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Greetings and welcome to the Blink Charging Company Fourth Quarter and Year-end 2022 Earnings Call. At this time, all participants are in a listen-only mode, and the question-and-answer session will follow the formal presentation. [Operator Instructions] I will now turn the conference over to your host, Vitale Stelea, Vice President of Investor Relations. Sir, please go ahead.

Thank you, Ally. Welcome to Blink's fourth quarter 2022 earnings call. On the call today, we have Michael Farkas, Founder and Chief Executive Officer; Brendan Jones, President; and Michael Rama, Chief Financial Officer. Today's discussions will include non-GAAP references. These are reconciled to the most comparable U.S. GAAP measures in the appendix of our earnings deck. You may find the deck along with the rest of our earnings materials and other important content on Blink's Investor Relations website. Today's discussion may also include forward-looking statements about our expectations. Actual results may differ from those stated. The most significant factors that could cause actual results to differ are included on Page 2 of the fourth quarter 2022 earnings deck. Unless otherwise noted, all comparisons are year-over-year. Regarding the Investor Relations calendar, Blink Charging will participate in the ROTH-MKM Investor Conference on the 14th of March and the JPMorgan Energy Conference on the 21st of June in New York City. Please follow our announcements for additional investor investments in the future. And now, I will turn the call over to Michael Farkas, Founder and CEO of Blink Charging. Go ahead, Michael.

Good afternoon, everyone. Thank you for joining us. Before I dive into our record financial results for the year, I would like to reflect on 2022, which was a transformational year for the EV industry. And even more so for Blink. Industry-wise, we saw record year for electric vehicle sales globally; and this trend is only poised to accelerate based on consumer preferences and strong governmental incentives. Electric vehicles are becoming more common plates on our on our roads and highways as global EV sales grew by 68% year-over-year, with EVs achieving around 10% market share for the very first time. And the vast majority of consumers who try an EV never go back to an internal combustion engine vehicle again. In fact, many OEMs are going electric with their mainstream offerings and making them more affordable in order to achieve scale, which will ultimately lead to price parity with their internal combustion engine offerings. Just think of the impact this will have on societies and the environment in the next 10 to 15 years. Mobility is being revolutionized in a way that has only happened once before, when people went from horses and carriages to self propelled vehicles. This shift to electric vehicles will not only change the needs in terms of how we refuel, but also put in place the need for new infrastructure required to service and maintain these vehicles, as EVs become the dominant means of transportation. As for Blink, 2022 was truly monumental. Not only did we increased our revenue by almost threefold during 2022 when compared to 2021, we fundamentally changed what Blink represents to the EV charging industry, and our position around the world. Slide 4 shows our capabilities as the only fully vertically integrated charging company in the United States, and among only a few vertically integrated charging providers globally. Our ability to design and manufacture our equipment and ownership of our network is a competitive strength, particularly when paired with our flexible business models, as shown on Slide 5. With a variety of ownership models, which ranged from simple network subscription to host owned, hybrid or Blink owned and operated, we are intensely focused on consistently delivering excellent products and services with an unparalleled customer experience. Having control over the engineering, design and manufacturing of our products and software enables us to efficiently scale the business, while at the same time delivering superior products and customer service. As a 14-year veteran of the EV charging industry, we have the expertise to identify and meet customer needs and design our best-in-class hardware and software offerings to exceed customer expectations. In essence, we now control our destiny, while leveraging scale and knowhow to generate some of the highest gross margins in the industry today. As for our financial results, you can see on Slide 6, that our fourth quarter revenue grew 184% year-over-year to $22.6 million, and our full year 2022 revenue grew 192% to $61.1 million, compared to only $20.9 million last year in 2021. Our growth significantly outpaces the industry. We are second to none, and is a testament to the strength of our experienced team, our strategy and our products and service offerings. Our service revenue grew by 213% in Q4 '22 to $5.7 million, compared to $1.8 million in Q4 of '21. And importantly, our network fees grew to $2.3 million in Q4 '22. That is an increase of 827% when compared with the same quarter last year. I repeat 827% and at very healthy gross margins. Looking at earnings performance, adjusted EBITDA loss for the fourth quarter of 2022 was $14.8 million, which is a sequential improvement of $3 million when compared with a Q3 of 2022 which was $17.6 million. Adjusted EPS for the fourth quarter of 2022 was a loss of $0.41, compared to adjusted EPS loss of $0.47 in the third quarter of 2022. Our number of stations contracted, sold or deployed grew to 66,478 units, an increase of 105% when compared to the prior year of 2021. Our growth in network fees and charging stations is related in part to our strategic acquisitions of SemaConnect and Electric Blue in 2022. reflecting the strength of adding these complementary businesses to the Blink family. And subsequent to year-end on February 9, we closed an oversubscribed registered public offering of common stock for gross proceeds of approximately $100 million. The newly raised funding will go towards running the business and strategically investing in complementary opportunities. We expect these funds to take us well into 2024. Also, in January, we exhibited at CES in Las Vegas, where we unveiled five new charging products for a wide variety of customers here in the U.S., and also for customers in Europe, Latin America and Southeast Asia. India for an example, is a market where we expect strong growth in electrification of both two and three wheeled vehicles. And we have a very, very special offering for those compact EVs. 2022 was a year of tremendous progress for Blink. This growth was enabled, in large part by the acquisitions we closed in 2021 and 2022, as shown on Slide 7. To recap our timeline on recent acquisitions, we acquired Blue Corner in May of 2021 adding over 7,000 charging points, and a strong European network. This acquisition really opened a window into the lucrative European market for us. Since completing this acquisition, we have added nearly 5,000 or 70% more charging ports to the existing Blue Corner network. And as a result, the Q4 2022 revenue for Blue Corner grew nearly 50% and is trending very strongly. Adding on to our growth in Europe, in April of 2022, we acquired Electric Blue. We also call it ED in the fast growing market of the United Kingdom, adding nearly 1,200 charging ports to our network, and a confirmed order book of approximately 16 million pounds. Finally, in June of 2022, we closed on our largest acquisition ever. We acquired SemaConnect, which in addition to a robust charging network and customer base, also brought key design and manufacturing capabilities for Level 2 and DC fast chargers. Positioning Blink to qualify for the buy American requirements of the [indiscernible] plan. SemaConnect has one of the highest, if not the highest gross margins in the business, which we intend to institutionalize across the entire Blink organization. Overall, Blink is a combination of many acquisitions since we were founded. By adding complementary businesses gradually and strategically, we have built what I believe to be the most talented team in the industry, second to none, allowing us to leverage our collective knowledge to deliver the best products and business models possible. As you can see, on Page 8, we have grown to become a truly global business with over 66,000 charges sold deployed or installed in 25 different countries, with much, much more to come. However, we are not done here. Slide 9 illustrates that the industry is positioned to see exponential growth, as electric vehicles continue to win customers all over the world. Bloomberg predicts that by 2040, we're going to need anywhere between 340 to 490 million chargers globally to meet demand. Today, we're not even close at about 14 million chargers, with many, many of them not even viable for where we are today. At best, we believe the runway is just tremendously, tremendously long. Just as a shift to EVs continues to build momentum, just imagine the opportunities that lie ahead for the charging industry, and especially for Blink. We are very excited for the future, and are working hard to prepare the company to be able to handle this amazing growth. With that, I'll pass it on to Brendan Jones, our president.

