if you can just talk about some of the main priorities that are driving R&D spending? And then just -- how should we think about the magnitude of OpEx leverage, especially as we think about, maybe the next few quarters or even into next year?

Sure. So, first of all that the OpEx number is a broad base number, because we’re investing heavily in sales, marketing, obviously, we’re a newly public company. So we do need to deal with those things. But it’s been our priorities are some major product releases that we have coming out this year. As you may have seen, we had a big fleet announcement several months ago and that’s just a huge watershed event for the company. So there’s enormous amount of energy going into that. We’ve got some very interesting things that we’re -- we have in mind for Europe coming out shortly. There’s a huge amount of energy that goes into what we see is one of our greatest differentiators, which is, of course, the software platform. So there’s a big, big push right now, and obviously, since we play in all verticals in both North America and Europe and we see that the time is now from an industry perspective, we’re really putting our shoulder to it. So that aggressive strategy we think will pay off and steady improvements in that ratio next year. I can’t give you a number, obviously, because it’s learning yet, but I think we should see some steady leverage next year that I think you guys to be happy about.

Okay. And then just last housekeeping for me, could you give us a sense of the non-GAAP gross margin between network and software and service. I just wanted to confirm that? Thanks.

That’s tough. Because on the subscription side, as you probably know, we do put our driver and hosts support into our subscription lines so that line tends to be the 50s. Other bounces around depending on what the components are. So as you -- if you do the math, you can tell that the hardware, you get back into the hardware number by just looking at the overall math, but one you can talk to the other.

Thank you, Mr. Patil. The next -- sorry. The next question is from the line of Greg Wasikowski with Webber Research & Advisory. You may proceed.

Hey. Good afternoon, guys. Nice to be on the call. Thanks for taking the questions.

Thank you.

I wanted to ask about your targets for market share in Europe and the pathway for reaching those. Specifically, the balance between an organic versus an inorganic approach, given the relatively more fragmented market over there and just thinking through, what does that do to the cash flow profile and/or tapping your own equity currency? Yeah, just wondering how you’re thinking about the path of least resistance and while you’re evaluating opportunities in Europe? Thanks.

That is very good question. So, first of all, market share targets, is obviously as high as we can get them. We see that’s everyone’s market share target and in an industry we’ve done pretty well in North American. We’ve recently, over the last couple years made enormous progress in Europe and we’re not putting a ceiling on that. We’ve done two acquisitions in very different industries, one is targeted at expanding, consolidating customers, as well as extending functionality in a fleet space that was ViriCiti, one that you saw, and then has to be is in the center of the commercial business in Europe. So they serve very different verticals. And in -- with respect to inorganic versus organic growth, we’ll be intelligent that we obviously will evaluate opportunities as they present. But I don’t think it’s necessary to have an all inorganic strategy to gain market share, its early innings in the EV market in general. Early enough and we have strength that’s broad based with respect to our product portfolio and position where in our modular and we are in every vertical that we can think of in both continents, so there’s a tremendous amount of leverage there that we have. And with that said, if there’s an opportunity that presents itself like that has to be like ViriCiti and it has team, it has tech and it has customers that are aligned with our business model, we’d certainly looked at it, so would be very interesting products.

Perfect. Thanks. Very helpful. And then for my next one more of a theoretical question around site owner’s decisions between Level 2 and Level 3 charging especially in places with like shorter visit times, like grocery stores, malls, parks, et cetera. Early conversations we’re having, I think, there’s some split opinions on what the preference may be for future EV drivers. You guys offer both solutions, obviously, but have more of a presence in LTE. So I’m just -- I’m curious, what are your conversations been like, with new site owners deciding which route to go with and if any existing Level 2 customers are looking to expand but with a DC solution.

