ChargePoint Holdings (NYSE:CHPT) Shares were up 7.8% as of 9:55 a.m. ET on Thursday morning after reporting mixed third-quarter earnings last night.
Ahead of the report, analysts forecast that ChargePoint would lose $0.09 per share on revenue of just under $90 million. ChargePoint even exceeded sales forecasts, reporting $100 million in revenue. However, the loss was twice as big as expected: $0.18 per share.
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Turnover fell by 10% year on year, with turnover from electric car charging in particular taking a big hit: a decline of 29% year on year. Subscription revenue, on the other hand, increased by 19%. To alleviate the revenue slowdown, ChargePoint cut operating costs by 30%, resulting in net losses being roughly halved year over year.
Net losses per share fell even more sharply (58% lower than in the third quarter of last year). However, this was largely due to the company growing its share count by almost 16%, spreading the losses over more shares outstanding.
The rode ChargePoint had to sell more shares because it’s still burning a lot of cash. Cash burn in the first three quarters of this year is now negative $154.4 million – better than $302.1 million a year ago, but still not great and stock sales are still needed to generate cash in the absence of a positive free cash flow.
So why are investors buying ChargePoint stock today, despite the losses and cash burn? Management has hired a new Chief Revenue Officer “to drive revenue growth” and top line growth was better than expected in the third quarter.
Yet sales declined and did not grow. And management’s forecast for fourth-quarter revenue, ranging from $95 million to $105 million (so $100 million at the midpoint), seems likely to miss Wall Street’s targets for $101 million. It would also fall short of the $107 million in revenue posted in the fourth quarter of last year.
With earnings still heading in the wrong direction and losses continuing, it’s hard to call ChargePoint stock a buy.
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