Thanks, Michael, and good afternoon to everyone. As you heard from Michael's comment, Blink had -- we had a great year. I'd even say a very, very, very good year, but I overemphasized very there. So now let's jump into some more of the slides. Let's go to Slide 11. Now as Michael stated, within the last 12 months, Blink has contracted, sold deployed or acquired over 35,000 -- 34,000. chargers both domestically and internationally. And I think we have to keep reiterating this point that bringing the total charge account for the company to over 66,000 chargers since Blink inception. Now we have a diverse mix of deployments in the United States and abroad. And the percentages are that 76% of our total company wide Blink chargers are deployed in North America, and right now 24% deployed internationally. If we jump over to Slide 12, you will see just a partial sampling of our customers. But as indicated, we service a variety of those customers in different industries. And we have won multiple contracts with an array of well established commercial enterprises, multifamily complexes, plant communities, health care facilities, fleets, and municipalities around the world. We also just want to re emphasize the important point that Michael made a moment ago, that Blink is the only fully integrated charging provider in the U.S market. And our capabilities combined with our flexible business model, and superior products position us very competitively to attract new customers and long-term contracts. With that said, let's jump on to Slide 13. And what we're looking at now is examples of our innovative product portfolio. We now have a wide variety of projects, products ranging from residential L2 chargers to high powered DC fast chargers, as well as our newly unveiled vision IQ 200, which we'll talk about in a little bit. With these chargers, we serve as both residential and commercial locations, including an increasing number of fleets across the United States. Now on Slide 13, you can see our currently available DC fast chargers. We think it is important to reiterate that Blink is a global company, addressing the demand for power and different DC installation settings that vary around the world. So we carry a wide variety of DC fast charging offerings to meet customers specifications. For example, one of our latest addition is a wall mounted dual port 50 kilowatt DC fast charger, which works well in tight spaces, especially in the densely urban environments in Europe. But regardless of the specific setting, we offer our customers flexible DC solutions, and ownership models that provide anywhere from 30 kilowatt chargers to 350 kilowatt and above power. Now let's go ahead and examine Slide 13. Now, what this shows is the innovative new product we recently displayed at CES, and I want to take you to this slide in different parts of it. So in the top center, you'll see our all new Vision charger. That -- this charger is designed as a two in one solution. It has a 55 inch LCD display screen which create the perfect point of charge advertising solution. Additionally, the Vision offers charging and advertising revenue share models, providing unique solutions for any of our customers. To the right is our new 180 kilowatt DC fast charger, which will be by American compliant and compatible with the newest electric vehicle charging architectures. To the left is another introduction and this is our Series 9 30 kilowatt DC fast charger. Now this is a small footprint charging station designed for speed and flexibility representing Blink's latest solution for fast charging situations across the global markets. Now if you if I can take you to the to the bottom of the slide, in the center is our EQ 200 charger. This is an intelligent, affordable and scalable charging solution designed specifically for the European markets. The EQ 200 is future proofed as it supports technologies like ISO 15118, OCPP 2.0, and bidirectional charging, also known also [indiscernible] grid, or vehicle to grid or via VTG as it's sometimes called. Next is the Series 3 and Michael referenced this earlier this is a flexible and versatile EV charging solution designed for the two and three wheel vehicles for Asian and Latin American markets. Now our primary target markets for this charge is currently Southeast Asia, where according to Bain and Company, EV adoption will be 40% to 45% for two wheel and three wheel vehicles by 2030. Now let's keep this in mind this is a 13 million to 14 million of those vehicles will need flexible charging infrastructure. Now finally, at the bottom here, we also have the release of the PQ 150, or energy kick. Now what this is, this is a smart charging cable designed for residential charging in the European markets and perfect for the reimbursement of charging costs for feet fleet vehicles at home. We're really excited about the vast variety of products we have on the market and those we recently unveiled. Right now Blink is confident that our product portfolio has a solution to meet charging requirements anywhere in the world. Now let's jump to a different topic. As we look at Slide 16. In 2022, we completely redesigned and launched our Blink network, and Blink charging mobile apps. Our state-of-the-art infrastructure, our tech stack, our user centric approach allowed us to create a technological platform that can be augmented quickly and efficiently without any service disruptions to our customers. And that is key. Now the Blink mobile app puts easy drivers in control by giving them improved capabilities to search for nearby amenities, charges by zip code, City, business category or address and seamlessly integrating EV charging into everyday life. Additionally, drivers can save their favorite charger locations, and manage payment information, as well as view payment history and real time charging status. The app is also available in both iOS and Android platforms. So now let's jump to 17 real quickly here. So when it comes to host benefits, the entire Blink experience has been redesigned with ease of use in mind. [Indiscernible] will also have expanded functionality to create dynamic pricing protocols responsive to various use case, locations and schedules. The new cloud based blink network allows site hosts to manage their business in multiple languages across 25 countries. We expect to transition all of our legacy networks acquired via acquisition to Blink's newly launched network by the end of this summer. Now let's jump into Slide 18, market growth continues to enjoy the support of government initiatives. Electric vehicles comprised about 10% of all U.S sales in 2022. And we expect this trend to continue and accelerate. In the U.S the administration is committed to building a nationwide network of 5,000 chargers, and it is targeting the goal of 50%. That's 50% of all new vehicle sales will be EVs by 2030. And that's just seven short years away. The White House mentioned Blink in a recent announcement on February 17, regarding the expansion of U.S manufacturing footprint and new standards for its buy an American program. So right now we are proud to say that Blink is compliant when it comes to buy American requirements. And we expect to meet the future requirements that will be enacted in July of 2024. So we are targeting production of 100,000 units annually in the US, which we expect to achieve in a major part by the expansion of our Bowie, Maryland facility and with the establishment of a new manufacturing plant for DC fast chargers and L2s, that we are actively in the process of identifying the location for that plant. Now let's jump to Slide 19. And this is a different topic. This is looking at synergies. So when we move on to synergies, and the progress we have made this quarter. With the help of McKinsey consulting, we performed an extensive analysis to discover and outline synergies across the entire global company and especially around the acquisition of SemaConnect. As a result, we identified in our targeting a total of 27.7 million in synergies related to just SemaConnect. And I'm happy to report that $5.3 million of those synergies have already been captured. We have broken down the synergy implemented patient into three phases. Phase 1, began in December and focused on sales, marketing and some aspects of operation. Phase 2 and Phase 3 will begin in March of 2023, and will focus on global operations IT services technology and manufacturing. If we look at the 5.3 million number that has already been attained $4.1 million relates to FTE reductions, and over 1.9 will be savings from reducing and simplifying the number of vendors. As stated, we are just at the end of Phase 1. And we'll have a lot more information to report over the next several quarters. As Michael mentioned earlier, when you dig a little deeper into our results, you will see that Q4 adjusted EBITDA improved sequentially by nearly $3 million when compared to Q3 of '22. And revenue grow more than $5 million compared to third quarter. We are narrowing our losses, and at the same time, we are growing our revenue. And we are looking to continue this momentum moving forward. So to wrap all this up, 2022 has been a truly an impactful year of progress for our industry, and a significant year for Blink. With record growth in all areas of the company. We are elated with what the future holds for Blink. So with that, I'm going to now turn it over to our CFO, Michael Rama for additional comments.