There’s a lot of misinformation on this and too many folks are pattern matching on gasoline. So, one point by the way of fact, it’s not an opinion. When you make the switch to electric drive, a depot is not your primary fuel anymore, meaning you don’t wait till the little yellow lights on, go drive somewhere fill up in the hall. That doesn’t happen, especially if you have access to charging it home or work or both or street side parking. This is -- we’ve seen these driver patterns kind of dominate how people behave, they’re always corner cases where people, certain percentages of the population don’t conform, but they usually have outlier reasons for not conforming. So it is not a speed gets faster you put it in. In fact, it’s actually matching the natural parking duration and how much energy is expected to be reloaded in that day. So if you’re going to the grocery store near your house, you’re not trying to show your tank or your battery, you’re not trying to do that. You’re trying to avail yourself of some convenience miles you may pick up as an amenity, buy a grocery store. Now, if you pulled off the highway and you’re on your way to a weekend holiday and you happen to pick a grocery store to stop it, because it had a fast charger, you’re doing that because you want to make an essentially a refueling stop. So they’re very different use cases and they get conflated. The average shopper doesn’t want to use a fast charger, if they’re in their local area. So it’s -- and I’m not talking down one or the other, it’s about matching it correctly. And if you don’t match it correctly, let’s say, you’re at that grocery…

Okay. Appreciate the color. Thanks, guys.

Thank you, Mr. Wasikowski. The next question is from the line of Colin Rusch with Oppenheimer. You may proceed.

Hey. This is Brendan on for Colin. First one for me, would you be able to give us a bit of color on early progress on acquisition integration in Europe and maybe any insight on initial returns for cross-selling opportunities there?

I mean, I’ll give you generalities, because we’re not coming to the typical specifics. But in both acquisitions, we’re newer to the has to be and frankly in ViriCiti one, because it’s earlier innings, because that closed a couple months past one ViriCiti one did. But on both, we’re making good progress on integration. On the fleet side, we’re already co-selling. And we are -- we have customers that, like I said, we’ve done some customer consolidation and we’ve had customers that have used ViriCiti for different functionality from and had our charging solution and ViriCiti vehicle solution. And where that’s the case, we are already moving the ball down the field to integrate the two solutions. With that said, it’ll take some time to get things integrated in an orderly way. We are in earlier innings, would have to be, but we’ve already got some customers activity going on, where 1 plus 1 is already equaling 3, where we can bring additional functionality, either to their customer base or ours, vice versa. So we’re already making nice progress there.

Awesome. And just, secondly, on the supply chain and pricing, are you seeing the need to redesign products or particular subsystems in order to help the resiliency of the supply chain? And how active have you guys been in terms of passing additional costs to customers?

Yeah. So I was chuckling, as you said that. I -- we’re incredibly proud of what our engineering and supply chain teams have had to do. As you’ve seen, we turned in upside results now over several quarters. And if you can, when -- if you can imagine how hard that is in a supply chain constrained environment, because obviously, we’re laying forecasts into our supply chain, either under -- even under normal circumstances with significant percentage of a year’s worth of visibility that because that’s just what you need to do, especially as you’re scaling. So then come up with upside, when you get, obviously, surprise the commits, which is happening everywhere in the industry, means that your organization is responding. I call rapid qualification of substitute components and rapid adjustment in software to enable that. So it is definitely happening inside of our organization. They are doing a tremendous job of keeping things moving through our supply chain, and yes, it is having -- it is a bit of a drag. We could have put those resources in different places. Rex, I will let you comment on the question of -- on pass-through pricing?

Yeah. Brendan, very good question. So, without getting into any specifics, we definitely have a program in place for passing through some level of our increased logistics days, which I referenced in that gross margin comments. And there may be some price adjustments for not too distant future to take account of what’s going on in the supply chain. So we definitely have some good news ahead. No, nothing major reflected in…

Okay.

It’s mostly perspective.

Okay.

Also, Colin, I will remind you two -- I will remind you of two things. Rex, first of all, I believe in your prepared remarks, you commented that, correct me if I’m wrong, it was about a 2-point -- the supply chain issues resulted in about a 2-point penalty and gross margin relative to what we could have turned in.

That’s right.

Verify that. Yeah. And so, Colin, we had that working against us, but we still turned in strong improvement in gross margin quarter-over-quarter and turned in results on the high side. So you can imagine internally what that took to achieve.

Okay. Thank you.

