ChargePoint Holdings (NYSE: CHPT) experienced a dramatic rally on Thursday, with shares climbing approximately 78% to $9.22 by 14:34 EDT. The surge came after the electric vehicle charging network operator reported a significant reduction in cash consumption and stronger-than-expected quarterly revenue.
The company's fiscal second-quarter results revealed revenue of $116.1 million, an 18% increase year-over-year. Sales of networked charging systems rose 25% to $62.9 million, while subscription revenue grew 10% to $43.7 million. Adjusted EBITDA loss narrowed to $4.8 million, down from $19.2 million in the previous quarter.
Operating cash outflow for the quarter was approximately $4.2 million, a substantial improvement from $36.6 million in Q1. This reduction was driven by aggressive working capital management, including a $24.1 million decrease in inventory compared to April. The company's cash and restricted cash position stood at $95.7 million.
The stock's surge added roughly $108.8 million to ChargePoint's market value, nearly matching its quarterly revenue. Trading volume reached 38 million shares, well above average, as investors bet on a faster path to self-financing operations.
However, analysts caution that the improved cash flow was partly due to one-time factors. Tariff refunds contributed four percentage points to the gross margin, which rose to 36% from 29% in Q1. Inventory reductions also played a significant role in the cash improvement, a pace that may not be sustainable.
CEO Rick Wilmer emphasized the company's disciplined approach: "We managed our cash with extreme rigor through continued operational discipline." Operating expenses were cut 15% year-over-year, and the company recently announced a 10% workforce reduction, expected to incur about $6 million in restructuring charges.
Looking ahead, ChargePoint forecasts Q3 revenue between $105 million and $115 million, which at the midpoint represents a 5.2% decline from Q2. The upper end also falls short of the most recent quarter's performance, suggesting a potential slowdown.
Needham analyst Chris Pierce maintained a Hold rating, citing "effectively zero cash burn" and anticipating limited cash outflow through year-end. However, price targets from other firms remain below the current market price. TD Cowen has a target of $7.50, and RBC Capital Markets set theirs at $6.50, both well under Thursday's trading level.
The company's early shipments of its Express Solo fast charger, capable of 600 kilowatts, began in Q2. Future growth will need to come from commercial expansion as the benefits of tariff refunds and inventory cuts fade. ChargePoint faces the challenge of maintaining margins while navigating softer revenue expectations and sustaining cash discipline without relying on one-time tailwinds.