Thank you, Brendan, and good afternoon, everyone. Now turning to Slide 21, total revenues in the fourth quarter of 2022 grew 184% year-over-year to $22.6 million, another record for Blink. In addition, fourth quarter revenues were up 31% sequentially when compared with the third quarter of 2022, primarily driven by the increased demand for our global EV charging infrastructure and higher service revenues. Product sales in the fourth quarter of 2022 were $15.8 million, an increase of 176% over the same period in 2021 as customers purchase greater volumes of our commercial chargers, DC fast chargers and residential chargers. Product sales for the quarter also included revenues generated from our acquired companies of SemaConnect and EV. Fourth quarter 2022 service revenues, which consists of charging service revenues, network fees and ride-sharing revenues were $5.7 million increase of 213% compared to the fourth quarter of 2021. The year-over-year growth was primarily driven by greater utilization of our chargers, the increased number of chargers on Blink's networks, revenues associated with the Blink mobility ride-share program and incremental service revenues from acquisitions. As many of you already know, we combine these service revenue line items into one to more accurately differentiate between the product and service aspects of our business. Now operationally, this approach also aligns with our company's strategic goal of increasing the service component of our revenue mix and growing our reoccurring revenue base. In time, as EV adoption accelerates and utilization of our charging stations improves, we anticipate seeing a larger mix of revenue coming from services. Gross profit for the fourth quarter of 2022 was approximately $6.5 million, an increase of 370% over the same period last year, and up 35% sequentially from the third quarter of 2022. As a percentage of revenues, gross margin was 29% in the fourth quarter of 2022, over 1,100 basis points improvement when compared to the same period last year. And sequentially our gross margin in Q4 2022 grew nearly 100 basis points. As Brendan, mentioned early, we continue to look at ways to reduce our component and operating costs which should have a positive effect on gross margins. Operating expenses in the fourth quarter of 2022 to $34.2 million, compared to $20.5 million in the prior year period. The year-over-year increase reflects the impact of recent acquisitions, as well as our commitment to positioning Blink to capitalize on many EV infrastructure opportunities that lie ahead. At the same time, we remain vigilant about cost reduction opportunities and additional synergies as Brendan mentioned earlier. Last year on this time, we began presenting adjusted EBITDA. Our management believes this non-GAAP measure is useful in evaluating our company's core operating performance because it excludes items that are either significant noncash or nonrecurring expenses. Adjusted EBITDA for the fourth quarter of 2022 was a loss of $14.8 million, compared to a loss of $9.1 million in the prior year period, largely due to the higher operating expenses as I just mentioned. Sequentially, Q4 adjusted EBITDA improved nearly $3 million or nearly 3,700 basis points compared to the third quarter of 2022 and improved nearly 5,000 basis points year-over-year compared to the fourth quarter of 2021. As you could see, as a percentage of revenues, our adjusted EBITDA improved nearly 40% since Q4 of 2021. Adjusted earnings per share for the fourth quarter of 2022 was a loss of $0.41 per diluted share compared to a loss of $0.44 per diluted share in the prior year period. Non-GAAP adjusted earnings per share is defined as adjusted net income which excludes significant noncash items such as amortization of intangible assets, nonrecurring acquisition related expenses and additional stock-based compensation divided by the weighted average shares outstanding. Adjusted earnings per share for the fourth quarter of 2022 was a loss of $0.41, compared to adjusted EPS loss of $0.47 in the third quarter of 2022. Now turn to Slide 22, you could see that both revenue and gross profit performance has strongly improved over the last several quarters with significant sequential and year-over-year growth. As we continue to expand our own and operate strategy, experience greater demand for EV infrastructure and increased utilization rates, we believe we are well-positioned to drive significantly improved revenue and gross profit performance moving forward. Moving to our cash position, as of December 31, 2022, cash and cash equivalents was $36.6 million. Following the close of the quarter, Blink closed on an oversized public offering with gross proceeds of $100 million. We are pleased to have closed fiscal year 2022 with a record fourth quarter and full year results. We believe we're building a solid foundation for continued growth as EVs are becoming more and more common among consumers and demand for our products and services -- service grows. I will now turn the call back over to Michael Farkas for a few final comments. Go ahead, Michael.