Thank you, Mr. Rusch. The next question is from the line of Gabe Daoud with Cowen. You may proceed.

Thanks, and good afternoon, everyone. Maybe just kind of back to the supply chain, can you give us a sense of how much visibility you have to -- into fulfilling orders over the next several quarters and maybe just any thoughts around or commentary around inventory that’s on hand currently?

I will let Rex comment on inventory. But in terms of visibility, it’s not so much visibility that’s -- visibility into supply chain that causes us many other companies say the same thing. Greece in the quarter, its unplanned decommit, which happens and we respond to that. Now there’s a bit of -- there’s not a bit, there’s quite a bit of preplanning going on there where we’re scrambling to multiple sources wherever possible on parts that we forecast is possibly being problematic. But our communication to supply chain, the firm orders that we’re placing into supply chains for product, et cetera are well out this year, well out into next year. Rex, do you want to comment further?

Yeah. From an inventory standpoint, as you know Gabe, first of all, again, thanks for joining us.

Hi, Rex.

A complete -- we extensively is seeing. So not all inventory sits on our books. Our inventory actually, like I said this last quarter, I keep wanting it to go up because it’s the spot supply chain challenges. But it actually slightly declined quarter-over-quarter here. So -- but I will just tell you, if we can build inventory going forward, we will, we just haven’t done that yet.

Got it. Got it. That makes sense.

Yeah.

And Gabe, that’s not weakness, that’s just continued upside materializing.

Yeah.

And that’s a in our opinion to have the problem I wish we didn’t have a supply chain constraints. But nonetheless, it’s a -- it’s on the good side of the problem balance sheet.

Yeah. Gabe, one of the…

Okay.

…I mean, our bank, because it’s kind of odd to have a CFO say, hey, let’s increase our inventory level. We have a, obviously, broad portfolio, but we have very minimal obsolescence risk. So if you’re trying to ramp the business and you got supply chain challenges you’re trying to make, building the inventories as fast as it’s a smart thing to do. So that’s what we’re trying to do.

This is also…

Got it.

…Gabe where the modularity of the platform is, I know all the platforms that we ship is really coming into play, because we have a lot -- we drive a very broad set of use cases on the hardware side of the product line with very few skews or very few internal parts that we have to make. It may show up as different orderable part numbers, but that’s largely just configuration at the end. So it really has helped quite a bit. Architecturally the product line is not without its challenges in a supply chain constrained environment, but it’s better than most.

Got it. Got it. Very helpful color.

Yeah.

Thanks, guys. And then maybe just as a follow up, we kind of hit on the fleet side, just only to the ViriCiti deal, but obviously kind of competition there particularly on the software side, just given the energy management needs. Is it more of a complex operation? And you saw the competition with another announcement today, VP making acquisitions, but could you maybe just give us a little bit of color on conversations, whether it’s here in the U.S. and Europe, and just generally our demand and -- is stemming from the fleet channel and how you expect that to progress over the next couple quarters?

Well, Gabe, fleets really, this kind of interest, just a tremendous. I mean, it’s coming at us from all sides, and again, in a good way. The comment though, I would say in our opinion, we think we have the most wholesome broad based software solution in that space, especially with the addition of ViriCiti, because now we’ve even ripped up the food chain on the vehicle side and remember, also full service provider with respect to the ability to add design, build, consultancy, and project management, help with utility infrastructure on the sides with respect to consultation there. We complete functionality across the Board and then we’re seeing a tremendous amount of cross vertical leverage. I mentioned on a previous earnings call the one example of that is we’re seeing a lot of fleets that have a take-home components to parking operations and refueling operations, not refueling in the traditional sense, but with electricity, wanting to reimburse the contractor that is taking the vehicle home. This is especially prevalent in fleets that are trying to lighten the CapEx load or their real estate load. So because we’re operating in those verticals naturally, in especially in Europe that develop solutions for lease codes that are providing both company cars and leasing services to commercial fleets. We really got a broad set of functionality. So we’re one stop shop for much of that stuff and we’re still. And we are -- as Rex mentioned on the R&D side, we’re piling a tremendous amount of R&D into that on a continuous basis, so we’re not stopping with the functionality that we have.

