ChargePoint Q3 Results Some Restructuring Benefits, Analysts Say: Expect 'Return To Growth In 2025'

Shares of ChargePoint Holdings Inc (NYSE:CHPT) were up 6.15% at last check Thursday, after the company posted upbeat third-quarter revenues.

Here are some key analyst takeaways from the company’s earnings report.

• RBC Capital Markets analyst Christopher Dendrinos maintained a Sector Perform rating, while reducing the price target from $2.50 to $2.00.
• Benchmark analyst Mickey Legg reiterated a Buy rating and price target of $3.
• Stifel analyst Stephen Gengaro reaffirmed a Hold rating on the stock.
• Needham analyst Chris Pierce reiterated a Hold rating on the stock.
• JPMorgan analyst Bill Peterson maintained an Underweight rating.

Check out other analyst stock ratings.

RBC Capital Markets: ChargePoint’s third-quarter revenues hovered at around $100 million. That’s higher than consensus of $91 million. Sales and marketing initiatives, as well as subscription revenue, drove the upside. Transaction charges also benefited other revenue, Dendrinos said in a note. Gross margins missed expectations due to pressure on charging network margins.

Margins were impacted by "incremental freight charges for moving raw materials from the U.S. to Asia, although these should be one-time charges," Dendrinos stated. The company guided to fourth-quarter revenues in the range of $95 million to 105 million, below Street expectations and representing a 14% year-on-year decline at the midpoint, he further noted.

Benchmark: ChargePoint's revenues declined by 10% year-on-year in the fiscal third quarter but came in above expectations, Legg said. "The company remains steadfast in its goal of achieving adj. EBITDA profitability in calendar 2025.”

"Overall, performance was solid and mgmt is executing on the facets of the business that they can control, but demand remains largely stagnant," the analyst wrote. ChargePoint executed on its plans to launch new products and right size the company, and may return to growth in 2025, which presents "an attractive buying opportunity," he further stated.

Stifel: ChargePoint's previously announced plans of reorganizing its operations and downsizing its global workforce by 15% "seems to be paying dividends," Gengaro said. The third-quarter results incorporate a "partial impact of the restructuring," and the full impact of the cost reduction is likely to be evident in the fourth quarter, he added.

Management expects non-GAAP gross margin to be flat or improve slightly in the fourth quarter, the analyst stated. The bulk of the margin improvement is likely to be realized in 2025, as the company "sells through its existing inventory and begins to realize the benefits of its Asia manufacturing," he further wrote.

Needham: ChargePoint beat revenue estimates against a lower bar, as the company focused on reorganizing its sales and marketing operations, Pierce said. Management's fourth-quarter revenue guidance came in-line with consensus, "a positive change vs recent CHPT history," he added.

EV adoption has outperformed the growth in charging equipment year to date, which drives "a utilization tailwind for the installed base," the analyst wrote. While the trough in charging equipment demand may be in the rearview mirror, concerns around the company's growth remain, he further stated.

JPMorgan: ChargePoint delivered a revenue upside, driven by better-than-expected equipment and other revenue, "with more resilience on display in the US than Europe," Peterson said.  The company's cash burn from restructuring improved significantly, he added.  

Margins were flat sequentially and are "unlikely to meaningfully inflect until mid-2025 when Asia manufacturing is ramped up," the analyst stated. The company could begin generating revenue growth next year, "although it remains unclear if/when customer buying patterns will inflect if policy support is curtailed under Trump 2.0," he further wrote.

Price Action: Shares of ChargePoint Holdings had risen by 8.98% to $1.34 at the time of publication on Thursday.

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