Thank you, Michael. 2022 was a truly transformational year for Blink and to the entire industry. I am very proud. I'm actually -- I'm beyond proud of our team and what they've accomplished this year. And completing and integrating two large acquisitions to launching a brand new redesign from the ground up network, new mobile applications, also introducing a number of best-in-class products for both Level 2 and DC fast charging. It has been an intense year. But it's also been a very, very rewarding year for us. And as you look at the EV charging industry, we have positioned Blink to be truly unique. Number one, we are a truly fully vertically integrated EVSC provider with software and hardware, engineering, design, manufacturing capabilities, and we're providing the most flexible ownership models period. Number two, our charging solutions range anywhere from simple level to home charger, to some of the most sophisticated DC fast chargers in the market. Number three, over the years, our flexibility allowed us to create strong partnerships and acquire a diverse client base that speaks for itself. The clients we have are just amazing. They're just amazing companies. Number four, electric vehicle charging [indiscernible] is positioned for gargantuan growth. It's forecasted to increase at more than 30x current levels over the next decade and a half. Number five to position ourselves for this growth. We have expanded our global footprint and scale it over 25 countries and counting. And finally 6. The last two quarters have shown that our strategy works as we have achieved some of the highest margins in the entire industry. We drove strong results in 2022 with our visibility today and our optimism around the opportunities we're seeing in the marketplace, we are targeting 2023 revenues in the range of $100 million to $110 million and targeting gross profit in excess of 30% for full year 2023. With continued solid operational execution, we believe we are well-positioned to generate continued growth and improved margin performance. We are excited with what the future holds for Blink. With that, we will now open the call for questions.

[Operator Instructions] Thank you. Our first question is coming from Matt Summerville with D.A. Davidson. Please go ahead.

Hi. Good afternoon. This is Will Jellison on for Matt this afternoon. I wanted to start out by asking you about reliability of charging stations, because we've started to see to come into the public consciousness a little bit more, making sure that our public infrastructure is reliable and can be depended upon. And I won't ask for specific performance indicators on Blink reliability. What I'd more so like to learn a little bit more about is what Blink is doing to drive continued improvements in the reliability of the network going forward. I'd love to hear what you're thinking about with that.

Okay, that was a great question. And it's something today that's plaguing a bunch of networks. We got a question historically, if you look back. The first generation of the technology that was launched, whether it was Charge Point, Blink's original hardware, even General Electric, Siemens, Schneider, and even the big boys remember that all the Gen 1 equipment was not made up to par. The reason why it wasn't because we really didn't understand the terrain, okay. Remember, these are high powered electrical equipment that that is subject to the elements and conditions. And really, there's been a lot of improvements with the generational changes of hardware over time. That's even more so for DC fast chargers and that's where you're hearing most of these operational problems with. And people driving up to a charger not being able to charge their car and moving on. So I'm not going to say we haven't had any issues, we've had. Most of the issues that Blink has had has been in prior generation equipment, and network prior before we bought the company and took over those assets. So unfortunately with legacy issues, we've gotten rid of most of those issues. And again, you deal with equipment going off, and you have to service it and take care of it, and that's really the main focus. But the DC fast charger operators, like the EVgo's, the electrify [ph] America and some others, they've been really bearing the brunt of those issues and problems, because DC fast chargers are a lot more complicated and require a lot more maintenance. Brendan, do you want to add anything to this? You're on mute.