Great. Great. That’s really helpful. Thanks, guys.

Thank you.

Thank you, Mr. Daoud. The next question is from the line of Ryan Greenwald with Bank of America. You may proceed.

Let me first ask one more on the supply chain? Do you guys talk about this 2 bps impact from the elevated logistical costs? I think you guys quoted 300 bps last quarter. Could you just give a bit more color on the evolution of the bottlenecks quarter-over-quarter and anyway to help frame the amount of demand in the pipeline that you guys weren’t able to meet?

Yeah. Right. So you definitely have the numbers correct. It was a 3-point swing last quarter, 2 point swing this quarter. The heaviest component of that is actually logistics to think expedite these putting it on a plane versus putting it on a boat and so that’s the biggest driver there. And I think that, obviously, we’re going to continue to battle that a bit, as you look forward. And so the second part of your question was?

Anyway to help frame the amount of demand in the pipeline, you guys weren’t able to meet this quarter?

Okay. And so I’d like to add. So I would tell you that there was a positive spillover from Q3 to Q4. It was -- it wasn’t massive. I hesitate to give you a number. But I would just tell you, what’s important is to understand that there was demand in the quarter little bit is big enough number that worth mentioning it. And it wasn’t a massive number, but it was a meaningful enough number that pushed us well above the high end of a range.

Got it. Appreciate that. And then in terms of the drivers of the revenue increase versus the plan that you guys laid out last quarter, sounds like momentum across the Board. But anything you can say in particular in terms of the contribution versus the prior forecast?

Question, are you saying that our mix shift at all quarter-on-quarter?

I notice that…

In terms of the…

…drivers of the revenue increase from last quarter?

What you…

What kind of shaken out better than planned in the last quarter?

It’s -- as we said earlier, as Pat said earlier, it is broad based across the three verticals. The mix has been pretty consistent with Q2. So superb performance from home even though that’s not any revenue number, relatively speaking, because it’s a fairly inexpensive product relative to our other products, we’ve seen really good performance from our CPE250, which is our DC products and then we’ve seen workplace do, okay, relative to what we think you should be doing once we get out of COVID. But if you were to look at it on a mix perspective, it was actually quite consistent. As I said, my commentary got a small bump from our acquisitions in Europe. So it isn’t like, I wouldn’t say, there’s anything moving left or right. It’s very consistent with this. It’s just bigger. And…

I will leave it there. Thanks, guys.

New customer acquisition was super strong in the quarter and then the distribution of what they buy, again, consistent. So it’s just really good growth across the Board.

Got it. Thank you.

Thank you, Mr. Greenwald. The next question is from the line of James West with Evercore. You may proceed.

Hey. Good afternoon, guys. Let’s go...

Hi, James.

You talked about fleet thorough amounts in your prepared remarks. Just on the commercial side, I mean, really massive year-over-year growth. There’s a very impressive or -- and you mentioned that fleets coming at you from all directions, which is a good thing, of course? Or is something changing with fleet? Is there an uptick in just overall demand or a tipping point that we’ve hit or are you taking more share? What do you think the evolution is here for fleet?

I think, I mean, I think, it’s pretty basic. What I would love to do is say, hey, we’re taking -- we’re having -- I think we are gaining share, but at that -- there was a -- relative to a couple years ago no share to gain, because there were limited vehicles. And when there aren’t vehicles shipping in volume for manufacturers and you’re limited the pilot level program sizes, just isn’t that meaningful. And if you remember some of the comments I’ve made in previous earnings calls, I pointed out that the revenue in fleet is not proportional to the opportunity that we’ve seized, because as we develop pilots and submit our relationship with our fleet customers, obviously, based on earning that trust, as they expand they will expand with us. So the, Rex -- and you have to do all the work to get to a pilot or a lot of the work. You have to integrate with a whole lot of their business system, you have to have a lot of functionality and they still are sticklers for reliability service with once time all those things. So the challenge is, it’s an incredible from an OpEx perspective relative to money returned in the period, it’s an -- it’s certainly in the investment category, not the kind of run rate category, so to speak. So that’s what I think is most significant is we are still flying planting.