Sorry about that guys. Yes, so a couple of points. But first, just reiterating what Michael said. Definitely the complexity of DC chargers is 5x what it is on the L2 charger. I think it was a year of awakening for the industry as Michael said. Everybody now is taking quality very much seriously, Blink is participating in quality analysis with both the DOT, and in California separately with CARB and CEC. So we're examining everything we're doing and we're collaborating with the industry not just improve our quality, but to assist in the improvement of quality across the board. And we also saw a little bit of an unusual blip in this summer, all networks faced an unprecedented event when it came to the sun setting of the 2G and 3G networks from all the providers and that created a significant disruption for everybody. And most of us all work together. We upgraded a lot of the equipment to the 4G and 5G system, but you did have this depth and a big bubble there for a little bit of time where everybody was working to catch up. But now everybody is getting on the same page, Blink is definitely focusing on making sure that we deliver the highest level of quality. And when we install DC fast chargers, we're going to do that, knowing that we have to double down on these and understand from a call center for network operations perspective and from a maintenance provider, that we have to ensure that when the customer gets to the charger, they can charge. And we're moving forward with all those activities now, as we speak.

Understood. And to add to what Brendan said, Blink is really focused on deploying Level 2 charging stations, a lot less maintenance, a lot less issues. It's a lot less common when you roll up to a -- drive up to a Level 2 charging station that you're going to have these issues. And as we deploy our next generation of DC fast chargers, we believe we're going to be addressing a lot of those maintenance and operational issues of the current generation of DC fast chargers.

Understood. Thank you for that. And then as a follow-up with the capital offering, now successfully completed, I'm curious as to how Blink is thinking about capital allocation moving forward, deciding between organic investments in your own manufacturing or innovation capabilities, or additional acquisitions of assets that might bolster the Blink network going forward?

Okay, great question. We got caught in a little bit of zone, okay. We all know that there's literally billions and billions of dollars that are now going to be earmarked for our industry, okay. Whether that's for building facilities, the deployment of infrastructure, subsidizing rebates and all these kinds of amazing things. So the capital that we raised was really a bridge to get us to a lot of that funding. We believe in the future and we've been -- I'm sure people who have been on these calls before have heard us say this, we've been looking for non dilutive capital or very little dilutive capital. The industry is really, really getting to that point. We're seeing it in Europe, where there's banks that are financing deployments now. And we're going to see stuff like that happen here. It's really about utilization. So we're going to look to use this money, the capital we just raised to really handle the operations of our business to grow our business. But we believe in short order, there are going to be some very interesting mechanisms to finance, some of the capital requirements, like the new build out as well as the new facility as well as the being able to deploy a serious amount of, of charging stations.

Thank you. Our next question is coming from Craig Irwin with ROTH Capital. Please go ahead.

Good evening and thank you. Thank you for taking my questions. So Michael, the one thing that really stood out to me was the more than eight fold increase in network fees in the quarter. Something really fundamental seems to be going on there. Can you maybe talk us through what the margins are on those? What's driving growth there? And how this is likely to take shape? Do we continue to see this outsize growth multifold increases materializing over the next number of quarters?

Yes, I'm going to let Michael or Rama address the margin and so on. But this is part of selling hardware to third parties. This is reoccurring fees of selling energy and other services. We're going to see a massive growth in a lot of our recurring revenue models. And that's because there are a lot of people who are buying charging stations, and we're deploying a lot of charging stations. And when we sell a charging station, we get a network fee, every single month paid by that property owner. So yes, we're going to see a lot of increases and as we deploy more and more charging stations, and I could tell you, we haven't seen anything yet. There's just a tremendous amount of growth we're going to see in this business. I'm going to repeat it again, I've said this a bunch of times. You look at what Bloomberg numbers are and others, you're talking $300 million, $400 million or $500 million charging stations needed by 2040. We're lucky if we're at the 10s, we're not even there yet. So especially viable ones. If you heard some of the reports that came out a little while ago, EVgo came out and said they need to have this go easy go renew. That's them acknowledging that many, many, many of their DC fast chargers, their legacy DC fast chargers all need to be pulled out of the ground and replaced. We don't have to do that. We're in a much better position in that. We just deploy new locations and are constantly getting more and more of those locations. But the margins and to address what you're referring to the margins of that business, on the processing fees, on the networking fees, they're massive. And Michael a little bit more.

Yes, Craig, just to add a little bit more color to that, the SemaConnect acquisition, it came with a vast -- very large network, and even though they're selling third-party hardware sales, but their stickiness and the network revenues that we're getting from that business. And that's where we're really seeing that take off in the third and fourth quarters of 2022. And the expectation is that will continue as the network keeps growing, as we put more chargers on the networks as our -- on our combined networks. And yes, as Michael mentioned, the margins are strong. And that's why we've always been looking at the service part of the business to grow that because we know the margins on that business are going to continue to expand, whereby the hardware end of the business over time could get commoditized. So that's the benefit of a very well balanced portfolio of revenue offerings is to have that mix of, of course, profit potential, if you will.

Excellent. So if I could maybe ask for just a little bit more color. There's some fringe elements that have been suggesting your utilization on your network is materially different than your peers. And we know that not to be true. Can you maybe talk about utilization on the network and how utilization contributes to this growth that you're seeing?

We're seeing that increase of utilization. There's no question about it. And when you average in, our European operations even more so. Again, you're looking at a difference between a portfolio of, let's say, solely DC fast chargers, where you'll see even a much, much lower utilization rate versus AC chargers. And you have to realize it doesn't take a very large utilization rate for Level 2 charging stations in the public domain multifamily parking garages. It doesn't take much utilization for them to be very, very profitable. But without a question, seeing a huge increase in those utilization rates. Mike, you want to elaborate on that a bit?

Yes, as you could see, a quarter over quarter, our charging revenue, part of the business has sequentially been increasing. And that's, again, more charges on the network, more own and operate. And as we've always mentioned, there's charging and utilization is has been going hand in hand a bit with the penetration of EVs to overall vehicle sales. And as we're approaching that 10% we're starting to really see pick up traction where we weren't just 12 months ago, where it was, I think it was the middle single digits, 5%, 6%. So we're seeing that in our portfolio of chargers where the utilization is trending positively and increasing because there's just more EVs on the road to be charged.

Absolutely. That's good news. And thanks again for taking my questions.

Thank you. Our next question is coming from Sameer Joshi with H.C. Wainwright. Please go ahead.

Yes, thanks for taking my questions and congrats on a great quarter. Would you comment on your position with the V2G opportunity, given that you have this build on own and operate model? Does it lend itself favorably to the V2G opportunity?

Yes. By owning and operating the charters we are able to monetize V2G when there are programs that allow that to take place. Again, it's about having the right equipment and having the right relationships with utilities. Brendan you want to expand on that a bit.

Yes, so we're making our chargers especially all of our new chargers, V2G capable whether it's a home charger, a commercial L2 or DC fast charger and whether it's on the own and operate amount whether it's sold. So all the new designs will have that capability built into and we already, as we said, during the presentation, the European Charter has that built in. And that feature is being added both to the network and to our charges as we speak. And then we'll work to monetize it, right. So how do you monetize V2G? And that's the big million dollar question. So we're working with a variety of outside companies on this topic, right now to figure out, how do we work with consumers? How do we provide them a solution with the installation of a charger and the vehicle, because you got to have the vehicle and the charger to be able to do it right. And we’re -- we'll have more to come on that as we move forward. But the goal is to explore and then to where possible to monetize everything we can on that topic.

Good. Thanks for that. And then the second question on …

Sameer, one of the things I want to add to it, and I'm sure you've heard me say this before. Right now, this is a land grab and we've been in land grab mode for 14 years. And there are going to be many different ways to monetize these locations in the future. The cars are coming, you're seeing more and more people buying these EVs. It's gaining a lot more traction out there. And we knew that there are going to be many ways, besides just selling the charging station or getting networking fees or getting processing fees, we know that ultimately we're going to be able to sell electricity to the EV owners. Maybe if we're able to aggregate enough electricity over time, being able to then turn some of our hosts into customers who have electricity, advertising V2G. There's going to be many different ways for us to monetize these locations as we grow more and more. And as we have more electricity purchasing, more hardware, all these things, factor in what leverage we're going to have. But it's our intent to monetize these locations, as our scale grows and we're able to offer different services and products to our host owners and the EV drivers.

Yes. Understood.

But it's not V2G. There's a lot of really amazing ways to monetize these locations.

Yes, thanks for that. The second question was about just an update or any visibility on the state level funding and federal funding dollars coming down? Should we start seeing any benefits from that? Or at least the initial positive news from that and the third, fourth quarter, or do you think it will be a 2024 windfall [ph]?

Yes, so it's a great question.

You go ahead, Brendan. No, I was going to -- I was going to tell Sameer, again, we're still at the mercy of the government and the getting their programs together and figuring out all their things, which is happening slowly, but surely. It's just a matter of having some patience and I'm sure Brendan is going to add to that.

Yes, so only three states are out right now and one pulled back. So Ohio, Kentucky, and Pennsylvania, and Pennsylvania pulled back. A lot of people were waiting to see what the new [indiscernible] rule came out by America as we talked about were compliant on the L2 side. We're working on compliance, and we'll be compliant with the DC side. So you're going to see some states right now take that into consideration, and then figure out your timing. But these are early guys out, are still in one has gotten responses in and they're evaluating to see if they require, and the other two, they're basically slow walking. And then after that we got 47 other states, right? So you're not going to see anything meaningful, especially in terms of fun dispersed. You're going to see some awards, perhaps as we get in the summer, a few probably in Q4, but the real work is going to happen in 2024.

Got it. Okay. And then just following up on previous question from Greg, I think your service margins should continue to improve as your network fees grow. By 2025, 2026 what proportion of your revenues do you expect to be from service related offering?

I'll jump in on that. And obviously as we go forward, we've always tried to keep strategizing where we do more own and operate. But as just as you think you're going to tilt one more one way, you get a big quarter that comes in. So predicting the scale and the balance between the two, we don't mind taking the profits for those the hardware sales. But again to the point is, we're starting to see a little bit more bigger volume of own and operate. And to get what that splits going to be, it'd be a nice 60-40 split, maybe a host versus own and operate, but you never know how it's all going to shake out when it [indiscernible].