Wow!

And we are doing a ton of work and we -- if you look at the size of our business, the OpEx that we’re able to deploy, because of the size of our business, it is in our opinion a huge differentiation on a go forward basis, because we can afford, frankly, to do the work. We can afford that mode, because we have a commercial business that’s healthy.

Right. Okay. Got it. That makes a lot of sense. Yeah. Thanks for that. You made a comment on auto dealers as well and seeing strong demand for them as they prepare for the future here. So they’re obviously getting the signals from the OEMs and we all know about all the models that are coming out and about to hit the next 12 months, 18 months. What are they telling you maybe the dealers or even the OEMs about when they may start to retire their ICE engines or their older models or old -- and get their old models?

I think most any information that I know that isn’t perfect , I couldn’t say.

Sure.

Because we’d be in violation of our MBAs with auto OEM partners. But…

Okay.

… if you just look at public announcements.

Right.

If you just look at -- if you look at public announcements, in terms of, flip over points where the majority of auto manufacturers lines will be electric, you’re looking in your brands shooting for somewhere between depending on the brand that 25, I think, that’s a bit aggressive. But by 2030 or the early 2030s, you’re seeing most commit to being substantively full electrified.

Right.

And I think the dealers now to be able to get what is a production limited and popular vehicle, they need to put in the electrical and they need to put in the charging infrastructure and the training and support for selling those types of vehicles before the OEMs or on mass give them the vehicle. So if you want to get the inventory, you got to make the investment with the dealer.

Right.

And we’re seeing the dealers respond to those OEM programs substantially and we think that especially it’s geographically broad based, it is not in the usual hotspots for EV. It is geographically much more broad based, not perfectly broad based, but much more broad based, that is a very good indicator that auto OEMs are communicating to dealers that get ready since that’s coming.

Right. Right. Okay. Got it. Thanks, Pat.

Thank you, Mr. West. The next question is from the line of Bill Peterson with JP Morgan. You may proceed.

Yeah. Good afternoon, guys, and nice job on the quarterly execution here. I had a question. You answered the prior question about the mix from the second quarter to the third quarter. I guess, based off your backlog and midway through the quarter, can you give us some directionality on how you see home versus commercial versus fleet. And I guess embedded in that, is there any sort of seasonality we should think about in that context?

It’s hard to say whether growth is going to eclipse seasonality or not and shift some of the usual trends around, it’s just hard to say, normally that we’ve seen seasonality in the business relative more to construction cycles in northern hemisphere. What -- we are only serving the northern hemisphere. So normally has a deep winter construction cycle slowdown in some areas, but you got so much growth going on now, it’s hard to predict how much it’s going to get offset. And so in terms of mix, I’ll caution you on something revenue mix and unit volume mix are very different, because of the while price point differences between the residential business inclusive of multifamily and then the commercial and then the fleet business. The fleet business actually is split right down in the middle like commercial is mostly seeing some fee and when you get to the kind of mid-tier vehicle goals and the heavy vehicles and now you’ve got a substantively LBC business and then their dwell time determines how shared that DC power conversion infrastructure could be. So what that bodes for is a very challenging segment in fleet to reconcile unit volume even within the segment or vertical, it’s very difficult to match unit volume to revenue, especially in early innings where averages have not stabilized. Overall, I believe Rex correct me if I’m wrong, but I believe residential was 13% of our billings this past…

Correct. That’s right.

Okay.

That’s right.

So…

…both periods.

Yeah. So that gives you an order of magnitude. It’s not revenue. Its billings. But you could determine what the correlation is there. That gives you an idea of order magnitude of that one segment and relative to the rest of our business. And I can tell you that the unit volume there to generate that percentage of business has to be quite high, relative to say the unit volume in our commercial business.

Okay. Yeah. That’s -- thanks for that color. I have a question on infrastructure and I think you also spoke to it as well. We’ve actually seen here in the last few weeks The California Energy Commission, as well as The California Air Resources Board announced some pretty significant dollars over the next few years, $1.4 billion total plan, $1.1 billion in new money of which a big chunk of that is spent for charging infrastructure. Can you give us a feel for, if you’re already seeing some activity and how you should expect these types of analysis, which are earning near term, frankly, relative to the Infrastructure Bill on your business?