Sameer, I want to add to that. For a while, we saw a lot of businesses, and we saw a lot of, excuse me, municipalities and the original RFPs, they wanted to own and operate the hardware. Similarly, with businesses. Now that they're dealing with it and having to provide the service and operate the charging stations, they're realizing that they don't want the headache. And just like they outsource almost all the services they provide, this is something they need to do as well. So we're seeing a lot of legacy customers who are buying hardware, who now want us to own and operate. We're seeing a complete changeover in municipal contracts, not only here in the U.S but globally, where they don't want to operate, they don't want to own and operate these things. They don't mind subsidizing someone and helping them put them in the ground and, but they just don't want to deal with the day to day. That is a huge, massive benefit for us as compared to some of our competitors. Again, that's why we have the different offerings. That's why we could sell to you or we can own it in your location. We want to make sure that we could satisfy every single customer. So -- but we are seeing a conversion where prior owners and operators want someone else now managing that service for them, and we're seeing a lot of that in the municipal side.

Yes, yes. No, I agree. I think you're very well-positioned for that kind of a scenario. Good luck for 2023 and beyond. Thanks.

Thank you.

Thank you. Our next question is coming from Oliver [indiscernible]. Please go ahead.

Good afternoon, everyone and thanks for taking my question. Just on the owned and operated model, kind of a follow-up to the prior question. But you all growing footprint, looking at the charter growth getting up to 66,000 or so. Y'all mentioned working on converting legacy owners of Sema chargers to the own and operator model. Just kind of wondering how that was going and was also hoping for a bit more detail in terms of how many of those chargers are revenue generating chargers, under either a Blink own turnkey, or hybrid owned business model and what the split between those two sit out today?

I'll jump in just a little bit that maybe on the -- Right now there's about 49, almost 5,000 chargers that are owned by us on our networks. And there's a lot of good memories in the 66,000 is historical legacy that goes back over time. And it's all types of chargers, DC fast chargers, commercial chargers, private chargers, all type of charger, home chargers. While they're not [indiscernible], so -- but we have a big portfolio that's generating, obviously, not remember, it's not just what we -- that's owned by us, but it's also what's in our networks. And we have over 50,000 or 50,000 units that are in our [indiscernible] networks that generate some kind of recurring, some kind of revenue that's generating from a network piece. So there's a bit of a split between that and to what’s to own and operate.

Yes, so as it relates to the SemaConnect portfolio, so we're just at the beginning, so we've identified multiplicity of different site hosts that want to engage in the own and operate model, especially as Michael said, they want to switch to the charging as a service as opposed to own and operate it themselves. So we've already won a significant contract in that area. Now, we're going to accelerate this as we convert the SemaConnect network over to the Blink network and that's happening within 30 days today. And then we combine all the portfolios together and cross-sell to everyone. So we expose all of Semi customers to the own and operate in the hybrid model. We have a unified pricing plan, a unified product portfolio to offer them and we are already seeing some very significant positive momentum in this area. And even things that we'll be able to talk about later on about awards that we have a high degree of confidence that we receive as well. So all of the legwork is ongoing. And it's pretty intense on both those topics and extends beyond. It's also penetrating the multifamily dwellings, even deeper than we previously have. And making sure that everybody knows that the new company, the combined company, has more products, more services, and more affordability in based on some of the moves we're making, from the manufacturing perspective. So the best is yet to come.

Awesome. That's encouraging to hear. And for a second question, just kind of, on the manufacturing side of things, I think it's back mid 2022, when y'all kind of announced that deal. You all running close to 10,000 unit run rate, just wanted to get a sense for where that is today, how optimally that facility is running relative to the maximum run rate that is fully capable of.

Yes, so what we've done is, and again, there's two different things happening simultaneously. So we've increased the productivity out of Bowie already. So we pushed up to between 12,000, 13,000, about to hit 14,000 units on that. We did that without adding much, right. So we're moving to a second shift out of there as we speak. And that's to push the output above 3,000 units, moving it up to four per month. Then we're going to add some square footage in the similar area to get that up to the target. Now we're going to have a phased approach, we're going to get it up to 25, then 30, we're going to add more square footage, then move on up to the 40. And then the 50,000 range out of that facility. The one change, we elected not to do a third shift, because given all the quality concerns, and the consistency in third [indiscernible] manpower. We decided to keep it at two instead of going to a third and just increase the square footage. So all of that is on track. And so, we feel very confident about that to be able to meet the product demands of our customers from there. But in addition to that, the new manufacturing footprint calls for a minimum of 10,000 DC fast chargers, and the remaining 40,000 will go also to L 2 production. So we're going to do a build up Bowie and get that at maximum output. And then we're going to also do the manufacturing on the L2 out of the DC fast charger plant as well.

Awesome. That's helpful. Thanks for the time, guys.

Thank you. Our final question today will be coming from Chris Souther with B. Riley. Please go ahead.

Hey, guys, thanks for taking my questions here. I certainly appreciated the SemaConnect cost and revenue, synergies commentary. Can you talk a little bit more about the overall OpEx trajectory? I'm trying to get a sense with some of these in progress targets, where you think, leverage for EBITDA breakeven and the timing of that might shake out based on -- OpEx trajectory.

Yes. So what you saw on the slide, it won't be talked about, right. So first, as it relates to FTE reduction, so we've only hit the first phase of that, right. And we will expect more of those in Phase 2 and 3, what we're going to be examining is operational costs of some remaining operational cost here in the U.S., but also globally and where those synergies exist. Then secondly, it's going to be the same thing we're going to do in technology, and then in IT support globally. As you might imagine, we're transitioning one network in 30 days, then two more networks over the summer time. As we make those transition, the support staff and then the folks that were working on the older network, the ones that were suppliers of the software that supported it and the sub vendors, all those are going to be eliminated. So as we move further into 22 -- '23, you see -- we will see us having additional operational reductions. Now additionally, as you might imagine, we did a product rationalization study and we're moving more to some of the product out of SemaConnect. So our own manufacturing, our parts building out of India, then our assembly out of Bowie and the new site when we got it, that's at a much lower cost of goods sold. So we're going to have this additional synergy that's going to start rolling and we're already starting to see it roll in right now. We will report that in the next quarter. Where we start to make more profit off a single charger sale and win more customers, because we're able to position the portfolio with the new network, and the lower cost of manufacturing, give us a bigger margin and a greater share market.

Got it. Yes so framing all that as far as kind of the overall OpEx for -- if we're going to use, say, kind of the fourth quarter OpEx run rate, does that continue to grow? Just because there's other areas we are growing as your …

Yes, I mean …

… netting out with those reductions.

Yes, there's going to be some net out. But it's got to be on the lower end of the scale, as well. So as you -- a lot of the reductions, and we haven't been very public, but there were a lot of high-end staff on that. And that was just due to duplication, right? You merge a company together, you have a lot of duplication and effort, right. So what you're going to see as we continue to identify staff in IT and technology, and everything, we're going to have to add manufacturing staff over time, and production workers and assemblers. Now we can get them depending on …

You're talking a much lower cost employees to handle.

[Indiscernible] words out of my [indiscernible].

Exactly.

Yes, so -- let me [indiscernible] for one second, what we're seeing now is a reduction in our expenses because of aggregating the businesses. And obviously, we're still going to grow the business, because you see how much we're seeing revenue growth, how many units need to be sold, maintained, operated and so on, deployed. So the business is growing, but what we're seeing here now is still an increase in the revenues, but a decreasing in the losses. So we're getting to a very good point here in our business, because that's occurring. I've not seen so much growth in the losses as we've done in the past, look at the difference between third quarter of this past year, I mean, this year, third quarter of '22 versus fourth quarter of '22.

Got it? Yes, that all makes sense. So is there any way you could frame -- you gave kind of guidance for 2023. But targets as far as EBITDA breakeven, either from a revenue run rate or timing perspective would be …

We're going to give more visibility as the year goes along. This is starting to get some visibility to the Street and where we're going and some guidance. And as things progress, we'll be sharing a lot more information.

Okay, appreciate that. And maybe just, if you could break down mix between product sales and Blink own deployments in the quarter anyway, you could provide total number of Blink owns charging ports kind of on the network, when we're looking at kind of the overall kind of number on the network.

Yes, there's about as I mentioned, on the previous question, I don't know if that was question or that was an [indiscernible]. So I'm assuming it was a question. But yes, you'll see will come out in our filings, but we have about 5,000 units that are that are Blink owned, and then over 50,000 of [indiscernible] that are our network. So that was the big unit and the big number on our network. We get we added SemaConnect and a large network, and we're seeing that reflected in that, as you guys saw a network revenue piece of the business growing.

Got it. Okay.

And one of the things that Michael mentioned is, every time we start growing our own and operate business, and we think that's going to outpace our host [indiscernible] business, selling the equipment to a third-party. We get large orders that change those dynamics. And I want to be very clear, today we're seeing single orders that are larger in size than revenues we did even just a couple years ago. That's where the scale and size of this business is going. And again, I'm not going to say we're winning all these orders. But we're very competitive, we have amazing hardware, we have amazing equipment. Our Level 2s are made in the U.S., there are very few, if any Level 2s made in the U.S., it puts us in a position to get certain contracts and orders that others can't compete in. Because there's [indiscernible] not made in the U.S and we're in a very, very, very good position. But again as soon as our own and operate business comes in, we have large outside orders that then put a substantial amount of that business in the [indiscernible]. Again, it's good for us, it's a hardware sale. And then we have recurring revenues. We typically have $18 a month connectivity fees. And then we have about 8% processing fees, an $18, it cost us like 3, 4 bucks. That's it. So there's huge margins in our business. When you look at the processing fees, it's about 8% and about half of it goes to expense a little less than the rest is ours. So these are very, very lucrative lines of business, and allows us -- what's most important is to be able to service every single customer no matter what they are. And it allows us to have major companies that manage different properties, whether it's McDonald's or CBRE or any of the others that we work with, they want to have aesthetic consistency, one vendor to work with, but they want to be able to deploy equipment at all different types of property owners who have different models, of deploying capital at their locations. And having the variety of models is so important to us. And if we have to sell it, we'll sell it. And if we have the ability to own and operate it, that's what we will do. And there are times when the property owner wants to make the capital improvements, but they don't want to deal with the technology or dealing with the managing the service. And we are there for that also. So having the flexibility in the viability, the flexibility, and as many models as we have really allows us to just really grow in size and scale. Look at the amount of units and locations we're getting both from an own and operate perspective. And host owned our growth is -- our growth percentage is second to none in the industry right now. We'll stand against anybody looking at from a revenue scale, how many units we're putting in the ground, we're growing a lot faster on a percentage basis than almost all of our peers. And the reason why is the flexibility we have and the ability to satisfy all the customers that we can.

Got it. Okay. That's helpful. I will hop in the queue. Thanks, guys.

Excellent.

Thank you. As that was the last question, it does conclude today's call. We thank you for your participation. You may disconnect your lines at this time, and we wish you a wonderful day. Thank you.

Thank you.