So, I mean, we’ve got a lot of experience with this issue. We’ve done quarter of build programs with the CEC for years. CEC moves relatively quickly, as you said, relative to other programs, because it’s not specific to the Federal Infrastructure Bill, the bulk of the money has to flow to states and then states of design programs. So you get this inherent two tier cascade where the CEC doesn’t have that two tier cascade, it’s a very large state that already has a very large EV population and it’s been operating with significant EV programs for a lot of years. So the -- how should we say, the relief pitchers are warmed up in the bullpen in California. And so, it’s hard to call how much of that is going to flow again to us. It’s always hard to call subsidy programs. So I’m not going to venture a guess. And remember, all of the subsidy programs that are announced recently have not been contemplated in any of our previous commentary on go forward. It hasn’t -- it was not in any of our models, because we don’t put something into a model until we can count on. And we understand that policy has a life of its own and so we don’t count on stuff until we can actually count on stuff. So none of what you’re seeing Rex talk about. He’s contemplating any of that.

Okay. Thanks again for the color.

Thank you, Mr. Peterson. The next question is from the line of Tyler Bailey with Needham & Company. You may proceed.

Hey, guys. This is Tyler in for Vikram here. Just one last quick one for you related with the supply chain and the mix for that last question, but I guess due to some of the supply chain issues you’re seeing, Is there any potential for a shift in mix prioritize some of your profit margin segments?

We tend not to. We don’t financially engineer our margin. And the reason is, our customer today is a customer for a very long time, because of the re-buy nature of this. So shaping is dangerous. We try to take all the business we can service, and obviously, inventory levels and lead times may impact our ability to win a deal in the future who knows, but so far, so good and not having an impact things. But remember, the customer’s initial buys usually a fraction of their ongoing buys and you have a lot of time over the life of that customer to mature and evolve the product they need to buy today, so if they buy a product today that’s under say supply chain pressure. Well, you want that customer anyway, because most of the products they’re going to buy is going to be well past when all of this clears.

Okay. That’s helpful.

Yeah. And…

Appreciate it. And then one last quick one, sorry...

I don’t think there’s a lot of big just that we could into fast forward exactly. But we could or would want to engineer backwards or forwards and the fact that our mix has been consist -- fairly consistent Q2, Q3 and will probably be consist -- I think consistent in Q4, just means we -- we’re and we have demand is more than what we can meet, we are meeting demand as best we can. So just leave it there.

Okay. That’s helpful. And sorry, one last quick one, in terms of you mentioned the spillover, just curious, most of that residential, isn’t that spillover into Q4 or is it just a mix across the Board?

Certainly some of those residential and that it’s fundamentally across the Board.

Okay.

Just --we are and by the way, we have got the inventory coming backwards, we’re effectively flat. But we’re -- anyway the difference is so slight, it doesn’t really matter. But we are chasing a very, very strong demand level across our business and we’re meeting it as little as we can. So we don’t have big open holes anywhere, but we would expect that to continue at some level, but thus far we’re managing it, our team has done a great job.

If the question is from advantage point of, is there one product that’s suffering undue levels of supply chain and the rest are clear to billed, no? If that’s where your questions coming from? That’s not the case.

Sure. That’s helpful. Thank you. Appreciate. Thanks for taking the questions and congrats on the quarter guys.

Thank you.

Thank you, Mr. Bailey. The next question is from the line of Stephen Gengaro with Stifel. You may proceed.

Thanks. Good afternoon, gentlemen. Two questions from me.

Hi, Stephen.

First, when you look at your opportunity in Europe, any sense how we should think about sort of relative growth rates in Europe over the next couple of years versus the U.S. market?

Relative growth rates of the market itself or our growth rate?

So your growth rates in -- your growth rates relative to the market for sure. But also, you think the European business grows at about the same rate as your U.S. operations or do you think it’s materially different based on sort of the maturity of the market and product lines?

I don’t think it’s, the product lines aren’t substantively different between the two markets. There are some differences in some areas, but they’re not substantively in the long-term different. We’ve got some startup conditions in our business in Europe but we’re having with ourselves out of yet, but that’s process. So I actually think fundamentally the early -- the -- in the next few years, just because of the regulatory and the policy environment in Europe, you will -- you’re likely to see higher percentages of electrification of new car sales than you will in the United States and now own and lease out over time. I think well before we hit significant percent of penetration of EVs into the install base. I’ll remind you of an interesting stat that almost no one, everyone says I had, when I say that no one realizes it upfront. If 100% of EVs have car sold tomorrow were electric, it takes over 20 years to replace the install base of cars that are in North America, Europe. That’s how big this market is. And so the next couple of years where there’s and it certainly where a lot of the customers want and certainly where a lot of the market positions are made. But the volume -- while the volume continues to go up for a very, very long time to serve that install base. So we see the two market is relatively similar -- relatively on a margin maybe differences but relatively similar by the time you get to significant penetration into the install base of vehicles out there. In terms of our business, we should acquire market share faster in Europe then we’re acquiring market share in the U.S., because the market share is already so high in U.S. And so by definition, we should be acquiring market share, and therefore, I will also point out something else. There is a higher percentage of ports and management in Europe, by necessity because we are acquiring customers that already have some hardware on the ground, that do not have our hardware. On the other side of the software -- of our software, it’s a much higher percentage in the U.S. It’s not 100%. But it’s much higher in the U.S, and therefore, the average, when you look at the ports under management and you try to equate that to revenue, it’s a little bit lower in the early days in Europe, because not 100% of the customers on our hardware or not an equivalent percentage on our hardware. It makes a little harder in your chairs to do the analysis.

I understand and I feel -- I appreciate that comment. And then just the other quick one for me and I -- you mentioned on the call, so the similar one quarter lag on subscriptions, just based on the time from installation. So that’s been pretty steady, right, I mean, that’s a pretty steady number that we should think about as kind of a guidepost going forward?

Rex?

Yeah. Yeah. That’s definitely true. There’s -- so there’s a one quarter lag and then the other factor, when you look at hardware, sorry, networked solutions versus our subscription revenue is, you get a very different outcome on a percentage basis something and what you said, right? So if you’re selling a home unit that has lower percentage software content than a commercial unit, on a percentage basis and then in our DC line, the equipment itself is sufficiently expensive, that again, relative to that number, software is the smaller percentage, so mix can really bang the percentages for subscriptions around.

Okay. Great. I appreciate the color, gentleman. Thank you.

Yeah. Always.

Thank you, Mr. Gengaro. The next question is from the line of David Kelley with Jefferies. You may proceed.

Good afternoon, guys. Thanks for taking my questions. Maybe if you could talk a bit about the visibility to workplace ramp and your customer’s propensity for re-buys at the moment. Just curious how that is trending recently given COVID continues to factor into corporate planning here into 2022?

I’d actually really enjoy your insights into when we’ll be returning to work-for-home, kidding. Rex, if you want to, one, the jest there is around -- it’s a difficult predictive environment for us in terms of return to work. So what we’re doing, but what I’ll point out is that the growth rate in the overall industry, the just the sheer volume of cars that have entered the market, while workplaces certainly not on a total, on a proportional basis, hasn’t returned to its previous levels, because there’s not as much utilization pressure work. There are so many more cars where we’re still seeing relatively decent numbers there. And because there are sections of the country where there are different types of workplaces that have different criticality with their jobs are different policies internally with respect to how they want to take on the more administrative -- the larger administrative burden of having people in the office more often. So you’re seeing those hotspots everywhere. So it’s not zero. When it gets to the new normal, whatever that is. Well, your guess is as good as mine. Rex, do you want to comment on the other question.

Yeah. So the only thing I would add is, if you look at our Q4 guide, the assumption that’s built into that is that workplace doesn’t come back in Q4 in a big way, because if you’re looking at all the things that are going on out there, even got updates today, it’s really hard to think that people are going to be back the office by the end of January. So what we are -- so my mix go to that as well. So we think our current mix is going to continue to before, hence the numbers, which we think are great as far as guidance are concerned. We’re really looking forward to workplaces coming back in full force next year. We’re not forecasting to that’s going to happen yet. But that would be very, very good impact on our business. We hope that happens. But short stands, of course, now in terms of how we look at the linear term future. But…

Philosophically -- yeah. Philosophically whenever there’s doubt, we take a conservative stance in how we think about it, because that’s safe. And as Rex said, we’ll bill as much inventory as humanly possible, because right now there’s -- it’s not possible to over bill, it’s just not, especially with our limited scrap risk and obsolescence risk. So we’ll bill as much inventory as possible should things come out on the positive side either that -- via early onset of stimulus money, early retreated COVID, what have you, if we get surprised to the upside, awesome. But we’re not going to engineer our company around expectations given variable because we don’t control on the rosy side of that equation.

Okay. Got it. And for the record, my guess have returned to work is not very good. So I won’t get it. But maybe as a quick follow up just on the utilization point and maybe this is a bit of an oversimplification, but kind of viewing it as a pull model as it relates to workplace demand. Are you seeing any shift to more of a push model in the sense that a lot of companies are certainly focused on ESG metrics sustainability, where maybe there’s some offsetting impact where there -- the demand is going up regardless of kind of what the utilization is at the moment.

So what that would, I’m sure there’s some of that, frankly, because all companies are turning their attention to making sure that they have the right posture with respect to supporting electric cars much fun transportation, which supports the climate goals will have. So there’s certainly an element of that. What I’ll point out, which I think is significant is that, early buys from a company just moving into electric vehicle charging tend to be small. It’s the revised based on their run rate experience that tend to be large. So customers trying to plant an ESG flag, I doubt are moving the needle significantly in our workplace business. But I bet you it’s in there, I just can’t quantify it. Rex, do you have any better commentary?

I don’t, I think, there’s a, it’s hard to call the build ahead, because we’re so close to the waves that hit us anytime, they’re hitting it now. So I think people are recognizing this as an undeniable trend and they should get ready for it. So I would call it preparation as opposed to early. It’s just a smart time to move.

And yeah…

And by the way, I could…

Yeah.

Right. And what’s -- yeah. What’s also happening, I’ll point this out as is, there is actually construction happening during COVID, because it’s an opportune time to do construction and remodeling of office space, because it’s unoccupied or lightly occupied. So for that we’re not seeing any slowdown at all. In fact, we’re seeing that being relatively strong on the construction side.

Okay. Got it. That’s helpful color. Thanks, guys.

Thank you.

Thank you, Mr. Kelley. That concludes the question-and-answer session. I will now turn the call back over to Pasquale Romano for closing remarks.

So, first of all, I want to thank everyone for the questions and I want to welcome all the new folks that have asked questions that haven’t -- hadn’t participated in our earnings calls interactively before the family really good to have you all, wonderful questions today. And I want to just sum up again, as I said, last quarter’s remarks, I really want to thank the ChargePoint team. I think you’ve heard a lot of commentary around how much work it’s been for this team to manage to the upside and what has been a dynamic environment with respect to supply chain, and frankly, the market materializing to the upside, which has been a wonderful thing for our employees. We also have our -- well on our way now of integrating two stellar teams from two acquisitions into the family of ChargePointers. So I want to thank the ChargePointers team. I know a lot of you listening to these calls. So thanks guys for doing all the good work that you do and we’re very, very, very excited about what the future holds for all of us collectively as an industry and company and our investors. We think it’s just a tremendously bright picture there. We are really buoyed by the broad base. The broad base support that we’ve seen in our -- in the market for all verticals, here all verticals and then you’ve got the car showing up and we’ve always said that we’re sort of analogous to an index to the electrification and mobility because as cars come, we’ve been so attached to cars, light-duty trucks, et cetera, heavy-duty vehicles. So as they continue to materialize, we see that really fueling some great growth ahead. So thank you all again. We look forward to hosting you in a quarter. Thank you and have…